The Chinese are unlikely to budge on their demand for an end to surveillance flights, at least not initially. Given those assumptions, the two sides may be able find agreement on some rules of engagement among pilots that could create a solid basis for avoiding future accidents. Yes, these meetings were really just an opportunity for each side to elaborate on its positions. The first session or two was always going to be about posturing. At least each side has a better idea of the other's concerns.
Bad vibes feed bad vibes, and the atmospherics right now are very negative.
But as the issue migrates off the front pages, it becomes easier for the diplomats of each country to negotiate issues in a less emotion-driven way than when they're communicating through the media. That's a strong signal that Washington wants to prevent the fallout from the Hainan incident from determining the course of U.S. Chinese relations. Yes, the Taiwanese have recently been quoted as saying they don't really need the Aegis right now, and that is making it easier for Bush to hold off on the sale. The administration can tell the Republican right wing that it's not denying Taiwan, but rather making a decision on the basis of the island's immediate defense needs. If it had gone through, Beijing would have seen the sale as a provocation.