Despite foreign and domestic challenges facing the Chinese economy, including the recent turbulence in the stock market, former Australian prime minister Kevin Rudd has full confidence in the world's second-largest economy.

"I think the Chinese economy has very strong fundamentals," Rudd said in an interview in Beijing with China Daily and other Chinese media earlier this week.

Rudd, now president of the Asia Society Policy Institute, was prime minister from 2007 to 2010 and held the office again in 2013.

He said China's fundamental economic strength in various aspects, including the economic system, foreign reserves and public finance, "are all in good order".

He said that "China is still growing", despite difficulties including the weak global market and "some domestic challenges, including in the equities market".

"So we need to take a deep breath and put everything into context. China is still contributing to global growth. Many economies in the world are not.

"Yes, there are problems, but none of the problems are incapable of solution," he added. "I'd rather say that in every country of economic development, no one ever has a smooth ride. Most of these rides are rough."

He said the process of development is not a theory but a reality that involves people and institutions. "That's not only an international story, that is also a China story."

On President Xi Jinping's visit to the United States later this month, Rudd said that the two great countries should "look at the big picture in a long term and work according to that".

"You have to manage daily challenges well, but you also have to look at the big picture, or you won't be able to do big things," he said in Chinese.

Rudd said the biggest obstacle in China-US relations is that both countries need to decide what future they want for their relationship, which he described as "absence of a common strategic narrative".

"I think the two leaders are capable of working on that," he said.

Asked to describe the current relationship between China and the US, Rudd said: "It is positive, it is challenged, and it is a relationship only limited by imagination."

As for the future of the relations, he said that they should be "creative and cooperative, in global and regional problem solving, and constructive - that is, building things together".

He also said it was wrong for Washington to oppose the China-initiated Asian Infrastructure Investment Bank. But since it has become a reality, he suggested that the AIIB, the World Bank, the Asian Development Bank and private capital in the US and China should work together on common infrastructure projects in Asia.

[email protected]