How Steady Are China-Israel Relations?

The twenty-first century has witnessed China’s economic ascendancy in the Middle East and North Africa (MENA). Its diplomatic influence in the region is growing too, underscored by the March 10 Saudi-Iran normalization deal brokered in Beijing. As the international geopolitical order becomes more multipolar, with the world’s center of geoeconomic gravity shifting away from North America and Europe toward Asia, virtually all players in the MENA region have deepened their ties with a rising China. Israel is no exception. China-Israel economic ties are expansive across many sectors, including investment, technology, infrastructure, logistics, scientific cooperation, tourism, construction, and education. However, at least three main factors will probably limit the growth of their bilateral relations: Beijing’s foreign policy in the MENA region and its ties with Israel’s foes, Israel’s security-related concerns about certain technology transfers to China, and US pressure on Israel to cool its ties with the Asian giant.

Despite these dynamics putting a ceiling on Israel’s ties with China, Israeli Prime Minister Benjamin Netanyahu appears to believe that a deeper relationship can serve his country’s interests. Netanyahu received an invitation to Beijing in June, and his plans to make his fourth official visit to the Chinese capital fit into his government’s quest to bolster Israel’s diplomatic standing on the international stage. Diversifying Israel’s global relationships beyond the West is one of Netanyahu’s goals as highly provocative actions and rhetoric on the part of extremists in Israel’s governing coalition fuel friction with western capitals. Domestic politics is relevant too. Part of the Netanyahu government’s strategic thinking is visible in this effort to offset political and social crises inside Israel with Netanyahu’s Beijing visit, which could possibly result in major economic deals.

Diversifying Israel’s global relationships beyond the West is one of Netanyahu’s goals.

Israel also looks to China as a rising power with influence over Iran and Saudi Arabia, which could potentially be leveraged to advance Israeli interests, including those pertaining to the Iranian nuclear program or the prospects for a Saudi-Israeli normalization accord. Furthermore, China’s support for the Abraham Accords could serve as another basis for stronger China-Israel relations in the future.

From Enemy to Friend

Since the 1940s, China-Israel relations have evolved through different phases. The Chinese Communist Revolution of 1949 came one year after Israel’s founding. Between that revolution and China’s Economic Reform and Opening in the late 1970s, Beijing’s foreign policy in the Arab world was (mostly for revolutionary purposes) supportive of the so-called radical Arab governments (Egypt, Libya, Iraq, Syria, South Yemen, etc.) and of national liberation movements such as in Palestine.

By 1979, however, China had begun to deal with Israel more pragmatically and less ideologically. This entailed the signing of deals to transfer Israeli defense technology to Beijing. And in June 1990, the two countries opened “de facto embassies”—Israel’s Liaison Office of the Israel Academy of Sciences and Humanities in Beijing and the China International Travel Service office in Tel Aviv. By January 1992, the two countries had established full-fledged relations. Over the past 31 years, China-Israel economic relations have grown significantly. While bilateral trade stood at $50 million in 1992, it reached $22.8 billion in 2021, according to China’s Bureau of Statistics. In 2021–22, China replaced the United States as Israel’s top source of imports and Israel added China’s currency, the renminbi, to its foreign reserves.

After Netanyahu returned as Israel’s prime minister in 2009, economic relations reached new heights. In March 2017, the two countries announced a comprehensive innovative partnership based on technological cooperation while Netanyahu was visiting Chinese President Xi Jinping in Beijing. What followed was soaring Chinese investment in the Israeli economy.

China’s attraction to Israel also has much to do with the latter’s position as a technology hub.

Israel’s location in the Eastern Mediterranean has contributed to the value that Beijing places on the bilateral relationship within the grander context of its Belt and Road Initiative (BRI). The Chinese and the Israelis started a new chapter in their bilateral relationship in 2017 with the announcement of BRI cooperation. From Beijing’s perspective, Israel is a unique BRI market. As China has sought to establish a greater presence in the Eastern Mediterranean, Israel’s relatively low investment risk environment appeals to Beijing. So do the growing economic and energy ties that Israel is strengthening with other countries in the neighborhood—Cyprus, Egypt, and Greece—along with the development of gas reserves in the Mediterranean Sea, booming Israeli ports, and growing Israeli trade with more Arab states following its normalization with the UAE.

China’s attraction to Israel also has much to do with the latter’s position as a technology hub where many innovative companies are doing business. And Israel sees China as having the fastest growing major economy with a large export market. The government in Beijing has strongly encouraged Chinese companies to purchase, partner with, and invest in Israeli technology companies (HexaTier, Visualead, ThetaRay, Lumus, Pixellot, etc.) and become active in major infrastructure projects, including the Ashdod and Haifa ports, the Tel Aviv light rail, and the Carmel Tunnels.

Pressure Points

Despite the quick growth in China-Israel relations across a host of sectors since the early 1990s, there are three main factors that raise serious doubts about how committed Israel will be to its relationship with China. These dynamics call into question the steadiness of bilateral ties in the years ahead.

