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.

Republicans and Democrats alike have taken aim at both China and the Trans-Pacific Partnership, holding them up as the scourge of beleaguered American workers. America needs to save more and consume less, while China needs to save less and consume more. To succeed, both countries will have to overcome entrenched mindsets.

The US-China Business Council writes that instead of building protectionist walls, the U.S. should boost exports to China—the fastest growing market in the world—by pursuing policies that reduce the trade and market access barriers that China uses to keep out American manufactured goods, services, and agriculture products. The U.S. should also take steps to boost worker education and training, and improve competitiveness to ensure that America continues to have a strong economy.

Donald Trump’s supposed 45 percent tariff on Chinese imports would punish American consumers, violate international trade rules, and ignite a trade war. However, given when a Chinese company pays top dollar to acquire a public U.S. company, shareholders generally receive cash in excess of the stock price, which goes right to the pockets of U.S. households and retirees.

The U.S. Treasury department has released a report on currency policy and trade between its major partners, selectively picking rules from the IMF’s list of currency manipulations actions to its advantage. To fix the porous global currency system, the Obama Administration should sit down with China and re-write multilateral rules and create a diverse supply of safe globally traded assets.