The International Monetary Fund (IMF) said on Monday that China can manage its economic slowdown. The IMF noted should implement effective governance.

"This will require, in particular, hardened budget constraints for both state-owned and private firms, and continued strengthening of the financial supervision framework," the lender said.

The IMF also said that a slowdown in the Chinese economy could have a negative impact on its neighbours.

"Spillovers have been magnified by forces that extend beyond China's border - including falling commodity prices and the prospect of an increase in U.S. interest rates - which could produce downward pressure on Asian neighbours," the lender said.