Netanyahu’s Embrace of China Made America See Red.
What Will He Do Now? Prime Minister Netanyahu expanded Israel’s business ties with China in the 2010s, but this time is likely to heed the concerns of Washington and adopt a more conservative approach
Jordyn Haime
Haaretz - Feb 1, 2023
In his previous terms as prime minister, Benjamin Netanyahu led the charge in developing Israeli-Chinese relations, helping make Beijing one of Israel’s biggest economic partners and its second-largest source of imports.
It was only during the Trump years, amid U.S. warnings of security threats posed by Chinese investments and large infrastructure projects, that things slowed. Now, with Netanyahu back in the Prime Minister’s Office, will he adhere to the new norms established by his predecessors Naftali Bennett and Yair Lapid and accept U.S. calls to maintain distance from China?
“In recent years, the establishment has moved,” says Assaf Orion, director of the Diane and Guilford Glazer Israel-China Policy Center at Tel Aviv’s Institute for National Security Studies. “It’s pretty obvious to see that we’re not in the same place where we used to be. Netanyahu saw a great opportunity in China in the last decade. He still sees the opportunity. But I think the whole world is now more balanced to the view that it’s not a pure opportunity, it’s not a pure danger – it’s an opportunity with some risks to manage.”
U.S. officials during Netanyahu’s previous terms in office believed the limitations he had set on doing business with China were not enough. In particular, China-backed infrastructure projects – like the new port terminal run by the Shanghai International Port Group, which is near an Israeli naval base in Haifa Bay – sparked rare tensions between the Netanyahu and Trump administrations as the Americans raised concerns about national security. In 2020, then-Secretary of State Mike Pompeo warned Israel to stop all Chinese investment that could strengthen the Chinese Communist Party.
The U.S. mood on China has only hardened since President Joe Biden entered the White House in 2021. His administration has reiterated security concerns about China winning large infrastructure projects in Israel, and in 2022 a Chinese company’s bid for Israel’s light rail project was blocked. Last October, the Israeli government strengthened a foreign investment advisory mechanism originally established under Netanyahu in 2019.
New strategic dialogues on advanced technologies with the Americans also mean that Israel must take U.S. security concerns more seriously, experts say. Chinese investment in Israel has declined significantly since 2018. It peaked that year at 72 deals, dropping to less than half that amount in 2021. This was likely due to China’s closure during the coronavirus pandemic, tightened Chinese regulations on outbound investments, as well as heightened tensions with the United States.
Israeli exports to China plateaued in 2018 at $4.8 billion, declining to $4.3 billion in 2021. However, at the same time, Chinese exports to Israel continued to expand: from $6.8 billion in 2018 to $10.7 billion in 2021.
Still, Netanyahu continues to see the benefits of a growing trade relationship with China. Negotiations for a historic free trade agreement between China and Israel – which have been in the works since 2016 – are reportedly still ongoing and would ease tariffs for both parties. To date, South Korea is the only Asian country with which Israel has a similar agreement (though it remains in negotiations with India, Japan and Vietnam). But Guermantes Lailari, a research fellow at Taiwan’s National Chengchi University, says Israel’s potential FTA with China is a pressure point for the United States.
“The U.S. has a trade deal with Israel as well. So they’re going to be putting pressure on the Israeli government to either not sign or narrow the variety of things that are going to be in that trade deal,” says Lailari.
Netanyahu has said little so far about how he will approach dealings with China. But the statements he has made on the subject indicate a path in line with U.S. interests, acknowledging national security concerns rather than focusing solely on economic benefits that can be gleaned from Israel-China relations as he has in the past.
Last December, he told American journalist Bari Weiss: “I enthusiastically opened Israel up for trade with China and economic enterprises with China. I suppose I’ll continue to do that. But matters of national security are also uppermost in our minds as they are in the minds of others. We’ll continue to work with China, but we’ll also protect our national interests.”
In his recently published memoir “Bibi: My Story,” Netanyahu recalls walking “a fine line” with China. “On the one hand, I wanted to open the enormous Chinese market to Israel and also lure Chinese investments to Israel, particularly in physical infrastructure,” he writes. “On the other, I was totally frank about setting clear limitations on what types of technologies we would share with China, stopping when it came to military and intelligence fields. This was our solemn commitment to our great ally the United States, with whom we shared much of this technology, as well as our cherished values as democratic societies.”
Same issues
Israel’s technology sector was a major Chinese focus when the Israel-China relationship grew during the 2000s. But Chinese investments in Israeli tech have declined significantly in recent years for myriad reasons, and Israel is becoming a less prominent focus of its ambitions in the Middle East, says Gedaliah Afterman, head of the Asia Policy Program at the Abba Eban Institute for International Diplomacy at Reichman University, Herzliya.
“Strategically speaking, the Chinese are more focused on the Gulf countries today. They still hope to develop or push forward these relationships on technology, but they also see that it’s not going anywhere in a hurry,” Afterman says. “No matter what’s happening on the bilateral front with American pressure, Israel and China will meet more and more in the Gulf – especially on technology. Because in some ways Israel and China work on the same issues: Israel brings the technology and China brings the infrastructure.”
The new far-right Israeli government also has the potential to spark tensions with the Chinese government – but likely only in the public eye. China has long advocated for Palestinian liberation and the advancement of a two-state solution, and regularly condemns Israel’s actions in Gaza and the West Bank.
Beijing voted in favor of the recent UN resolution to determine the legal consequences of Israel’s occupation of Palestinian territory, and last month joined the United Arab Emirates in calling for a UN Security Council debate over Israeli politician Itamar Ben-Gvir’s controversial visit to the Temple Mount a few days after he became national security minister.
During a visit to Cairo last month, Chinese Foreign Minister Qin Gang said his country is “deeply worried” about recent tensions between Israel and the Palestinians, calling for Israel to maintain the status quo on the Temple Mount (the Jerusalem site that is sacred to both Jews and Muslims) and for the Palestinian issue to be prioritized on the global agenda.
These actions are widely seen as an effort to maintain China’s image toward its allies in the Middle East as a country that supports global liberation movements, and are unlikely to go beyond public statements.
“As China becomes more influential in the Middle East, it’s more likely to use issues such as the Israeli-Palestinian conflict as a way to criticize the U.S. to counterbalance U.S. criticism of Xinjiang,” says Afterman, referring to the region where China has been accused of committing crimes against humanity and even genocide against the local Uyghur population.
Below the surface, China has enjoyed the benefits of its growing economic relationship with Israel. Its police academy has even studied Israel’s anti-terrorism policy when forming its own in response to a series of terrorist attacks by members of the Uyghur community between 2009 and 2014.
“In return [for vocal support of Palestinians], China enjoys Arab countries’ silence and even vocal support on Xinjiang and its treatment of Muslim Uyghurs,” notes Orion.
For now, at least, China is publicly optimistic in its statements concerning Israeli-Chinese relations. After Netanyahu’s government was established at the end of 2022, the Israel Hayom free newspaper printed an op-ed by Cai Run, China’s ambassador to Israel, to mark 30 years of diplomatic relations between the two countries. It did not mention Netanyahu by name or comment on his far-right coalition.
Cai wrote that the past 30 years of Israel-China cooperation have brought “ever-increasing political mutual trust.” He referenced both the Chinese sage Confucius and “the Jewish classic Talmud,” concluding that “embracing new opportunities, the China-Israel relationship will build on the 30-year achievements and open a new chapter of greater splendor.”
But most observers believe that China and Israel’s honeymoon period is over, and that Israel’s path forward is instead likely to become more complicated as it remains caught between the two world powers.