China’s Israel, Israel’s China.

I spent the spring of 2019 in China, teaching at New York University’s campus in Shanghai. On several occasions during that period I was told that many people in China viewed Jews positively, even if they’d never actually met one. After all, both Karl Marx and Albert Einstein were Jews (or at least of Jewish origin), and they were not only great intellectual innovators but could also plausibly be regarded as inspiring forerunners of the effort to build a science-based “socialism with Chinese characteristics.” I was also told that the largely positive assessment of Jews in the popular imagination extended to Israel, widely perceived as friendly to China, a thriving center of technological innovation and also a tough state that knew how to secure its interests by whatever means necessary.

I really can’t say whether what people told me back then was at all accurate, but it did make me curious about China’s relationship with Israel. This is a relationship that seems to have received a lot less journalistic and scholarly attention than the evolving economic, political and security relationships between China and various Arab states, Iran and Turkey, and the effects of these relationships within those countries. Yet China and Israel have been connected in important ways for a long time, and Israel – obviously a major power in its region – apparently sees the maintenance of good relations with China as increasingly important.

Israel’s connection with the People’s Republic of China can be traced back almost to the founding of the two states: in January 1950 Israel announced its recognition of the new communist regime, the first country in the Middle East to do so. The United States was most displeased about this, since it refused to acknowledge the legitimacy of the PRC; at the time it was also keeping Israel at arm’s length so as not to aggravate relations with its Arab clients. China did not reciprocate, but as late as 1955 an Israeli trade delegation was invited to visit China. Relations went downhill from there, in the aftermath of the Bandung conference at which Arab representatives raised the issue of Palestine, and then the Israeli-British-French attack on Egypt in 1956 which from the PRC’s perspective demonstrated that Israel was an aggressive lackey of the imperialist powers. Unlike the Soviet Union, which maintained diplomatic relations with Israel from 1948 until the June 1967 war, the PRC not only refrained from recognizing Israel but was vocal in its (militant but largely rhetorical) support for the Palestinian national movement in the late 1960s and early 1970s. Yet by the 1980s China had covertly turned to Israel (which had earlier sold arms to Taiwan) to help it modernize its largely obsolescent military. The two countries had thus developed important ties well before they established full diplomatic relations in 1992.

Since then bilateral trade has burgeoned. Israeli exports of goods (excluding diamonds and military gear) to China grew from $340 million in 2001 to $4.4 billion in 2019, a large part of which is accounted for by computer chips made in Israel by Intel. Israeli imports from China – mainly machinery and mechanical equipment, textiles and the products of mining – grew from $730 million to $6.8 billion in the same period. The value of Israeli exports of services to China, including information services, computer software and royalties for the use of intellectual property, is much smaller. All told, China is today Israel’s third largest trading partner, accounting for about 10 percent of Israel’s foreign trade. But to put this in perspective: as a trading partner for Israel, China still lags far behind the United States and the European Union which in 2019 accounted for (respectively) twice and four times as much of Israel’s foreign trade.

The publicly available data on Israel’s exports to China do not include weapons systems and military technology. As US-China relations have deteriorated in recent years, with both the Trump and the Biden administrations framing China as a long-term strategic threat to the United States, Israel’s sale to China of advanced weapons systems has been an issue of growing concern in Washington. Israel’s (not very well-regulated) arms producers naturally have an incentive to sell all they can to China, though their efforts have sometimes by stymied by the Israeli military. Private Israeli arms dealers have also been active: in early 2021 Israel’s security service reportedly arrested at least twenty of them for allegedly trying to sell China “suicide drones” (used to devastating effect by Azerbaijan in its 2020 war with Armenia) without government approval.

US officials have also expressed alarm about certain aspects of direct Chinese investment (mostly by state-owned companies) in Israel, estimated at $19.4 billion between 2001 and 2020. Most of this investment has been in the technology sector and in critical infrastructure projects, the largest of which is at the port of Haifa, home base of Israel’s navy. At the older docks there, state-owned but slated for privatization, dockworkers’ unions have retained some power. In 2015, to reduce labor costs while enabling the port to handle much larger ships, Israel awarded Shanghai International Port Group (SIPG), a largely state-owned enterprise which manages Shanghai’s port, a twenty-five-year contract to upgrade and manage a newly constructed, privately owned and highly automated container terminal; the first phase of the project was completed in September 2021. (A different Chinese company had already won the contract to build a new privately-owned container terminal at the port of Ashdod, between Tel Aviv and Gaza.) Somewhat belatedly, officials in Washington began expressing their concerns about SIPG’s role at the port of Haifa, where ships of the US Sixth Fleet regularly visit, and the opportunities for espionage and disruption it could supposedly create, as well as about the sale to China of advanced weaponry and “dual-use” technology. There has even been vague talk that US warships might avoid visiting Haifa.

Israeli leaders have generally deflected US concerns that Chinese penetration of the Israeli economy constitutes a threat, though they have promised more careful scrutiny of trade and investment, and in 2020 Israel rejected a Chinese company’s bid to build a huge water desalination plant located near a sensitive missile test and satellite launch site. As Israel sees it, good relations with China – perceived as a friendly power – have contributed to Israel’s longstanding effort to diversify its economic and political links with the rest of the world in order to reduce dependence on any one country and enhance its ability to act independently. As for China, good relations with Israel can yield political as well as economic (and military) benefits: for example, in October 2021 Israel refused to sign on to a French-sponsored UN statement criticizing China’s treatment of the Uyghur minority in Xinjiang.

So far, complaints and pressure from Washington over Israel’s relationship with China do not seem to have led to any significant change in policy. But as US hegemony in the Middle East wanes and China seeks to exert its influence, Israel will have to figure out how to maintain its “special relationship” with the US, which (despite sporadic tensions) continues to brings it massive aid and critical strategic support, while successfully hedging its economic – and to an extent political – bets through good relations with China, with its own evolving agenda in the region.