The key legal framework for the China-initiated regional multilateral institution – the Asian Infrastructure Investment Bank (AIIB) – was inked by representatives of the bank’s 57 founding members in Beijing last Monday. For China and the U.S., the AIIB is not about win-lose. A win-win result can be achieved if both sides are more open-minded.

East Asia has avoided major military conflicts since the 1970’s. It is owing to the maturity and good sense of most of the states of the region, their emphasis on economic growth over settling scores, and the American alliances and security presence that have deterred military action and provided comfort to most peoples and states. But above all else, it is due to the reconciliation of the Asia-Pacific’s major powers, the United States and China.

The past two years witnessed the Chinese leadership enunciating a “Chinese Dream” visions for the nation and offering to share the prospects of prosperity and stability with the entire Asia Pacific region and beyond.

China-U.S. competition and rivalry in the South China Sea is structural, strategic, and irreconcilable. Preventing conflicts there from damaging bilateral ties is a practical imperative for decision-makers in both countries.

There is increasing commentary among the chattering classes about the importance of making China “pay a price” for its aggressive behavior, but the possibility of miscalculation and misjudgment makes it even more important that all participants step back from confrontation.

"Issue-specific partnership, instead of alliance" may become an outstanding feature of the three countries relations in the future, but their varying relationships challenge their ability to work together to meet global problems and coordinate global governance.

In its eagerness to reassert its supremacy in the Asia Pacific, Washington risks losing its balance amid competing strategic goals, by forcing a position that is neither fair nor legally supportable in a region far from its shores.

While Washington has mixed feelings toward China’s rising international status, many American scholars see no convincing reasons for the United States not to support or participate in China’s initiatives like the modern Silk Road and the Asian Infrastructure Investment Bank. That’s a good omen for the concept of “a new type of major country relations,” as proposed by Chinese President Xi Jinping, to avoid confrontation between big powers and to blaze a new trail of mutually beneficial cooperation.

Despite obstacles, the White House continues to push preferential trade deals in Asia and Europe. But neither can reverse the erosion of U.S. innovation and in Asia Pacific the proposed pact is more likely to divide than unify the region.

The ongoing dispute threatens to drive U.S.-China relations permanently in a far more adversarial, zero-sum direction and destabilize the region.