Wang Yu. Journal of Modern Jewish Studies. 2020.
The rise of China as an economic superpower has major ramifications on its international standing. For dozens of countries across the globe, the relations with China have turned from something relatively marginal into a major factor of concern. These relations bring with them many opportunities, which expand rapidly in tandem with China’s economic advancement, but also manifold challenges, especially in the wake of aggravating China-US competition. Israel is not an exception to this tension between the lure of the Chinese market and Chinese investment and US pressure. How the country navigates itself “between the Chinese dragon and the American elephant” is one of the crucial questions influencing Israel’s future economic and diplomatic policies.
In recent years several studies have been published addressing various aspects of Israel-China relations, particularly in the economic sphere, and the impact of US pressure on Israel’s policy. My goal in this essay is to build upon my predecessors’ and my own work and expand it in two respects. First, I shall offer a slightly updated review of the state of Israel-China relations as is observable in early 2020. Second, I shall address the question of China’s image in Israel, especially in Israeli media, to explore its potential impact on policy-makers in Israel and on their choices. In this context, I shall also address the visible deficit of China’s “soft power” and its potential repercussions on the future trajectory of Israel-China relations.
Background: Ups and Downs to 2017
Israel’s unofficial relations with China started in 1979 under the auspices of the Jewish tycoon Shaul Eisenberg, who fostered clandestine bilateral ties focused on military technology transfer from Israel to China. In 1992, the two countries established diplomatic ties. These were the optimistic years of the peace process in the Middle East, and diplomatically speaking, China’s ties with Israel developed robustly. Economically speaking, though, China was still not in a position to influence Israel’s market significantly. Therefore, well into the end of the twentieth century the primary focus of the bilateral ties was in the sphere of military technologies (putting aside Israel’s agricultural assistance to China). This situation however, had eventually backfired with two major crises. The first was Israel’s backpedaling in 2000 from the promised sale to China of the Phalcon airborne early warning system (originally agreed upon in 1996). The second was in 2005, when Israel was forced by the US to confiscate Harpy attack UAVs that Israel had originally sold to China in the 1990s and sent back for maintenance and upgrade. These two consecutive crises caused by US pressure on Israel had changed the nature of China-Israel military ties completely. Yoram Evron summarised in a recent study:
Under the Israeli-American understandings on Israeli technology transfers to China, Israel was obligated to submit for US approval every application for sensitive technology export to China, which not only exposed business information to US officials—a potential hindrance to certain transactions—but also prolonged and complicated the export licensing process Israeli companies were required to undergo. Unavoidably, the situation harmed exporters and created turmoil. According to some claims, once the strongest link between Israel and China, Israel’s Ministry of Defense became the highest barrier to economic-technological connections between them.
The results were grim. Whereas China primarily blamed the US for the deterioration of Sino-Israeli military and technological ties, the overall new atmosphere of Israel’s reluctance to cooperate in potentially sensitive spheres was counterproductive in terms of bilateral ties. Thus, although bilateral commerce had continued to expand, paralleling China’s transformation in the early twenty-first century into “the global workshop” and the concomitant expansion of China’s domestic market, more substantial cooperation was much less evident than prior to the Phalcon and Harpy debacles.
In 2013, we are justified in speaking of a new start in Israel-China relations. At the beginning of his new (third) term as the Prime Minister of Israel, Benjamin Netanyahu visited China, which had just undergone a change of leadership from the General Secretary Hu Jintao and Prime Minister Wen Jiabao to the team of Xi Jinping and Li Keqiang. In a series of meetings, the two sides decided on massive upgrading of their economic, scientific and academic cooperation. The implications of the visit on Israeli policies are vividly depicted in a book by Efron et al.:
Upon his return from China, Netanyahu passed Government Resolution 251, which directs the expansion of all non-sensitive aspects of Israeli-Chinese cooperation. The Resolution was followed by additional government directives, including the appointment of the head of the National Economic Council to lead the expansion of ties with China; the creation of different working teams; and specific incentives for different ministries to cooperate with Chinese companies. Ministers of Finance and Housing promoted deals to bring Chinese construction workers and, for the first time, Chinese construction companies to Israel. In 2013, the Ministry of Economy began closing economic attaché offices in the United States and Europe and instead opened offices in China. The Minister of Transportation continued promoting tenders to Chinese companies.
