Israel’s China Option

By Evan Gottesman

On December 30, China announced an initiative to establish a free-trade agreement with Israel. This prospective treaty sheds new light on an often overlooked relationship. From Cold War hostility to unofficial collaboration and now open cooperation, the Beijing-Jerusalem connection is still developing and can be especially beneficial for Israel, so isolated in its corner of the world. Yet Israel and its principal ally—the United States—must carefully manage this relationship against the backdrop of U.S.-China rivalry.

A new Sino-Israeli dynamic emerged before the two countries even established formal diplomatic ties in 1992. In the late 1970s, Chinese leader Deng Xiaoping detached the country’s foreign policy from its radical political narrative. Under Mao Zedong, Beijing was largely isolated. The country opposed the Western bloc, with state media rejecting Israel as, “a dagger thrust by U.S. imperialism.” China also broke with the Soviet Union.

After Mao’s death, Deng embraced realpolitik, making his country a pivotal world actor by engaging other states for utilitarian purposes. In this context, Israel has much to offer China, while the Palestinians present mostly ideological satisfaction. Eighteen percent of West Bank Palestinians and 30 percent of Gazans live below the poverty line, making them an unlikely outlet for Chinese consumer products. There is little for Beijing to buy from the Palestinian territories, whose primary exports include olive oil, building stones, and furniture. Israel, on the other hand, is a developed country with a population that can afford imported goods. The Israelis can also offer China sophisticated technology and valuable expertise. Dr. Alon Ben-Meir, a Senior Fellow at NYU’s Center for Global Affairs summed up the Chinese position: “business is business, politics is politics.”

Deng’s tenure saw the historically tense Beijing-Jerusalem paradigm reverse, with weapons transfers stimulating a new relationship. In 1986, Israel discreetly agreed to terminate arms contracts with Taiwan. China, for its part, promised not to provide Syria M-9 ballistic missiles. Beijing further committed to refrain from re-exporting Israeli technology to Jerusalem’s foes. By 2002, Israel ranked “secondly only to Russia as a weapons system provider to China and as a conduit for sophisticated military technology,” according to a report from the US-China Economic and Security Review Commission, an American congressional panel. Formal defense coordination stagnated after the United States vetoed the Israel’s China-bound arms exports.

In  2004, this developed into a full-blown political crisis as the United States demanded Jerusalem withhold Israeli-built drones returned by China for repairs. However, indirect channels remain and the Sino-Israeli trade actually expanded after the incident. Israeli telecommunications and aerospace products, for instance, still contribute to Chinese military upgrades. Dr. Yitzhak Shichor, who taught at Hebrew University and University of Haifa, specializes in Sino-Israeli relations. “The main problem is in the middle, in this gray area of [Israeli] high-tech which could be of dual use implications,” he says.

The IAI Harop (above) was the subject of a three-way political controversy. China returned the Israeli-built military drones for upgrades and the United States demanded Jerusalem withold them.  

Washington may be able to block direct weapons shipments. However, soft transfers, including personnel exchanges and knowledge sharing are more difficult to regulate. Israeli engineers can provide military expertise by working in China as they did in South Africa during the apartheid era. The new free-trade agreement may ease labor transit between the two countries. This means China could have easier access to such technical know-how by way of individual Israeli experts.

While it is difficult for the United States to impede intellectual exchanges, many in Israel remain conscious of American concerns. When the Technion—Israel Institute of Technology opened a campus in China, university officials “were very worried,” notes Dr. Shichor, “because they also have a campus in the United States, at Cornell University.” As with academics and engineers, there is little the United States can do to prevent Israeli and Chinese military and intelligence officials from interacting, short of direct interference. In 2010, the heads of Israel’s Home Front Command and its military intelligence agency visited China. In 2012, Lieutenant General Benny Gantz, then Israel Defense Forces Chief of Staff, met Beijing’s top brass on a similar trip.

Thanks to their geopolitical pragmatism, China is becoming particularly popular with the Israeli right wing. Israel’s conservative Minister of Economy Naftali Bennett visited Beijing and Shanghai in 2013 to negotiate with government ministers and business executives. While there, he remarked that, “In all the 20 meetings we held, not once were we asked about the Arabs, or about the Palestinians, or about any occupation or anything else. All [the Chinese] care about is Israeli high-tech, Israeli innovations, how we can bring these technologies here.”

Bennett called this, “something amazing.” His reaction is unsurprising, given Israeli fears of external pressure on the Palestinian issue. In July 2014, 12 European Union member states warned citizens to avoid trade with Jewish settlements in the West Bank. Citing IDF misconduct, American Presidents have scrutinized and suspended certain arms transfers to Israel, as did  Barack Obama during the 2014 Gaza War and George W. Bush, during the Second Intifada. Such actions stand in stark contrast to Beijing’s approach, adding new appeal for Israel’s China option and a prospective free-trade accord.

Still, not all Israelis reflexively support stronger ties with Beijing. Some view these links with concern through the prism of intimate Iran-China ties. Yitzhak Shichor briefed members of Israel’s government on the topic before Prime Minister Benjamin Netanyahu’s 2013 China visit. Shichor says he told the officials, “Forget about these issues. It has nothing to do with Israel because China has its own interests. Its relations with Iran by no means reflect any kind of sympathy for the Iranians or the government.” Alon Ben-Meir frames China’s relationship with Tehran in a positive light, suggesting that, “a single party [China] that has good relationships with two enemies…can also have some kind of a positive implication for the future because the Chinese have a vested interest.” Unlike the United States, China boasts good relations with both Iran and Israel. Beijing’s position here could keep the Middle East’s regional antagonists from direct confrontation.

Potential benefits with respect to Iran remain a sideshow to far more consequential Sino-Israeli economic ties. Beijing is already the Jewish state’s largest Asian trading partner. Some 60 percent of the Chinese population lives on less than $5 a day, meaning Israel cannot expect much success selling consumer technologies to its East Asian partner. Accordingly, as bilateral exchanges grow, Israel’s greatest interest will lie in direct trade with the Chinese state in both the civil sphere and, indirectly, the defense sector.

A critical benefit, Dr. Shichor adds, is that, “China would never impose any sanctions or any boycott like any of the European countries or even American universities.” He reflects that, on the contrary, “[China] can benefit from Western boycotts and so on because [the Chinese] are very much interested in Israeli technology.” Naftali Bennett and like-minded Israeli leaders correctly identify that Beijing will not impose political pressure on Israel over actions in the Palestinian territories. Here, the United States must tread carefully. Punishing Israel for new alliances can drive the country closer to China. Being too cautious might reward belligerent behavior.

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Evan Gottesman is an editorial assistant at World Policy Journal.