In one of his expansive speeches, President Xi Jinping assured his audience that “China’s economy is an ocean …”

I was often reminded of that moment while looking at vacuous claims that some cyclical or structural problems would sink the economy that is home to nearly one-fifth of humanity.

China’s naysayers are impervious to the fact that the country’s economic growth sharply accelerated this year from 4.5% in the first quarter to 6.3% during the spring.

That is the best G20 economic growth performance – based on stable prices, relatively sound public finances, a current account surplus of 2.5% of GDP and a global wealth in an international investment position of $2.5 trillion.

Indeed, nobody says better.

And there is room for more. China’s monetary policy can expand – as strongly suggested by an ongoing price deflationary bias. The broad money supply and the bank lending are growing at double-digit rates (12% and 11% respectively), but the real (i.e., inflation adjusted) weighted average lending rate of 4.6% is much too high for this stage of the business cycle.

Stronger monetary support and welfare reform

That should be corrected in the context of more stimulative mortgage lending policies to decrease excessive supplies in real estate markets.

Such a measure would also boost household spending because new home purchases lead to rising demand for consumer durable goods (furniture, housing appliances, automobiles, etc.).

China’s reported fears of creating a new round of housing market bubbles seem unwarranted in view of unused residential capacities and waves of population shifts to urban centers. China’s urbanization rate of 64.7% is expected to reach 80% over the next ten years.

On the fiscal side, some tax and administrative fee cuts are more structural in nature than the usual cyclical tax reductions and public spending increases.

There is also little room for a safe fiscal stimulus because the consolidated public sector balance sheet shows an entrenched deficit of 7% of GDP.

 That means that most of the support to aggregate demand should be channeled through declining credit costs until inflation begins to move back toward its long-term trend of 2%.

A long overdue welfare reform should also be stepped up by cutting tuition fees, or, preferably, by offering a free education in publicly funded institutions. Similarly, the public health system should be moving toward a universal healthcare coverage.

Those reforms would be consistent with China’s political objectives of creating a “moderately prosperous society.” Apart from that, a generous welfare system would significantly reduce precautionary savings, leaving more purchasing power for discretionary consumer spending. And that, in turn, would provide a strong support to a steady and sustained economic growth.

Move on from a stalemate

But China is far from that. As things now stand, public sector investments in infrastructure will remain a key segment of aggregate demand. In a relentless quest for modernization and connectivity, China is building some of the world’s finest railways, highways, air and sea ports.

That, and other stimulus measures already under way, will be enough to keep China’s economy on its potential and noninflationary growth path currently estimated in a range of 5% to 5.5%.

In spite of that, pessimism and dismissive comments about China’s economy and policies will continue as part of an increasingly hostile U.S.-China political environment. Official relations between world’s two largest economies are stuck in a crisis management, centering around Beijing’s contested maritime borders, the status of Taiwan, and an unstable armistice on the Korean Peninsula.

None of those problems are new. The transcript of a White House press conference on September 25, 2015, shows that Obama and Xi discussed them at length. Xi was unyielding about border claims in the South China Sea, Taiwan was an internal matter for China, and the nuclear disarmament of North Korea was a topic for further consultations, involving, as it turned out later, a step-by-step approach, with lifting of sanctions in exchange for Pyongyang’s concessions.

Positions perfectly unacceptable to Washington.

But undeterred by that bellicose stalemate, China wants to maintain normal trade and investment relations with the U.S. and with America’s European and Asian treaty allies.

Even more surprising is to see Beijing’s irritation at the U.S. and E.U. de-risking -- some even call it “de-sinicization”-- approach to China trade, with a ban on dual-technology exports to China.

The way out of this is for Beijing to accept that the U.S. and the E.U. “strategic and systemic rivalry” with China will expand and intensify. China, therefore, could find it more productive to follow the rule of reciprocity, while promoting trade and investment relations with countries and regions welcoming its concepts of “multilateralism” and “win-win cooperation.”