China has “tremendous” room to modify monetary policy if the trade war with the U.S. deepens, People’s Bank of China Governor Yi Gang said.
“We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate, and also for the fiscal, monetary policy toolkit, I think the room for adjustment is tremendous,” said Yi in an exclusive interview in Beijing.
Asked if his scheduled bilateral meeting with U.S. Treasury Secretary Steven Mnuchin on the sidelines of the Group of 20 gatherings of finance ministers and central bank governors in Japan over the weekend would get negotiations with the U.S. back on track, Yi said it would probably be a “productive talk, as always,” though the topic of the trade war would be “uncertain and difficult.”
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“A little bit of flexibility of RMB is good for the Chinese economy and for the global economy because it provides an automatic stabilizer for the economy,” he said.