Ok, I did some scaling and placing of vertices and now the cloth doesn't intersect the body upon relaxing. However, when I animate the body, in this case, rotating an arm 90 degrees inward, the sleeve stretches a lot and intersects the body. The movement in the sleeve also affects the rest of the shirt, which then collapses into the body in a few places. Also, the shirt "bobs" up and down a lot, which is quite unnatural.