With Donald Trump’s return to the U.S. presidency, the world watches with anticipation and trepidation as he revives his bold promise to end the Ukraine and Middle East crises swiftly. Yet, in China, the focus isn’t merely on these distant conflicts. For Beijing, which had a really tough four years during Trump’s presidential tenure, the most pricking question is how the future of Sino-U.S. relations will unfold under his leadership, with ramifications that may extend far beyond the boundaries of the U.S. and China.

U.S. President Joe Biden also continued the containment strategies with the same avidity against China and tried to ramp up boundaries around trade and technology with the narrative of "small yards and high fences." Under the Biden administration, the U.S. pursued a strategy that, despite diplomatic rhetoric, appeared designed to hem China in on all sides. Ostensibly aimed for "stability," policies have deepened the trade war while urging American allies to build a united front against China. In fact, the Biden administration has intensified efforts to limit technology exchanges and augment trade barriers – essentially pursuing a strategy of economic decoupling to obstruct China’s financial journey. As Trump steps back into the Oval Office, speculations are rife that Sino-U.S. relations will enter another testing phase in the coming days.

In the race for American votes, both former president and Republican candidate Donald Trump and Vice President and Democrat candidate Kamala Harris heavily leaned on the "China card" as if Beijing were some convenient scapegoat for Washington’s troubles. Trump’s promise to slap a whopping 60% tariff on Chinese goods and strip China of its "most favored nation" trade status is only his opening salvo. He talked of further bans on U.S. investments in China and blocking semiconductor exports, as if isolating China could solve the complexities of global trade. Harris, meanwhile, also offered little indication of change; her stance suggested she would carry on the Biden administration’s hard-line approach, sticking with tariffs and tightening the screws on U.S. technology flowing to China.

During the election campaign, both extensively talked about the "overcapacity" issue in China, blaming the decline of the American auto industry on the import of cheaper Chinese-made electric vehicles. In a bid to court voters, particularly autoworkers in the Midwest, they painted China as the culprit. Biden’s administration tightened restrictions on these imports, while Trump threatened hefty tariffs on Chinese-made cars.

However, the narrative doesn’t hold. In reality, the U.S. imported just over 40,000 cars from China in the first half of 2024 – most of which were manufactured by American giants like Tesla and Ford in China. The real issue isn’t China’s overcapacity but how American manufacturers have chosen to globalize production for efficiency. But here’s the irony: The souring of Sino-American ties wasn’t birthed in the factories of Guangzhou or by policies out of Beijing. Rather, it’s the product of American hawks who’ve shaped a narrative of China as an adversary, a strategy some U.S. voters barely question. After all, foreign policy in America is often crafted not by the people but by an elite who understand that stirring up public opinion usually serves their ends. The result? A foreign policy that prioritizes fear over constructive engagement with China.

Xi's cautious pragmatism

However, Chinese President Xi Jinping extended a hand of cautious optimism to Trump following his election victory, urging a return to the often delicate but vital diplomacy between China and the U.S. Xi’s message, an amalgamation of both a recognition of the stakes and a call for pragmatism, could be interpreted as an olive branch as he emphasized nurturing cooperation between the two global powers for mutual and global economic stability and prosperity. "History has shown," Xi noted, "that a stable, sustainable China-U.S. relationship aligns with not only our interests but also those of the global community."

These words are not surprising if viewed against the continuous attempt by Beijing to resurrect trade relations with the U.S. with a kind of win-win formula. The recent exorbitant hike in tariffs against Chinese electric vehicles (EVs) by Washington and its European allies has caused serious anxiety in China. Xi’s congratulatory message reflects that he sees some hope that, under Trump’s renewed leadership, Washington might embrace a path rooted in respect and practical cooperation, not confrontation.

For Beijing, this outreach isn’t mere rhetoric; it underscores a strategic belief in mutual respect, peaceful coexistence and shared gains. This is certainly a positive gesture by President Xi, suggesting that, while differences remain, he is still optimistic about finding some common grounds to work with the Trump administration to reduce the temperature of the ongoing trade war.

In his message to Donald Trump, Xi suggested three principles for managing the Sino-U.S. relations. These principles are grounded in pragmatism and the simple reality that the world’s two largest economies can benefit more from cooperation than confrontation. Xi’s principles emphasize understanding each other’s strategic motivations, tackling sensitive issues – like those simmering in the South China Sea and Taiwan – with maturity, and harnessing shared strengths to foster economic growth. The fact is that both nations have plenty of stuff – from tackling climate change to driving innovation and trade – to resurrect their bilateral relations that have seen a steep nose-down in the last couple of years. So, rather than beginning every interaction with a "show of strength," perhaps it’s time for Washington to approach with the mindset of common interests and mutual gains.

The continuation of bilateral dialogue is the lifeline here. The good thing is that both sides have many working groups in place, indicating that despite intense diplomatic tension, the doors of bilateral communication are still functioning. Through more open communication, Beijing and Washington can recognize that what unites them as global stakeholders is far greater than what divides them. The path forward doesn’t have to be zero-sum; with a healthy dose of mutual respect, the two powers could forge a relationship that boosts not only their own growth but benefits the wider world. However, it all depends upon how Trump, perhaps the most unpredictable politician, handles this crucial bilateral relationship when he takes charge of the Oval Office. The global landscape has shifted drastically since he entered the White House in 2017.