As the two largest economies, China and the U.S. are trying to formulate a new-type of major-country relationship. The establishment of a free trade area should be an integral part of such relationship. This will be a challenging mission, but the rewards will be tremendous.

Discussion of whether or not China will lead the world through a “third industrial revolution” ignores the China’s excess supply of low quality products, polluted air and water, and an information sector that isn’t completely integrated with manufacturing. China still has a ways to go in industrializing while facing changing international circumstances.

While the TPP is not attractive to several APEC economies because of its U.S. dominance, the proposed FTAAP, which embraces all of the 21 APEC economies, is meant to be an all-inclusive, all-win trade initiative that represents the largest single trade liberalization in history.

The renminbi has appreciated sharply over the past several years, exports are sagging, and the risk of deflation is growing. Under these circumstances, many suggest that a reversal in Chinese currency policy to weaken the renminbi is the most logical course. That would be a serious mistake.

European quantitative easing policy lead to the depreciation of the RMB exchange rate, but this depreciation is being carefully and intentionally observed by China’s central bank to observe the actual impact on the Chinese economy. A more flexible and internationalized RMB will be better to guard against depreciation.

A Greek exit from the EU would lead to increased instability in Europe. Yet, it may present opportunity for China, the U.S. EU, and IMF to engage together in a summit to safeguard the stability of the Eurozone and shape a global norm on tax evasion and tax heavens that have adversely affected insolvent states like Greece.

China’s “new normal” economic development is necessary to achieve more valuable GDP growth at a more reasonable speed and sustainability. Key components of these reforms will be decreased growth, higher-level manufacturing, narrowing of rural and urban wealth, capital exports, a consumer middle-class, and new small businesses.

China’s economic slowdown fueled by a real estate bubble, excessive debt, and manufacturing overcapacity could benefit from a change of structure. China’s service sector is now a greater percent of its economy than manufacturing and construction sectors, and with some additional government spending on social services, the economy could see long-term growth.

Falling oil prices present challenges for the competitiveness of China’s own oil and gas sectors, and while providing short-term benefits for production, poses additional deflationary risks. However, there are opportunities for Beijing to support oil companies in acquisitions, and further its own reserves.

China’s central bank will maintain a neutral stance in 2015, in order to stabilize the stock market and provide support to the economy, writes Yi Xianrong.