2020 Annual Assessment

The growing confrontation between the United States and China has escalated in recent years – from a trade war to a technological one, then to a political war, and now to an ideological war as the US attacks China’s domestic policy (Hong Kong, Xinjiang) as well as a “narrative war” over who is at fault for the spread of the coronavirus. For Israel, this confrontation has created dilemmas it has not faced outside of past differences of opinion with the United States related to the Middle East, or with other countries today. Not that America’s displeasure with Israel’s China links is new. In fact, China is one of the oldest – possibly the oldest – continuous bone of contention between the United States and Israel not linked to the Middle East. This brief paper is an update to an ongoing and long-term JPPI project regarding the relations between Israel, the Jewish people, and China.

Fear and Pressure


The US fear of China has many aspects. In part, it stems from the fact that the United States has never faced such a formidable challenge to its economic dominance. Its main rivals in the past – Germany, Japan, the USSR – presented a military and ideological threat, and were defeated by military and economic means.

For the last two years, America’s new concerns about Israel’s China links have gone beyond the defense sector. They now extend to trade, Chinese investments in Israeli companies, and China’s involvement in modernizing Israel’s infrastructure (ports, subway and railway lines, and more recently Israel’s largest desalination plant). According to the OECD, critical infrastructure in Israel lags behind other advanced nations, and improving it requires significant investment. Chinese firms specializing in infrastructure development have been hired for these purposes, and in certain economic sectors, have no competition from other countries in terms of price and competence.

American concerns about China’s involvement in Israel’s economy add another dimension to previous concerns about Israeli-Chinese security cooperation (the American pressure that forced the cancelation of the 1999 Falcon spy plane contract is a prime example of this). Israel, unwillingly, finds itself caught in the middle of a tug-of-war taking place between the two greatest powers on the planet. American and Chinese observers describe the current situation as a mighty struggle between powers, perhaps even for global supremacy. American officials keep repeating that all Chinese companies are somehow linked to the Chinese government and the Communist Party of China. The US accuses China of dealing in unfair trade practices, committing intellectual property theft, and effectuating technology transfers through coercion or espionage. Intelligence agencies around the world have connected China to significant intelligence operations against the US and to cyber-attacks against Israel. The United States has also added cooperation between Chinese and Israeli universities as another area of concern.

The United States claims that opening Israel up to Chinese investment and development endanger Israel and American interests.

The US, after all, has done more for Israel’s security than any other country and is adamant that Israel stand by its side as it confronts China. At the same time, China has done nothing to assuage Israel’s most serious strategic concerns. It supports Iran, including militarily, and seems indifferent to Israel’s security.

The Chinese government claims its economic relationship with Israel is based on a “win-win” principle, where all sides profit, and that it has no ulterior motives. Accordingly, Israeli industrialists and those who oversee the industry and trade in Israel seek to protect their important economic ties with China. Of course, apart from interest in Israeli technology, China too has hidden agendas which occasionally appear in its media. China would like to present Israel as a model to other countries – that even America’s closest friends can have beneficial relations with China.

Economics and Strategy


In 2000 and 2004, when Israel had to break off its military relationship with China, nobody doubted who the world’s only super-power was. Things are no longer so clear. China is catching up in future technologies, including those that are increasingly underpinning Israel’s economy. One sign of this can be seen in the Chinese Huawei’s 5-G technology, which skipped over the parallel American technology – apparently the first time China has developed such a transformative, paradigm shifting technology before the United States. China could become a global competitor and even take the lead in developing certain advanced technologies (it set a goal to be a world leader in the field of Artificial Intelligence by 2030). Over time, such developments could affect the balance of power between the two superpowers.

Another important component of the changing geopolitical constellation is China’s entry into the Middle East. Until recently, China has moved cautiously in the Middle East’s shifting sands. Now, concordant Arab and Israeli sources report that the COVID-19 crisis is accelerating China’s entry politically, economically, and even militarily. The Arab world does not share the West’s hostility to China. On the contrary, it hopes China will help the poorer Arab states, Egypt and Jordan.

China seeks new areas of influence and is interested in developing naval and military bases in the Middle East in order to protect the flow of oil. Even Syria has drawn China’s interest. China wants to participate in Syria’s reconstruction and provides weapons to Assad. China will have to resolve complex issues, including its competition with Russia, before its cooperation with the Arab world can bear fruit. But Israel cannot ignore that in due time it may have a new superpower in its neighborhood, China. What it needs is a regular strategic dialogue with China, similar to what it has with Russia. But this requires more American understanding.

Today, and for a long time to come, Israel’s ties with the US (including American Jewry) will continue to greatly outweigh its ties with China. Therefore, Israel’s policy challenge lies in promoting economic and civil ties with China without harming its strategic relationship with the United States.

Israel must remain sensitive to American policy, which may change with a possible shift in administrations in Washington in 2021. At the same time, and as it has already begun to do, Israel must strengthen its oversight on foreign investment. Moreover, the Israeli government must improve its knowledge base regarding China, which is insufficient for what will be required and expected in the coming years.

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