Back in 2013, some scholars predicted a renewed thaw in China-Israel ties but it was expected that these ties would once again develop in the direction of “robust but low profile” military cooperation. Netanyahu, however, succeeded in avoiding the trap of re-entering the route that would certainly invite renewed US pressure, and redirected the cooperation toward civilian projects, especially R&D. His 2013 visit coincided with the decision of the Xi Jinping-Li Keqiang administration to encourage innovation and R&D development as the primary engine of the Chinese economy. Israel appeared as a natural partner for cooperation in this field. One of the most notable of its manifestations was the formation of the China-Israel Joint Committee on Innovation Cooperation (JCIC). The establishment of JCIC was decided upon in 2014, and its inaugural meeting was held in Beijing in January 2015. JCIC became the primary government-to-government cooperation mechanism between Israel and China. It encompasses a number of ministries and governmental agencies and is dedicated to promoting innovation cooperation in various fields, including science and technology, education, culture, healthcare, commerce, agriculture, intellectual property protection and so on. Its annual meetings were attended by Israeli leaders, including Prime Minister Netanyahu, and by high-level Chinese officials, including Vice Premier Liu Yandong and later Vice President Wang Qishan.
The establishment of JCIC marked rapid increase in bilateral R&D cooperation. Among many initiatives, one can mention the China-Israel Changzhou Innovation Park (CIP) in Changzhou City, Jiangsu Province. The CIP is designed to serve as a platform for Israeli industrial companies entering the Chinese market. It is difficult to assess precisely the JCIC role in bolstering China’s investment in R&D in Israel (for which see below), but at the very least it may be surely argued that it fostered a convenient atmosphere for this investment. Another important development, which paralleled the formation of JCIC was the expansion of academic cooperation. Among most notable developments in this field one may mention the enhanced cooperation between Israel’s Council for Higher Education (CHE) and the Chinese Ministry of Education. This cooperation included the establishment of the Israel-China 7 + 7 Research University Alliance. The 7 + 7 Alliance (which comprises leading Chinese universities and all the seven research universities in Israel) works on promoting research and academic cooperation between research universities in the two countries. Other agreements including allocation of funding for Chinese students to study in Israel and support for Israeli students eager to study in China.
The warming of bilateral ties is reflected in a great variety of fields. Bilateral trade continued to increase robustly, even though Israel suffers from perennial deficit and Israeli companies are generally less successful in penetrating Chinese market than vice versa. Much more notable was the increase of Chinese investments in Israeli companies and the increasing involvement of Chinese companies in the construction of infrastructure projects in Israel. As noticed by Evron, both “became vibrant channels of economic interactions between the states—each had concluded deals amounting to billions of dollars in just a few years.” As we shall see, both fields of cooperation also brought about a plethora of tensions.
The innovation-oriented cooperation between Israel and China peaked in 2017, when, during Netanyahu’s later visit to China, the two countries signed the Comprehensive Innovation Partnership agreement dedicated to increasing innovation ties on the governmental level and between Israeli and Chinese businesses. It is notable that Israel is the only one whose relationship with China was entitled “Comprehensive Innovation Partnership” (创新全面伙伴关系). Even if this was a second-best choice of wording (Israel was not granted the position of China’s strategic partner), the achievement is still remarkable. By itself, it demonstrates the success of the Netanyahu government’s efforts to diversify Israel’s global ties by paying increasing attention to Asia in general and China in particular. However, this success met with the renewed challenge amid the rise of US-China rivalry.
Israel-China Relations in Trump’s Era
The year 2018 may be considered a watershed in China-US relations. President Trump’s decision to launch a full-scale trade war marked the notable deterioration in bilateral ties. Whereas previous US administration were often highly critical of China, they maintained the façade of mutual respect and cooperation. In 2018 this façade was gone. Whereas much of the media was attracted by the tit-to-tat war of punitive tariffs imposed by the US on Chinese merchandize so as to “rebalance the trade deficit,” the real focus of the US concern lies elsewhere. The US made little secret of its unhappiness with China’s “Made in China 2025” strategy, which is an industrial policy designed to enhance China’s capacity to independently produce critical advanced technologies and achieve global leadership in high-end manufacturing. It was China’s successes en route to achieving its goals that generated “a qualitative shift in U.S. thinking because this is the first time that the United States has failed to keep pace with China’s innovations in a key emerging technology such as AI.” It is therefore precisely the gem of Israel-China cooperation, namely bolstering innovation in China, that now became the true target of the US administration ire.
It is tempting to analyse the shifts in Israel-China relations in terms of Israel’s involvement in bipartisan politics in the US. It had been noticed that Netanyahu’s romance with China started in 2013 against the backdrop of souring ties with the Obama administration. Since, in distinction, Netanyahu’s ties with Trump are much closer, it is reasonable to assume that Israel under him would become more responsive than ever to US pressure. But one should neither jump to premature conclusion, nor limit US-China aggravating rivalry to Trump’s personal preferences. Rather, a negative view of China became a sort of new US bipartisan consensus, especially after 2017. Back then, the contrast between the bold vision of China’s rise to the position of international eminence outlined by President Xi Jinping during the 19th congress of the Communist Party of China and what appeared to many US and foreign observers as the weakening of the US international clout and its international prestige under the Trump administration, caused an alarmist reaction throughout the broad spectrum of US media and policy-makers. China was swiftly rebranded as the major rival of the US and this understanding is shared by policymakers from both major parties. Thus, whereas the “tariffs war” with China launched by President Trump is not necessarily popular, other steps—such as the imposition of penalties and trade bans on Chinese telecom giants, ZTE and most notably Huawei—are not challenged by the opposition leaders. It may be argued that whereas it is impossible to predict whether or not US-China total decoupling is possible, there is no doubt that some kind of mental decoupling from China had occurred already.
