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China’s Rise, US Opposition and the Implications for Israel

Israel’s dilemma is to protect its irreplaceable human, political, and military links with America while also broadening its relationship with China. The links with America include America’s Jews as well as Silicon Valley and Wall Street, backbones of Israel’s high-tech. These links are existential. Those with China are not, but they will become increasingly vital as China keeps rising and entering the Middle East. As long as China appeared hostile to both the US and Israel, it was easy for Israel to align its China policy with America’s. But now China wants to be friends with everybody in the Middle East – although responsible for nobody. Its elites are well disposed toward Israel and Jews. The Chinese understand Israel’s predicament and have communicated that they want Israel to remain a close friend of the US and benefit from American protection,32 but they also want the world to see that America’s best friends can remain partners with China. In contrast, America does not want to let one of its most pampered friends get away with a Chinese dalliance, as they see it. Israeli officials are worried because they see no solution to their conflicting policy objectives. America’s identification of China as its main strategic enemy is a calamity for Israel. The US is expected to demand more Israeli support in confronting China. Israel will have to maneuver.

Israel and China hoped to increase their links in three sectors: trade, investments in Israeli companies, and in infrastructure. In 2018, Israel’s exports to China reached approximately 5 billion dollars, which is twice the figure for 2014.33 In comparison, Israel’s exports to the US reached twice as much, approx. 10 billion dollars in 2018, but the figure has changed little since 2014. It must be added that the majority of Israeli exports to China come from just two companies. Although Israeli companies find it very difficult to penetrate the Chinese market, one over-optimistic expert believes that China could in some years become Israel’s first trade partner, overtaking the US.34 The US has had its hand in Israel’s China trade since 2004. Israel’s technology exports are subject to controls to prevent defense or dual-use items being sold to China. Trade experts say that Israel’s exports to China would be higher without this obstacle.

Chinese interest in Israeli industry investments, particularly in high-tech is causing American annoyance. Reliable statistics of Chinese direct investments in Israeli industry are lacking – China was perhaps the third most important source of foreign investments, and thus, important but not indispensable. Artificial Intelligence demonstrates the problematic implications of Chinese interest in Israeli high-tech. AI plays a key role in the competition between the US and China (see above). Israel, too, aspires to become one of the world AI leaders.35 It is the fastest growing sector of Israel’s high-tech. In 2018, 37 percent of the total capital raised for Israel’s high-tech sector was designated for AI companies. The Israeli government is said to be developing a national strategy to achieve its AI goal, which will include major investments in defense AI. A lot of money has already been invested in AI, mainly by global companies. The initiative has come from industry, not from government as in China. Israel’s most stunning AI success so far was the 2018 sale of its Mobileye self-driving car technology to Intel USA for 15 billion dollars. It is vital for Israel to maintain close links with the relevant American companies, but it is also useful not to lose contact with China’s advancing AI research. In January 2020, the US embargoed certain AI exports to China. Israel cannot support China’s side in this fight, but rejecting Chinese potential investments will be a loss for Israeli companies and research centers. More critical than trade, and at least as critical as high-tech investments, is China’s role in improving Israel’s infrastructure. OECD reports indicate that Israel suffers from one of the most deficient infrastructures among advanced countries.

To maintain the growth rate necessary for its social and defense needs, Israel must improve its roads, ports, railway, tram and subway lines, residential buildings and more. Israel lacks the means and experience to do this job alone. China is the world’s first, most competent and least expensive infrastructure builder. When Israel published its tender for enlarging the Port of Haifa, only the Chinese responded. Israel first solicited American companies but none was interested. Cutting China off from improving Israel’s infrastructure would damage Israel’s economic development.

Finally, there are older and deeper reasons for Israeli interests in a lasting relationship with China. There is a hidden agenda here that Israelis will not want to raise with Americans. Israel’s founder, David Ben-Gurion, called on the Jewish people and later Israel to seek links of friendship with Asia, predicting the rise of China and India from 1930 on.36 In 1963, he said that the United States and the Soviet Union would not control the world forever: “There is no doubt that…China and India would become the greatest powers in the world.” His colleague, and later foreign minister, Moshe Sharett, saw a more specific link between Israel’s hope to be accepted in the Middle East and “the amount of goodwill and solidarity which we shall succeed in evoking on the part of the great Asiatic civilizations.”37 Such hopes have had little success so far with China but they influenced the few diplomats and businessmen who looked for bridges to China during the years without diplomatic relations. A hidden concern that America, apparently lowering its profile in the Middle East, will not “control the world forever” or will one day stop supporting Israel remains present in many minds.

While American policies are often transient, China’s policies are planned for the long term and rarely yield to foreign pressure. As in the past, China will refuse to “pick sides” in the Middle East, apart from lip-service. It will support all anti-Israeli UN resolutions submitted by the Muslim world, which will “reward” China by ignoring its treatment of its own Muslim population. The UN does not affect China’s officially stated friendship for Israel. For 60 years China never intended to damage Israel. China has supplied some, but never “game-changing” weaponry to Middle Eastern countries, including Iran (less from the 1990s on). Israel was hit by Chinese missiles a few times: China had sold them to Iran in a “tit-for-tat” for US weapon supplies to Taiwan. Iran then transferred some without Chinese approval to Hezbollah and Hamas (which arguably, the Chinese could have anticipated). China’s support for Iran is directed against the US, it is not only due to China’s oil needs, as Chinese diplomacy claims. Iranian oil is replaceable. Whereas the US is challenging internal Chinese policies, e.g. in Hong-Kong and Xinjiang, China cannot do the same to the US. Therefore, it supports America’s far-away enemies, Iran and North Korea. Israel is “collateral damage” of the US-China confrontation, not of any direct Chinese hostility. Whatever China’s motives, the fact that it is close to Israel’s worst enemy is a serious problem. Israel hoped that its growing economic and diplomatic relations with China would motivate the Chinese to show consideration for its gravest strategic threat, but this has not, thus far, happened. In recent years, China has, as far as is known, never publicly condemned Iran’s extermination threats against Israel – an easy and cost-free step. In contrast, the other UN Security Council members have done so.