Thomas B. Moore, Acting President of China Institute, addresses his remarks to the 10th China Institute Executive Summit (MATT GILLIS)

"The things we say to each other turn out to be policies, because they get embedded in political systems, the 500 million bloggers in China read this stuff, and they are very nationalistic. We are both so much better than that," Owens stressed.

The solution to these larger political challenges may be on the micro level, said Tom Easton, American Finance Editor for The Economist.

"I don't think there is any interest on a national level to solve any of these political problems. It's going to be done on a micro level--business-to-business--and in that sense there is tremendous interest and cooperation," Easton said, adding that small business ventures can form a powerful foundation for change.

"There are no two countries in some ways closer in thought and spirit than China and the United States and that can flower on a low level that will become a big deal," he added.

Part of that shared spirit is the common pitfall of nationalism, Easton explained. The rhetoric of some on both sides can harm economic development. Both sides need to promote the theme of friendship.

What investors want?

On the micro level, there is massive interest from investors on both sides, said panelists. Both Chinese and U.S. investment funds view the opposing markets as ripe with opportunities, but how are their specific needs evolving?

On the Chinese side, one growing request centers around "diversifying risks, both on a commercial level as well as an individual high-net worth one," said Wendy Cai-Lee, Senior Managing Director and head of Eastern U.S. business for East West Bank. "Secondly, immediate and strategic value to grow business domestically in China."

Acquisitions that strengthen a Chinese company's supply chain--downstream and up--are extremely valued, she added.

"They are looking for resources, technology, the global brands, additional channels outside of their domestic market. And, in recent months, everyone has seen increasing interest in commercial real estate as well as personal real estate investment," Cai-Lee said. Financing these types of deals has become a hot business for banks.

Information technology has ranked as the highest investment area by East West Bank, she said, as well as industrial electronic equipment, energy, automotive, aviation, consumer products and services, as well as financial services. However, "we anticipate that commercial real estate will overtake them all very quickly," she added.

On the U.S. side, investment interest has shifted from low-cost labor in China to the consumer market, especially the shift to online retail, said Harvey Fine, Managing Director for Global Investments & Strategies for Fosun Group.

"There are 800 million mobile Internet users in China," Fine said, "almost two-and-a-half times the U.S. population."

While this mobile-empowered group of Chinese consumers is growing, infrastructure in payment and fulfillment systems is lagging, an area where Fosun sees an opportunity for development high returns, Fine said.

Luxury continues to be an important market as China spews out hundreds of newly minted millionaires along with its economic development. Entertainment, luxury resorts, private hospitals and high-end retail continue to attract strong investment.

When China's GDP growth hit double-digits, investors could buy an interest in any sector and make money, Fine noted. Now, as economic growth settles at around 7 percent or 8 percent, U.S. investors have to be more strategic.

"Now you have to differentiate not only what sectors, but also which geographies are growing. It's no longer an export-driven growth, it's a consumer-driven growth so we have to adjust accordingly, though we still believe the market is strong," he said.

After China held the Third Plenum of the Communist Party of China Central Committee, China watchers expect the focus to be on financial reform, said John Allen, Chairman and CEO of Greater China Corporation. Bilateral trade will also heat up between the United States and China. This government support signals a further opening of investment opportunities.

"Invest in the seasons, not in the weather, because the weather changes every day, but the seasons are predictable," Allen said, quoting super-investor Warren Buffett.

Such encouragement aside, Allen acknowledged serious challenges in education, housing, healthcare, and pollution along with the mass migration of rural Chinese into cities.

"These problems have to be dealt with, but the flipside is the tremendous opportunity created," he said.