The results for Israel are ominous. Once the US decided to disengage from China, it started pressuring its allies to adjust their China policies. This is most notable in the field of the US fight against Huawei, which by in early 2020 possesses the world’s best platform for upgrading the telecommunications to the fifth generation (5G) level. US pressure succeeded in causing Australia and New Zealand to join the US ban on utilizing Huawei’s technology in the 5G upgrading of their networks. The pressure on the UK was (as of May 2020) less successful, as was also the case in Europe and among the US allies in the Middle East. Israel also “received clear and explicit warnings on the matter from senior American officials, including President Trump, former National Security Advisor John Bolton, and Secretary of State Mike Pompeo.” Whereas in this case Israel’s compliance with US pressure was easy and not costly (Israel, unlike UK, European, and the Arab countries did not employ Huawei technology for its 4G network), overall the situation became more complex. More than a decade after Israel reached a tolerable level of mutual understanding with the US regarding its military relations with China, the new wave of US pressure threatens to jeopardize anew the carefully cultivated technological romance with China.
In what follows, I shall outline two aspects of China’s engagement with Israel which generated much tension both before the US turn against China and especially in its aftermath. I shall show how the changing atmosphere is reflected in Israeli treatment of Chinese investments and infrastructure projects. I compare these two fields with the field of academic exchanges which apparently is deemed less sensitive and which continues to develop robustly (although negative trends are visible in this field as well). In the next section, I shall turn to the issue of China’s image in Israel as a factor influencing the future of bilateral ties.
Chinese Investments
China’s outbound economic investment started to develop rapidly in the aftermath of the global financial crisis of 2008, and it has accelerated considerably since the launch of the Belt and Road Initiative in late 2013 (on BRI see more below). Pre-2014 Chinese investments in Israel were relatively small, with the exception of the acquisition of the agrochemical Machteshim Agan Industries (later renamed Adama) in 2011 by the China National Chemical Corporation (ChemChina) subsidiary China National Agrochemical Corporation. Back then the acquisition was hailed as “the largest transaction ever concluded between a Chinese and an Israeli company” and a “milestone” in Machteshim’s 66-year history. The dissenting voice of the former president of the Technion—Israel Institute of Technology, Zehev Tadmor, who lamented the sale as “a sad day for industry” remained a minority opinion.
The sudden acceleration of Chinese investment in Israel and acquisition or attempts to acquire Israeli companies after 2014 met with a very different reaction. The most notable of these acquisitions was China Bright Food Group’s takeover of Israel’s Tnuva Food Industries in 2015. This was the largest acquisition in the history of Israel’s food industry and it brought the Chinese investment into the limelight of the Israeli media and broad public. It caused vociferous opposition from those who lamented the loss of a famous national icon, those who feared the lowering of food safety standards after the acquisition, and those who raised security concerns. Of the latter, the most notable was the former head of Mossad, Efraim Halevy, who warned that the purchase of Israel’s largest food company by a Chinese firm would be a threat to national security. Whereas in Tnuva case the acquisition was completed, another major acquisition—that of Fosun International which planned to buy a controlling stake (52.31%) in an insurance and financial group Phoenix Holdings—failed, in part due to the Israeli regulators’ opposition and in part due to Fosun’s domestic troubles. Clearly, China’s entrance into the Israeli market was not rosy.
In retrospect, the Tnuva and Phoenix examples appear as isolated incidents. Since 2016, Chinese capital has moved robustly toward the investment in biomedical and other technological companies in Israel, such as, e.g. a cybersecurity firm HexaTier acquired by Huawei. Efron et al. estimate that the number of Chinese companies investing in Israeli high-tech entities rose from 18 in 2013 to 34 in 2017 and that annual Chinese investment in start-ups from 2015 to 2017 was in the range of $500 million to $600 million, about 12 percent of all capital raised by Israeli start-ups during that period. For capital-hungry Israeli start-ups Chinese investment had been a timely and welcome solution. Initially, these acquisitions did not annoy the broader public either. Whereas certain voices in Israel echoed Halevy’s fears of Israel jeopardising its security by exposing itself too much to China’s economic interests, this remained a minority opinion. However, as Chinese investment in Israel drew US attention, a major change in attitudes ensued.
