China's central bank still has plenty of tools that it can use to counter the detrimental effects of a trade war, its governor, Yi Gang, said on Sunday.
The Asian economic giant is in the center of a tariff fight with the U.S. The world's two largest economies have imposed tit-for-tat tariffs on each other's products, which have made investors nervous and is seen as a major risk in derailing the global economy.
"I think the downside risks from trade tensions are significant," Yi said at the International Banking Seminar, which was organized on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Bali, Indonesia.
"We still have plenty of monetary instruments in terms of interest rate policy, in terms of required reserve ratio. We have plenty of room for adjustment, in case we need it," he said, adding that China still wants a "constructive solution" to the ongoing trade frictions.
Yi's comments came just days after the IMF downgraded global growth forecasts for this year and next year to 3.7 percent, citing ongoing trade tensions that could hurt confidence. China's economy is expected to grow 6.6 percent this year — maintaining an earlier forecast — but slashed the country's 2019 growth estimate by 0.2 percentage points to 6.2 percent.