BEIJING (Caixin Online) — The governor of China’s central bank says the nation’s monetary authorities are ready to cope with a potential flood of speculative cash, following this week’s quantitative easing decision by the U.S. Federal Reserve.

Zhou Xiaochuan, the governor of the People’s Bank of China, told a Caixin financial conference Friday that the so-called QE2 bond-buying announcement now roiling emerging markets, including China, “is not necessarily optimal policy for the world,” given the U.S. dollar’s pivotal role in international trade and settlements.

But China considers the Fed decision to buy back up to $600 billion in bonds “reasonable” as a domestic move for U.S. policy makers, who are trying to fight unemployment and weak growth.

The governor declined to directly comment on QE2, although an earlier comment by an adviser to the central bank in an official newspaper criticized the decision by the Fed and its chairman, Ben Bernanke. The adviser warned that the decision to effectively unleash huge amounts of new cash in the United States threatened to upset the global economy.

Zhou noted that Chinese and U.S. officials, including Bernanke, have been in close consultations on monetary issues. And he said China was ready to react to any QE2-related speculative inflows of dollars, so-called “hot money,” that chases fast-growing markets such as China’s.

“Some worry that more hot money will flow into China,” Zhou said. “I would like to emphasize ... that capital accounts are still controlled.”

Zhou said currency arbitrage cannot be stopped entirely, but that any hot money that makes its way into China through “abnormal channels” eventually would be blocked by the nation’s monetary control mechanisms.

“We can have our own administrative measures to block the flow of this hot money,” he said, adding that officials could also bar the exit doors for hot money that manages to reach the mainland.

“We will collect and put this money into a pool so that it will not affect the economy,” Zhou said.

Zhou did not directly address the currency exchange-rate issues that have divided U.S. and Chinese policy makers. But he argued that his country is taking a slow, restrained “traditional Chinese medicine” approach to economic problems that may clash with Western remedies.

Washington has urged China to increase the value of its currency, the yuan, to improve the bilateral trade balance. China last summer launched a new phase of its ongoing yuan exchange-rate reform policy, pushing the currency higher against the dollar. But U.S. officials want appreciation at a faster pace. See this report on Caixin Online.