BEIJING After a rough start to the year last weeks U.S.-China Strategic and Economic Dialogue the mammoth biannual consultation led by Secretaries Hillary Clinton and Timothy Geithner capped off a three-month period that has returned the Sino-U.S. relationship to a state of fragile equilibrium. Strategic mistrust remains pervasive as the continued breakdown in military ties demonstrates and there are few issues on which the two sides genuinely see eye-to-eye. But the missteps of 2009 provided some important lessons for better management of future differences.

It is clear that China has no inclination to take on greater responsibility for maintaining the global order. Quite the opposite Beijing feels better able to resist international pressure than it has in the past sees calls for China to take up new burdens as a trap and intends to use its strengthened position to focus more intently on domestic policy. Nevertheless the Chinese leadership has shown no stomach for a full-on fight with the United States. In the face of a toughened U.S. stance in 2010 Beijing blinked first. This reflects both successful diplomacy from the Obama administration and a China that is more realistic about the scope of its newfound power.

But while Beijing reaffirmed the importance of the U.S.-China relationship there is only so much that can be delivered through bilateral bargains. With international unease over Beijings assertiveness growing the moment is still ripe for Washington to build a China policy that is more global in scope more resilient to future shifts in the balance of power and more effective in exerting pressure across a wider range of issues.

Last year saw China emerge from the global financial crisis emboldened but lacking a well-calibrated sense of the limits of its strength. Some of the conciliatory gestures made by the Obama administration encouraged a more inflated sense in Beijing of Chinas power and U.S. dependency than was borne out by reality. This translated into an openly uncooperative Chinese stance on major policy areas and a brash diplomatic manner. The Copenhagen climate summit saw its apogee but it was far from an exception.

The reality check came at the beginning of the year with an announcement of U.S. arms sales to Taiwan a presidential meeting with the Dalai Lama and rumors of a looming Treasury citation for currency manipulation. After some initial rhetorical bluster including threats to sanction U.S. companies Chinas leadership looked into the abyss as one American official put it and decided to pull back. A March trip from Deputy Secretary of State James Steinberg and NSC Senior Asia Director Jeffrey Bader paved the way for a carefully choreographed mutual de-escalation before Chinese President Hu Jintaos visit to Washington for the nuclear security summit.

Crucially while the moves on the U.S. part were mostly about atmospherics Chinas were on substance. The most significant has been on Iran where Beijings agreement to a new round of sanctions has so far held through the Brazil-Turkey fuel announcement described by Chinese analysts as the perfect excuse to pull back. Instead China has moved closer to final sign-off last week producing its list of Iranian companies for targeting in the draft UN Security Council resolution. Chinese signals on currency revaluation have become consistently positive even if the euro crisis has derailed progress before the upcoming G20 meeting. And while Chinas response to North Koreas attack on a South Korean destroyer in late March has been painfully slow leadership advisors suggest that China will at the very least not block a UN Security Council condemnation of Pyongyang.