Surprise announcement of US partner’s withdrawal from joint venture leaves the world wondering about American priorities, as political winds seem to blow needed infrastructure development off track.

In the long-term, a series of regional free trade agreements and the new global rules conform to China’s own economic restructuring and reform direction. China must enhance its level of liberalization in such areas as goods trade, service trade and investment, break through market barriers and get rid of institutional barriers. Making use of an open competition will promote the country’s upgrading in the global value chain.

Printing money and other misguided policies by developed economies in the wake of the 2008 crises were not successful in the long term. China’s policy of supply-side reform is applicable to other countries as well. Different countries may pursue different policies, but the overall theme should be to provide support to innovation, liberalize controls, encourage competition, and expand market access. Adopting this approach at the Hangzhou summit could contribute to rejuvenating the world economy and spur growth.

China’s six-month old investment bank, the AIIB, has been at pains to portray itself as a new multilateral economic institution governed by written rules and not merely a foreign economic policy puppet of China. However, problems may arise as the South China Sea tribunal ruling nears the official AIIB coming-out party.

South China Sea tensions appear to reveal the innate character and intentions of both countries. However, small inkblots, just like small islands, can only explain so much when assessing the overall China-U.S. bilateral relationship. These inkblots imperil a more comprehensive scrutiny of the larger geo-political canvas of the ongoing 8th China-U.S. Strategic and Economic Dialogue.

China’s economic growth has been slowing for six years – far longer than expected. Eager to stem the slide, Chinese government officials and economists have desperately sought a clear explanation pointing toward an effective policy response.

In 2015, China’s growth was again at the center of international headlines, but the focus was instead on the slowdown of the world’s second-largest economy. Much has been made of China’s adjustment to the “new normal,” even as US-China Business Council (USCBC) companies reported that China remains a priority market that delivers more growth than most other markets around the globe. But China is not a monolith, and local-level growth patterns suggest the emergence of the new model.

Only by totally abandoning the current growth model, which relies on credit investment and the real estate industry, can China’s economy escape the dangers posed by the potentially risky debts on its commercial banks’ financial sheets that may exceed $1.3 trillion. The majority of bank loans have flown into the real estate market, which will become instantly volatile if and when housing prices begin to slide.

China’s economy will constantly have to overcome contradictions and problems, as it explores new avenues for economic growth in a period of recurring volatility. Current indicators are positive, but as the economy steadies itself for the long term, it will fluctuate and experience reverses during the short term.

Ultimately, the regional order is shaped by economic relations. The current cooperation structure accommodates the interests and comfort levels of multiple parties, and opens up new space for compromise and dynamic balance through mutual adaptation and acceptance. China has gained invaluable experience in neighborhood diplomacy, and the country’s neighbors have gradually gotten used to China's rise.