By Christopher K. Johnson & Bonnie S. Glaser

Regarding China, 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. Both leaderships say they subscribe to this axiom, but their respective behavior suggests otherwise. Whether it is the Obama administration’s clumsy opposition to the Asian Infrastructure Investment Bank, or President Xi Jinping’s allusions to “Asia for Asians,” both sides seem reluctant to truly embrace the avoidance of zero-sum approaches or the bent toward dividing Asia into discrete spheres of influence implicit in many Chinese renderings of President Xi’s proposal for a “new style of major country relations.” To combat this tendency, the 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 keep the competitive elements in the relationship from tipping it over into conflict. The numbers remain compelling, with trade volumes and investment in each other’s country dwarfing whatever could possibly have been imagined at the time of normalization. Still, we cannot take it 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 as explosive an issue as China’s currency valuation was in years past. Although there is little more Congress can do legislatively to further enable Chinese investment, 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. They should elicit the opinions and support of state governors in this process, given their firsthand experiences with welcoming Chinese investment and the strong appetite in many of their jurisdictions for more.

The administration also must confront what appears to be an emerging mindset among Chinese officialdom that foreign countries and businesses need the China market much more than China needs their investment. If true, such a notion helps rationalize seemingly counterproductive Chinese behavior such as cyber espionage for commercial benefit and the use of legal and regulatory measures to pressure foreign firms. Implicit in such actions is the judgment that the draw of China’s vast economic potential outweighs the desire of firms — and governments — to impose costs on these behaviors. The administration can better respond to this thinking by approaching Chinese behavior as a holistic and coordinated industrial policy rather than a series of discrete actions. A more aggressive effort to advance negotiations on a Bilateral Investment Treaty also would facilitate this goal, presuming, of course, that the Chinese side demonstrates its seriousness by promulgating a short negative list when the two sides formally exchange lists in early 2015.

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. China in its official media has highlighted the importance of several new Party “leading groups” that have been established under Xi’s leadership, and these bodies oversee policy on areas of obvious U.S. concern — security, economic, and cyber issues just to name a few. Regular communication between our functional agencies has long been a mainstay of bilateral cooperative efforts, yet the United States has no dialogue with these new Party 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. Congress, or, perhaps more realistically, the Republican and Democratic National Committees, also may play a role in connecting with these institutions through the promotion of party-to-party dialogue and exchanges.

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 People’s Liberation Army (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.

China’s accretion of greater power, especially economic muscle, has been accompanied by diminished willingness to respond to the concerns of the international community on human rights. The United States must continue, however, to pursue a values-based foreign policy. Specifically, President Obama should continue to raise human rights concerns with Chinese president Xi Jinping and senior U.S. administration officials should periodically meet with Chinese dissidents and their families, and with human rights advocates. President Obama should continue to publicly urge Beijing to respect universal freedoms within Chinese borders. At each high-level meeting, China should be encouraged to adhere to international standards on human rights that are relevant to the subject being discussed. As an expression of support and concern for China’s minorities, existing initiatives that promote Americans to study in China (such as the 100,000 Strong Initiative) should be encouraged to set aside proposal funding for students and experts to study Tibetan, Uighur, and other ethnic minority languages, and create opportunities for them to do so in their native geographical areas, including Lhasa and Urumqi.

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.

Mr. Christopher K. Johnson is a senior adviser and holds the Freeman Chair in China Studies at CSIS. Ms. Bonnie S. Glaser is Senior Adviser for Asia within the Freeman Chair in China Studies at CSIS. Follow her on twitter @BonnieGlaser.

Interesting in learning more? Watch video of the first panel at CSIS’s Asia Pacific Forecast 2015 which was held on January 29.

A version of this article first appeared in the new CSIS publication Pivot 2.0: How the Administration and Congress Can Work Together to Sustain American Engagement in Asia to 2016. Read the full report here.