Where China is concerned, successful implementation of the rebalance hinges upon a recognition in both capitals that neither country can hope to organize the future order in East Asia without the other. Chinese and U.S. leaderships say they subscribe to this axiom, but their respective behavior suggests that both sides seem reluctant to truly eschew zero-sum approaches. The notion of dividing Asia into discrete spheres of influence is implicit in many Chinese renderings of President Xi’s proposal for a “new style of major country relations.” To combat this tendency, the U.S. administration must put more energy behind the traditional strengths of the relationship while not shying away from elements that are harder to manage as a consequence of China’s growing power and influence.

The deep economic interdependence between the United States and China has long served as an important shock absorber to the relationship’s more competitive elements but we cannot take for granted that economic ties will continue playing this stabilizing role. Companies in both countries increasingly decry the lack of a level playing field in the other, creating the risk that investment climate recriminations could become explosive. The administration and the Hill should work together to reassure fearful Chinese investors by not threatening legislation that would put new restrictions on Chinese investment, and, more helpfully still, should send a clear indication that the door will remain open to interested firms where no genuine national security concerns arise.

The administration also must confront an emerging mindset among Chinese officialdom that foreign countries and businesses need the China market much more than China needs their investment. This notion helps to rationalize seemingly counterproductive Chinese behavior such as cyberespionage for commercial benefit and the use of legal and regulatory measures to pressure foreign firms. The administration can better respond by approaching Chinese behavior as a holistic and coordinated industrial policy rather than a series of discrete actions.

President Xi’s growing emphasis on shifting the locus of policymaking to Communist Party organs rather than those of the state also deserves greater attention. Xi has established several new Party “leading groups”, and these bodies oversee policy on areas of obvious U.S. concern—security, economic, and cyber issues just to name a few. The United States has no dialogue with these new entities or the senior Chinese officials running them. The lack of such access increases the likelihood of misperception regarding Chinese motives and intentions, suggesting President Obama should encourage President Xi to craft a mechanism for engaging these bodies.

Turning to the relationship’s more intractable elements, furthering the implementation of conflict-avoidance mechanisms should remain a priority in the military-to-military arena. The U.S.-China agreement signed last November on rules of behavior for safe military encounters at sea and in the air, beginning with establishment of guidelines for encounters between naval surface ships, has set a good foundation. In 2015, the United States and China should realize their commitment to complete an annex on air-to-air encounters. Efforts should also be made to reach agreement with China and other regional nations to extend the Code for Unplanned Encounters at Sea (CUES) to apply to coast guards, which would further reduce uncertainties and the risk of accidents. To ensure that the U.S.-China mil-mil agenda serves a consistent set of U.S. national security objectives, an oversight mechanism should be established to monitor the diverse bilateral engagements going forward.

In the East and South China Seas, the administration should develop an interagency plan to provide incentives to China to engage in cooperative, tension-reducing behaviors, and to impose costs for destabilizing, coercive actions. For example, China’s participation in the U.S.-led multilateral Rim of the Pacific (RIMPAC) naval exercises in 2016—preparations for which will get underway in 2015—could be expanded if China curtails provocative actions. The PLA could also be invited to conduct more trilateral military exercises with the United States and its regional allies like the survival skills drill held recently in Australia. Good behavior could be rewarded by an administration decision to have the U.S. secretary of defense attend China’s Xiangshan Forum in 2015. Bad behavior should result in denial of such rewards, increased U.S. military operations and activities in the waters around China, and the fostering of a growing web of intra-Asian security cooperation that excludes China.

U.S. interests with China and the broader region can be more effectively advanced by working more closely not only with allies and partners in Asia, but also with those in Europe. The United States should bolster coordination and cooperation with European nations to sustain a rules-based international order founded on open markets, respect for the rule of law, peaceful resolution of disputes, and free access to the global commons. The European Union could join the efforts of the United States and Japan to enhance maritime domain awareness of the Southeast Asian littoral nations. As an incentive for China to strengthen, rather than challenge, the existing world order, the United States and EU could coordinate with other members of the International Space Station (ISS) to offer the possibility of China joining some activities aboard the ISS with the prospect of eventual full membership. Greater EU involvement in Asia could pave the way for EU participation in the East Asia Summit, which is an EU objective.

This article is an excerpt and appears in its original form in “Pivot 2.0: How the Administration and Congress Can Work Together to sustain American Engagement in Asia to 2016”. The full CSIS report is available here.

About Bonnie Glaser

Bonnie S. Glaser is a senior adviser for Asia and the director of the China Power Project at CSIS, where she works on issues related to Chinese foreign and security policy. She is concomitantly a non-resident fellow with the Lowy Institute in Sydney, a senior associate with CSIS Pacific Forum and a consultant for the U.S. government on East Asia.

About Chris Johnson

Christopher Johnson is a senior adviser and holds the Freeman Chair in China Studies at the Center for Strategic and International Studies (CSIS). He served in the U.S. government’s intelligence and foreign affairs communities for nearly two decades, during which he worked as a senior China analyst for the Central Intelligence Agency (CIA) and as intelligence liaison for two secretaries of state and their deputies.