Sino-Israeli Relations: Caught in the Crossfire?

China-Israel relations
Credit: Idont / CC BY-SA

The Israeli PM Benjamin Netanyahu equated the Sino-Israeli friendship with the marriage made in Heaven. The economic engagement, being the cornerstone of the bilateral ties has been shot up for more than 170 times since both countries formally established diplomatic relations on Jan. 24, 1992. The Covid-19 outbreak and the U.S.-China blame game over Beijing’s mishandling of the coronavirus have dragged the Sino-Israeli relations to a difficult juncture. The recent occurrences with regards to the global pandemic have opened new war fronts in the already strained relations between Beijing and the Trump administration. What it concerns Jerusalem regarding new developments is the possible ramifications which these could have on the course of Sino-Israeli relations as Washington had already articulated its disillusionment for enlarging China-Israel partnership.

Historical Course

The then Israeli leadership recognized the People’s Republic of China (PRC) on Jan. 9, 1950. Albeit the absence of formal diplomatic channels, the bilateral relationship witnessed remarkable progress utilizing defense collaborations and procurement. The defense cooperations on track since early 1979 was in line with PRC’s sought-after technological assistance for military modernization and Israel’s desperate need to subsidize its military program. Besides the arms transfers, Israel found room for its IT, agriculture, and solar energy products in the Chinese market. The blockade exercised by the U.S. and the West in the sale of state-of-art weapons and technologies to Beijing after the Tiananmen Square violence of 1989 further boosted Israel’s prospects in supplying weapons to PRC. 

The subsequent turn of events, the Madrid Conference of October 1991, and the change in the political landscape of the region fast-tracked the formation of official relations. The bilateral relations got into a dire predicament as the sale of Phalcon Airborne Warning and Control Systems (AWACS) to be integrated onto the Russian platform in 1999 and the up-gradation plan for harpy drones in 2004 was scrapped by the U.S. intervention. 

Several domestic and international political developments since then have made a profound impact on the trajectory of Sino-Israeli relations. The rapid economic expansion of China has facilitated it to expand its political sphere of influence all over the world. PRC which was overwhelmingly focused on addressing the internal issues began to look outwards for active engagement in global affairs since then. The downfall of the Gaddafi regime in Libya on the back of the Arab spring badly hampered Beijing’s policy objectives in the region and incurred a loss of around $20 billion. The Chinese project to renovate the West Asian strategy on these grounds identified Israel to be a key outpost of its engagements in the volatile region. 

The suicide of several ‘Foxconn’ employees in 2010 due to the alleged work pressure compelled the Chinese authorities to rethink the subsidized production strategy to steer sustained economic growth. As a result, the 12th Five Year Plan of 2011, laid renewed thrust upon the innovation-driven economy instead of the manufacture based one. The Israeli advancement in Science and Technology and its top rankings in the global R&D indexes have been a device catalyzing the bilateral relationship. On the other hand, Jerusalem, found it attractive to have cordial ties with Beijing, having an eye on its massive investment potential while the U.S. and the West, facing severe cash crunch since the 2008 global economic crisis.

Ongoing Trajectory of Relationship

The mutual trade now values more than $14 billion from a mere $51 million at the beginning of official relations in 1992. The People’s Republic of China is Israel’s third-largest global trading partner and the top one in the Asian continent. Now, China is the destination of 7.7 percent of Israel’s total exports in terms of value. This surged for over 50 percent last year and has crossed a $4.7 billion mark. In 2015, Israel along with Australia, India, Germany, and the U.K. became one of the founding members of the Asian Infrastructural Investment bank, refusing to pay heed to the American voice.  

For Beijing, Israel provides ample opportunities to acquire state-of-art technologies in clean energy, agriculture, cybersecurity, water conservation, etc. China which aspires to become a global innovation hub has a lot to learn from Israel in developing indigenous technologies. Given this, China forged a comprehensive innovative partnership with the Jewish state in 2017, which Beijing before had granted only to Switzerland. 

From 2013 onwards, the Chinese firms are making considerable investments in the West Asian country through acquiring Israeli firms and by winning contracts for infrastructure projects. The flow of venture capital investments to the Jewish state reached $1 billion in 2016. The total Chinese capital investments in the Israeli technological sector in between 2011-2018 ranges up to $5.7 billion. The infrastructural projects which Chinese companies have undertaken in Israel include Haifa Port, the extension of Ashdod Port, the digging of Carmel tunnel, and the construction of the operation of Tel Aviv light rail. Besides these, the project to develop a rail line connecting the Mediterranean Sea and Eilat city is under consideration. 

The proposed Haifa Port project would provide the Chinese firm operational control over it for the next 25 years from 2021 onwards. The China Communication Construction Company (CCCC) and its subsidiaries, which have won bids in Israel, were blacklisted by World Bank for financial crimes and have been collaborating with PLA.

Mounting Tensions

The U.S. Secretary of State Mike Pompeo made a warning against Israel in January 2019 that the United States might reduce security partnership with Tel Aviv unless it reduces its engagement with Beijing. Similarly, former national security advisor John Bolton urged the Israeli administration to take a hardline stance on the Chinese electronics companies including Huawei and ZTE. Even before the global pandemic, United States was rethinking the co-sharing of security resources with Israel due to the threat perceptions regarding the long-term presence of Chinese companies and workers with access to the sophisticated communication devices in the Jewish state. 

The U.S.-China frictions which have been on the rise from the time when President Trump assumed office ranges from tech-ban to the contentious trade war. The bilateral relationship has been deteriorated further due to China’s alleged mishandling of the Covid-19 pandemic. The Trump administration has already shown its teeth by declaring that it would terminate the trade deal with China, signed in December last year, in case Beijing fails to comply with the rules. The White House on May 15, 2020, extended the ban on Huawei restraining the company and suppliers from using U.S. technologies.  

The new developments are likely to have far-reaching implications on the Sino-Israeli partnership. The Israeli leadership in fact would have to choose between either Washington or Beijing, at least till the next U.S. presidential election is over.

The views and opinions expressed in this article are those of the author.