Relations between China and the United States have become decidedly testy in recent weeks. Sharp disagreements over policy toward North Korea and the status of disputed islands in the South China Sea especially have raised tensions.

The spat regarding North Korea erupted in the aftermath of the sinking of the South Korean naval vessel Cheonan. Obama administration officials were surprised and disappointed at China's reaction. U.S. policy makers were already annoyed at Beijing's long-standing reluctance to pressure its ally regarding its provocative nuclear program. But China's failure to condemn Pyongyang's rogue behavior in the Cheonan episode was seen as inexcusable.

Nevertheless, the Chinese government did not waver in its support of North Korea. Beijing insisted that the UN Security Council resolution condemning the Cheonan sinking not name Pyongyang as the perpetrator. Washington reluctantly accepted such language rather than risk a Chinese veto, but U.S. officials were not happy, and they publicly criticized China's stance.

While that dispute was flaring, tensions erupted regarding the South China Sea. At an ASEAN Regional Forum meeting in Hanoi, Secretary of State Hillary Clinton asserted that “the United States has a national interest in freedom of navigation, open access to Asia's maritime commons, and respect for international law in the South China Sea.” She went on to advocate a binding code of conduct for the various nations, including China, that make claims to disputed islands in that body of water. Clinton also proposed the development of an institutional process for resolving those disputes, and indicated that the United States wanted to participate in that process.

Beijing's reaction was swift and hostile. Foreign Minister Yang Jiechi portrayed Clinton's remarks as “an attack” on China. Questioning Washington's sincerity on the issue, he stated that “nobody believes there's anything threatening the region's peace and stability.” Finally, Chinese leaders made it very clear that they believed the United States had no legitimate role to play in resolving competing territorial claims in the South China Sea.

Beijing's uncooperative attitude has played into the hands of hawks in the United States. Writing in the pages of the Wall Street Journal, American Enterprise Institute scholar Daniel Blumenthal praised Clinton for standing up “to China's bullying.” But he regarded such surprising fortitude merely as a good beginning. He went on to propose that the United States orchestrate a de facto diplomatic and military containment policy against Beijing.

China's behavior has become a matter of understandable concern. But the United States must pick its battles in terms of taking hard-line stances. We can't prevail on every issue. Many of the same experts and pundits who want the Obama administration to adopt an uncompromising attitude on territorial claims and navigation rights in the South China Sea and pressure China regarding its lack of effective help regarding North Korea also want Washington to confront Beijing on such matters as Taiwan, China's currency valuation, the treatment of domestic dissidents and the status of Tibet. There is a marked unwillingness to set priorities.

Beijing's failure to rein in an increasingly reckless Pyongyang is a legitimate security issue for the United States. So too are China's breathtakingly broad claims in the South China Sea. China regards virtually that entire sea as its territorial waters—something that, if enforced, would have profound implications for international navigation and commerce. As the world's leading maritime and trading power, the United States cannot tamely accept such a brazen attempt to change the status of international waters through which much of the world's commerce flows.

But even on those issues, Washington needs to understand that some concessions may need to be made to secure Chinese cooperation. It is unrealistic to expect, for example, that China will incur the risks involved in pressuring North Korea if the United States offers nothing in return. Beijing worries that coercing Pyongyang could cause Kim Jong-il's regime to unravel—perhaps even cause the North Korean state itself to implode, much as East Germany did at the end of the 1980s. That development would produce massive refugee flows into China, and possibly result in the emergence of a united Korea closely allied to the United States and with a U.S. military presence on the peninsula.

If we want China to take on serious risks to tame North Korea, we have to offer some incentives. Promising to assist Beijing in dealing with the probable refugee problem would seem to be the absolute minimum. In all likelihood, Chinese leaders would also want a commitment to phase out American military bases in Korea if the North Korean threat were neutralized. Yet Washington has not offered the slightest hint of concessions on either issue. U.S. officials implicitly expect Beijing to accept the risks entailed in getting tough with Pyongyang but receive nothing at all in return.

Likewise, getting China to be more restrained in its South China Sea territorial claims may require concession on other issues. A trade-off might involve recognizing more limited Chinese claims in that area, combined with a willingness to cut back on U.S. arms sales to Taiwan. There may be other possibilities, but the underlying point is that Washington must be prepared to be flexible.

Finally, if we are going to focus—as we should—on issues that have direct relevance to important American interests, U.S. policy makers need to de-emphasize topics that are less relevant. However much China's domestic human-rights policies might offend us, we can do little about them. And they are not especially pertinent to America's economic and security interests. That is equally true regarding Beijing's regrettable treatment of Tibet. We're simply not going to prevail on such issues, and turning them into acrimonious disputes needlessly riles the crucial U.S.-China relationship.

Setting priorities and understanding that diplomatic bargaining and a willingness to make concessions is usually necessary to get desired results on important issues is the mark of an adept, effective policy. Unfortunately, that realism seems largely absent in the American foreign-policy community regarding relations with China.

Ted Galen Carpenter, vice president for defense and foreign-policy studies at the Cato Institute, is the author of eight books and more than four hundred articles on international affairs. His latest book is Smart Power: Toward a Prudent Foreign Policy for America. He is also a contributing editor to The National Interest.