China tried to move forward when the US was perceived to be weak. But the US is far from weak. Message sent.
There is an easy way out: Both sides can just keep the positions they had before but they cannot move ahead something China tried to do with threatening a Taiwan invasion. China has just seen in Ukraine that invading is no walk in the park while Taiwan recently got armed up. At the same time the US is getting prepared to move away from trading with China, quite different from Europe currently, in case of embargoes needed and out of growing strategic and espionage concerns.
China needs the western technology and hard currency income and its global supply lines are quite vulnerable, big navy or not. It cannot risk to end up being the next outlaw. There are enough domestic issues from finances to real estate, a very undeveloped inland and minorities the party will have to deal with.
Therefore it's time to calm down again and stay with the Status Quo.