Former Fed chief Ben Bernanke said on Monday that President-elect Donald Trump calling China a currency manipulator doesn't "fit with reality," and warned about the dangers of a trade war.
"One of the things the candidate said he would do was label China a currency manipulator, which means that China is keeping its currency artificially low in order get an advantage in exports," said Bernanke, who headed up the U.S. Federal Reserve from 2006-2014. "Of course, China right now is working very hard to keep the renminbi from falling. So it's a little bit inconsistent."
Bernanke made the comments from the Washington Press Club in a wide-ranging question-and-answer session that was video-conferenced at the UBS Wealth Insights conference held in Singapore.
President-elect Trump had vowed to label China a currency manipulator for the purposes of a competitive trade advantage and threatened to impose a tariff of as much as 45 percent on China's exports to the U.S.
In the wake of the surprise Trump win, fell to nearly eight year lows against the dollar, touching its weakest since at least January 2009, during the global financial crisis. But analysts attributed the slide primarily to the strength of the dollar, with the dollar index, which measures the greenback against a basket of currencies, surging to a 14-year high after the election.
Indeed, some analysts had noted that, based on currency movements within the yuan's trade-weighted basket, policymakers appeared to be supporting the Chinese currency somewhat.
Bernanke said he expected a "little bit of friction" between China and the U.S. over trade, but that he doubted there would be a major change in global trading patterns.
"Our trading system is very important to our economy," Bernanke noted, citing the breadth of global supply chains, such as how the 2011 earthquake in Japan disrupted production in the U.S. as companies weren't able to get product inputs.
"It is a dangerous thing to try to interfere too much with our trade and I'm hopeful that this will be a very cautious process," Bernanke said.
Bernanke noted that for his administration, Trump has tapped both people who want to roll back trade and globalization and others who have more moderate views.
"I think what we're going to see is a lot of internal dissension, where different points of view are fighting it out within the administration and the president is sort of broadcasting to the public what he's thinking in the moment," Bernanke said. "So there's a lot of uncertainty."
But when it came to Trump's likely plan to push infrastructure spending, Bernanke was less enthusiastic than in 2012-13, when as the central bank chief, he had advocated for more government spending, or at least less austerity.
"That case is weaker now because we're closer to full employment. There is still a case for fiscal policy but it's less in terms of large of amounts of spending and more in terms of smarter policy," Bernanke said, citing as an example the need for tax reforms.
"Infrastructure makes sense, I think, not so much now as before in terms of job creation, but because America's infrastructure is not as good as it should be," he said, adding that improved infrastructure may spur more private investment as well.
At the same time, Bernanke believed the markets may be anticipating too much fiscal spending, noting that many Republicans in Congress were concerned about deficits. He added that the post-election spike higher in U.S. Treasury yields was excessive as the level of fiscal stimulus was unclear.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter