As US president-elect Donald Trump prepares to take office on January 20, a pivotal moment in US-China relations is unfolding. One day before his inauguration, TikTok faces a shutdown under legislation requiring its Chinese parent ByteDance to divest or cease its US operations.
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Trump’s declaration last month that the United States and China “can together solve all the world’s problems” signals a reset in bilateral relations. He showed he was open to practical cooperation in his first term, notably with the phase-one trade agreement, which established frameworks for financial services and intellectual property protection, and expanded economic engagement.
Trump’s new team reflects his commercial priorities: David Perdue, with extensive Asian business experience, as US ambassador to China; Wall Street veteran Scott Bessent as Treasury secretary; Jamieson Greer as trade representative; and Tesla chief Elon Musk – all signalling a business-focused approach.
Business-driven diplomatic breakthroughs are not without precedent. The resolution of US-Japan trade tensions in the 1980s offers instructive parallels. In the 1980s, Japan defused bilateral frictions through a strategic pivot towards direct investment in American manufacturing. Against strict US automotive import restrictions, Toyota’s 1985 decision to establish a factory in Kentucky proved transformative, creating jobs directly and throughout the local supply chain. Honda’s investment in Ohio reinforced this model, showing how production localisation could address trade imbalances while creating local employment.
Through this “Made in the USA” strategy, Japan balanced its trade surplus while boosting US economic growth. Though China’s economic power today far exceeds Japan’s in the 1980s, the lesson is clear: strategic investment transformed US-Japan relations. The same approach could stabilise US-China ties today.
Chinese companies in the US show how this investment-led approach can work. Fuyao Glass Industry Group’s US$1 billion commitment to Ohio represented more than a manufacturing investment – it has created thousands of jobs while establishing a model for Chinese industrial expertise to enhance American productivity.