Toyota Motor Corp last month announced two deals in China that were small in size but large in strategic planning.

The automaker said it would establish a green-technology research institute with China's Tsinghua University and provide state-owned BAIC Group's Foton unit with fuel-cell technology for buses. But before it could feel comfortable unveiling those plans, Toyota put in months of work to pledge fresh investment in the US.

The technology transfers represent gestures of goodwill to Beijing by the Japanese automaker, which wants to "step on the accelerator in China" as CEO Akio Toyoda told an internal management group, according to minutes of meetings on March 19 and April 23 viewed by Reuters.

Announcing US investment first was a strategy Toyoda felt the company needed to pursue to avoid US President Donald Trump's wrath, the minutes showed, providing a rare window into how it has sought to tread carefully as the US and China battle for investment, jobs and influence in the global economy.

"For Toyota to operate globally, we need to strike a fine balance between China and the US," the March 19 minutes quoted Toyoda as saying. "It's imperative to avoid making enemies."

According to the April 23 minutes, the Japanese automaker is making what one unidentified senior executive described as a "significant move to steer its focus to China," a market where it is far behind industry leaders Volkswagen AG and General Motors Co.

Toyota declined to comment on its internal meetings.

Its pivot to China, one that many other global automakers are also making, has been made easier by an improvement in ties between China and Japan but complicated by Trump's aggressive trade policies.

That includes the trade war between Washington and Beijing as well as threats from Trump to impose tariffs of up to 25 percent on imported cars. Earlier this month, Trump declared that some imported vehicles and parts pose a national security threat, although he delayed a decision for as long as six months on whether to impose tariffs.

In response, Toyota issued one of its strongest messages on potential tariffs to date, calling the designation "a major setback for American consumers, workers and the auto industry" and saying it sent the message "our investments are not welcomed."

Show of commitment 

Toyota has been at pains to show its commitment to the US, and in the March 19 minutes Toyoda explained a fresh investment of $749 million in US manufacturing capacity and jobs as "an essential" step before it could speed up efforts to expand in China.

Announcing the new investment on March 14, Toyota said that the amount would increase a five-year investment pledge made in 2017 to almost $13 billion from $10 billion. 

"I just don't understand why we are called a national security threat and it pains my heart," Toyoda said in answer to a question after his speech.

Though many other automakers, including US automakers, have announced investments in the US since Trump took office in 2017, the near $13 billion pledged by Toyota is the biggest amount by far.

Toyota would have pressed ahead with fresh US investment even without its China plans, but there was much internal planning around how the announcements should be timed, company sources with knowledge of the matter said. The sources, who were not authorized to speak to the media, declined to be identified.

In a further sign of Toyota's careful approach to relations with Washington, board member Ikuro Sugawara was dispatched in April to meet with US Ambassador William Hagerty at the US embassy in Tokyo to let him know that the two China deals would be announced.

"I didn't think we needed to do that but the ambassador commended our effort more than I had expected," the April 23 minutes quoted Sugawara, a former vice minister for trade, as saying.

The US embassy in Tokyo declined to comment on the specifics of the meeting, saying only it was in regular contact with Toyota and many other Japanese companies about their plans to continue investing in the US.

Pivot to China market

For many automakers, the US market is a key profit center that generates industry-wide sales of about 17 million vehicles annually. But China has rapidly grown in importance, with 28 million vehicles sold in 2018, and is drawing new investment from global automakers eager to keep up with its heavy promotion of electric cars.

Toyota commands 14 percent of the US market, but in China it had just 5.3 percent share last year and the 1.49 million vehicles it sold were less than half the volume sold by VW and GM.

It is aiming to lift sales 10 percent annually over the next five or six years, or about 3 million cars annually by the mid-2020s, according to a source at a Toyota parts supplier, who declined to be identified as he did not work for the automaker.