* Fed's decision on QE2 to depend on economic data -Lipsky
* Strauss-Kahn: capital controls can be useful in Asia
* China's Yi: as trade surplus narrows, yuan will be stable
(Refiles to give full title in paragraph 1)
By Farah Master and Kevin Yao
SHANGHAI, Oct 18 (Reuters) - A fresh round of quantitative easing in the United States is not a done deal and will depend on the economy's performance, the IMF's First Deputy Managing Director, John Lipsky, said on Monday.
Speaking at the end of a meeting of global finance officials in Shanghai, Lipsky also downplayed worries about a "currency war", saying that bickering about exchange rates would give way to a more coordinated approach between countries.
"I don't think that there is any clarity whether first of all the Fed is going to act," Lipsky said, when asked about the prospects for a new phase of quantitative easing, or QE2, in the United States.
"It seems they have left it dependent on new data," he said.
Worries are mounting in some emerging markets that more loosening by the Fed in the form of government bond purchases could lead to a wave of destabilising capital inflows, a central topic of the one-day forum in Shanghai.
Dominique Strauss-Kahn, managing director of the International Monetary Fund, said Asian countries would face a challenge if capital flows lead to exchange rate overshooting, credit booms or asset price bubbles.
But he noted that they had many policies in their toolkits to deal with the risks: "lower interest rates, reserves accumulation, tighter fiscal policy, macro-prudential measures, and sometimes capital controls".
There is evidence that China, long a darling of investors, has been on the receiving end of strengthening cash inflows in recent weeks.
Xia Bin, an academic adviser to the Chinese central bank, told Reuters on the sidelines of the conference that Beijing needed to bolster its capital controls.
"The United States is implementing loose monetary policy, which is irresponsible and generating capital flows. That is why we are talking about capital controls in Asia," he said.
THE YUAN DEBATE
But Yi Gang, a vice governor of the central bank, said the issue was not so clear-cut, noting that capital controls could be harmful and so therefore should be limited.
China already has one of Asia's most tightly controlled capital accounts, but the country's foreign exchange regulator has vowed to do even more to plug holes.
Flows to China are in part chasing yuan appreciation, which has quickened in recent weeks alongside a rise in foreign calls for a stronger Chinese currency. Yi reiterated Beijing's commitment to reform the exchange rate by making it more flexible.
He said that reform would be gradual and suggested that the yuan, which is formally known as the renminbi, was already near to its fair value.
"We are fully capable of keeping the renminbi's exchange rate basically stable at a reasonable and balanced level, given that China's trade surplus is narrowing," Yi said.
U.S. and European officials say Chinese exporters have an unfair advantage because Beijing keeps the yuan undervalued. Beijing won something of a reprieve from that pressure on Friday when the U.S. Treasury Department delayed a decision about whether to label it a currency manipulator.
With China moving slowly on yuan reform, U.S. easing leading to a softer dollar and Japan intervening to weaken the yen, some officials and investors have expressed fears about the onset of a currency battle.
The IMF's Lipsky said it was simplistic to look just at exchange rates in rebalancing the global economy. A broader range of policies was needed to get countries with large trade surpluses, such as China, to spend more.
"This is the right way to view this. This is also the way to ensure that there will be not be a currency war but a coherent and cooperative approach," he said. (Writing by Simon Rabinovitch; Editing by Ron Askew)