This is a book series that I read in middle school.
I remember the very beginning of the story started with a dragon shape shifting into a little old lady in order to walk through a town. She used a magic pearl that was hidden behind her ear. And when she shape shifted it hurt especially to get smaller instead of larger.
Somehow she meets an orphaned boy, I can't remember how. But they travel together and she shifts to the size of a cat. They go in search of her family because she was exiled a long time ago and find what used to be an ocean is now just salt... because something stole the water. The salt is so white it almost blinds them.
I know a trickster monkey god messes with them and ends up traveling with them. And I remember the boy getting stuck in an old magic trap. Used to trap this creature that was only skin and he needs the boy's help. The boy figures out they can escape in the pots because they are made of clay and the barrier lets clay, sand and water pass through.
At one point they all shape shift into horses to avoid being noticed by a human army camp.
And I remember at the very end of the books they find out that the boy is actually a king and how great of a king he will be because he can laugh at himself.