BEIJING: China’s central bank said on Saturday it will maintain its “prudent and neutral” monetary policy while keeping an ample level of liquidity amid a trade war with the United States.

The yuan’s exchange rate and market expectations remain generally stable, giving the world’s second largest economy a stronger ability to counter external shocks, the People’s Bank of China said after its third-quarter monetary policy committee meeting, according to the official Xinhua news agency.

Amid warnings about China’s massive debt mountain, the bank said it will “guide reasonable growth in credit” and continue to deepen financial reform.

China has been locked in an intensifying trade conflict with the US, which unleashed a new wave of tariffs on $200 billion in Chinese goods on Monday, with Beijing targeting $60bn in American products in response.

Premier Li Keqiang acknowledged last week that China is facing “greater difficulties” in maintaining steady growth in the face of the US onslaught, but he voiced confidence in its ability to “overcome obstacles”.

Analysts say a sharp depreciation of the yuan has helped China weather the tariffs storm by making its exports cheaper.

Published in Dawn, September 30th, 2018