The Catalan giants top the Spanish top-flight standings, having won all but one of their domestic games this season.
Barca are also guaranteed of a spot in the knockout phase of the UEFA Champions League with 10 points from their first four Group H fixtures.
Despite this, they have been accused of lacking fluidity under new coach Gerardo Martino and, although he accepts his side can still improve, Xavi believes Barca are still outperforming all of their competitors.
"He (Martino) is very intelligent and understands the club, where we come from," he told Mundo Deportivo.
"Perhaps now we are not at the level of a '10', but we are still remarkably high. We can still reach excellence, but we are doing fine.
"We have to work to reach that level again. But the question we should ask is - what team is playing better than Barca? No one is.
"We are in good form, we have improved and are progressing without drama and understand that there are discussions around the club and that is this club's requirement."
Barca could be without Lionel Messi for the next two months as the Argentine's hamstring woes go on.
Xavi accepts that Messi, who has suffered his fourth muscular injury in the past nine months, will be a crucial loss, but has backed the attacker to be back to his best when fit again.
"He is a very tough guy, mentally strong and he will return," the 33-year-old added. "He has had four or five years playing everything, remaining decisive in all the games, scoring two or three goals in many of them.
"He is the best in the world but the body says enough and so he must stop. The most important thing is that he recovers well.
"For us, he is the number one and we need him a lot. In January he will return and prove to be the best."
