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China's external position in 2019 was broadly in line with the level "implied by medium-term fundamentals and desirable policies," the International Monetary Fund (IMF) said in its new External Sector Report released Tuesday.

"Policy reactions have appropriately prioritized support to the most affected households, workers, and firms, with increased focus on further supporting the demand recovery," the IMF said.

The multilateral lender said China has room to provide more policy support if needed, including on green investment and strengthening the public health system and social safety net.

"If imbalances that existed prior to the COVID-19 outbreak persist in the medium term, policies to achieve a lasting balance in the external position should include a gradual fiscal consolidation and successful implementation of the authorities' reform agenda, which addresses distortions and supports rebalancing," the report said.