First, policymakers in Beijing are unlikely to ever support Israel in its conflicts, its “shadow wars,” and its disputes with the Palestinians, Lebanon’s Hezbollah, Syria, and Iran. In trying to avoid taking sides in political crises that divide MENA powers, China remains committed to a “friend-of-all” foreign policy in the region, with “strategic vagueness” as a pillar. In other words, Israel will not find an ally in China to support its aggression in the Middle East as the US does. In fact, in certain instances, aspects of China’s foreign policy in the region seem to undermine Israel’s perceived national interests.

China-Iran relations are a case in point, with Beijing serving to help the Iranians circumvent US sanctions, which undermines Washington-led efforts to isolate and weaken the Islamic Republic. Beijing’s position on Palestine is another example. Although China maintains far deeper economic relations with the Israelis than the Palestinians, with Beijing’s support for the latter now being largely rhetorical and symbolic, Chinese policymakers call on Israel to make concessions to the Palestinians that no Israeli government, especially the current one, would ever consider making. Of course, Chinese-Israeli disagreements over Palestinian-related issues have not prevented China-Israel economic relations from flourishing, although the Israeli occupation of the West Bank may limit the extent to which China and Israel see eye to eye. Additionally, China’s government does not consider Hezbollah in Lebanon or Hamas in Gaza to be “terrorist” organizations, instead viewing these groups as legitimate representatives of segments of Lebanon and Palestine.

Chinese-Israeli disagreements over Palestinian-related issues have not prevented China-Israel economic relations from flourishing.

In 2012, China’s then ambassador to Lebanon, Wu Zexian, addressed Beijing’s stance on Hezbollah in an interview with Al-Akhbar, a pro-Hezbollah newspaper. While labeling Israel an occupying force in Lebanon, he stressed that “all the efforts of the Lebanese to protect their country and preserve its sovereignty are legitimate,” and that Hezbollah’s status as an armed group in Lebanon is an internal matter for the Lebanese to address in dialogue among themselves without any foreign interference. More recently, Chinese companies and the government have shown a keen interest in playing a role in Lebanon as part of efforts to boost relations with all Mediterranean countries.

Beijing has long depicted the US as isolated in its support for Israeli military campaigns against Hamas-administered Gaza, often accusing Washington of obstructing efforts at the United Nations Security Council to hold Israel accountable for its actions. In response to Israel’s Operation Guardian of the Walls in Gaza in May 2021, China’s Foreign Minister Wang Yi condemned Israeli conduct in a UNSC meeting but did not criticize Hamas for its rocket attacks. China has also insisted that Israel end the blockade of Gaza as part of a Beijing-supported push to ease tensions between Israel and Hamas.

Second, Israel has over the years come to see some risks posed by deeper relations with China in the technology sector. These are related to data surveillance, gray-zone technology transfers, cybersecurity, and data theft. Given weak enforcement of intellectual property rights in China, there are concerns about Israeli intellectual property being stolen and Israel losing its advantages over competitors in the technology sphere. Moreover, with Chinese technology companies doing business with some of Israel’s adversaries, national security considerations have left Israelis cautious about transferring dual-use technologies to the Chinese. The United States has also voiced such concerns about China-Israel cooperation in the technology sector.

Third, and perhaps most important, is Washington’s pressure on Israel to prevent the Chinese from growing their footprint in Israel’s economy. During the Trump years, the United States expressed its concerns about the deepening of China-Israel cooperation in certain areas. The Biden administration has also voiced its unease with China’s growing importance to Israel’s economy, and Biden’s eventual successor probably will too.

In 2019, the US Defense Department explained how the US military has become “highly attentive” to Chinese investments in and trade with Israel. Officials in Washington were unsettled by the potential implications for American national security of the Chinese state-owned Shanghai International Port Group’s $2 billion deal to manage Israel’s port in Haifa, which is a port of call for the US Navy’s Sixth Fleet. “The openness of the US and Israeli economies is a strength to our countries, but malign actors can take advantage if we are not cautious,” said Deputy Assistant Secretary of Defense for the Middle East Mick Mulroy. US officials have also flagged Chinese investments in the light rail system in Tel Aviv as being of concern, and in 2020 the Trump administration contacted Israeli officials to demand clarification about a Chinese-controlled company’s role in work on a water desalination plant in central Israel.

An Expanding Relationship

Ultimately, China and Israel are set to maintain their deep relationship, which has much potential to further expand in the future. Given Beijing’s growing influence in the international arena, Israel will continue to see its relationship with China as critical to its efforts to counterbalance its partnerships with the United States and European powers. Economically, China and Israel simply offer each other too much for either country to disregard the value of this bilateral relationship, particularly when it comes to technology.

Nonetheless, the United States plays a special role in Israel’s foreign policy and defense strategies that China will not. The pro-Israel lens through which both Democrats and Republicans see the Middle East differs from Beijing’s perspectives on the region. Critical questions to ask and trends to monitor pertain to how Israel’s leadership will navigate the “new cold war” between the United States and China, especially in terms of how it plays out in the Middle East. A major test for Israel would be a military confrontation over Taiwan, which would likely entail Israel siding with Washington but also working to protect its interest in maintaining robust relations with Beijing.

Most likely, if it were not for the United States, Israel would move ahead with initiatives to further bolster its partnership with China. Yet as long as Washington remains focused on great power competition while eyeing China as a major threat to US national security, Israel will have to contend with bipartisan concerns in Washington about the nature of its relations with China.

The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.

Featured image credit: Flickr/israelipm