To a certain extent, increased Chinese investment in Israel was by itself a by-product of the US-China competition. One insider noticed in 2019: “Today, I see a strong movement of investors and companies from China to Israel, because Chinese investors are having more trouble in the US.” Certainly the US policy makers were well aware that, being denied access to advanced technologies in the US, Chinese companies would turn elsewhere, including Israel. The US goal is now to deny China this opportunity, by exercising pressure on the US allies.
One of the best sources for understanding the mindset behind the US pressure on Israel is the study The Evolving Israel-China Relationships prepared by a team of authors working for the RAND corporation. This corporation is a global policy think tank in service of the United States Armed Forces. This study, which is frequently cited in my article, examined the “nature of Israel-China relations with a greater emphasis on the Israeli perspective and implications for the United States.” The study (self-identified as “report”) primarily focuses on the perceived negative security and political implications of Israel’s engagement with Chinese investors. Whereas Israel’s interests are duly acknowledged, the study clearly is concerned primarily with the interests of the United States. It recommends that the United States “work with Israel to deconflict, shape, and advance a mutually agreed-upon agenda on China and help Israel build its knowledge base and understanding of the PRC.” After a systematic survey of the major components of Israel-China relations and their changing patterns, the authors focus on “Areas of Concern” related to these ties. Their concern is primarily with Chinese investment and infrastructure projects (discussed in the next sub-section of this article). It may be reasonably surmised that their views are representative of at least a significant segment in the US political and security establishment.
The RAND report explains how the assessments are done.
We address the profiles of Chinese entities investing or engaging in construction in Israel and several factors that should be considered when assessing the risks posed by this activity. Last, we look at several Israeli companies that have been the targets of Chinese investment and assess whether there are risks from Chinese ownership of or stake in these entities.
Once we turn to the report, we discover an extraordinary broad list of “areas of concern.” Chinese companies are suspect if they have ties to Chinese military or government connections, if they collaborate with China’s censorship efforts or have activities in Iran, if they are suspected of corruption or have close ties with the “princelings” (the progeny of the Communist Party leaders). Even when a founder or a CEO of a Chinese company served as the National People’s Congress delegate or if Xi Jinping paid a visit to the company headquarters this is a good reason for suspicion. Predictably, under such broad categories, almost any important Chinese economic entity becomes a problematic partner. Should Israel follow this list of “concerns,” it would be difficult to expect any Chinese investment at all!
A similar picture arises from the list of Israeli companies, the acquisition of which should, according to Efron et al., raise the level of concern of Israeli and US policy makers. Whereas in some cases this concern is understandable, e.g. when the company’s product may serve military and not only civilian needs (“potentially sensitive technologies”), other cases raise an eyebrow. For instance, ZTE investment in Israeli company Rainbow Medical, which deals with medical innovation, is opposed not because of the Rainbow products but because of the suspicion of ZTE’s alleged ties to China’s military and its involvement with Iran. Even odder the author’s concern regarding the investment of an unknown Chinese company in Israeli Copyleaks, which uses AI to identify plagiarism. Here the problem is that the “Copyleaks’ founders were formerly programmers in the 8200 unit of the IDF, which is responsible for signals intelligence and is comparable to the U.S. National Security Agency.” Yet given the prominence of 8200 unit graduates in most of Israeli high-tech companies, it becomes clear that the authors hint, again, at undesirability of Chinese engagement with the Israeli technological sector in general.
The RAND report allows us to assess the potential nature of US pressure on Israel with regard to Chinese investment in the country. To which extent this report reflects an actual state of affairs in US-Israeli debates about China is difficult to assess, but some anecdotal data indicates that the RAND contributors’ views reflect the pattern of US pressure on Israel. For instance, in May 2019, “The Marker” reported the US’s strong opposition to Chinese-owned Tnuva investment in Israeli food-tech industry. Since the latter does not seem to be militarily sensitive, it is clear that the US currently opposes any major investment by Chinese companies in Israeli technological sectors.
The RAND report hails the attempt (still inconclusive by early 2019) to establish “a committee to screen foreign investments.” Soon enough the establishment of this committee became a focal point of US pressure. In August 2019, Barak Ravid reported that “Chinese investments in Israel have become the main source of tension with the Trump administration over the last two years.” According to his report, “officials from Israel’s Foreign Ministry warned in a classified Cabinet meeting last month that if the Israeli government doesn’t create a strong monitoring mechanism on Chinese investments, it could lead to a harsh confrontation with the Trump administration.” Ravid further said that “President Trump and other senior U.S. officials have asked Netanyahu several times to take steps to limit Chinese investments … The Trump administration has started showing signs of nervousness about what it sees as foot-dragging by Netanyahu on the issue.” After procrastination (caused in part by the fact that through 2019 Israel was ruled by interim governments only), the screening committee was established in October 2019. The establishment of this committee aroused bitter complaints from China’s special envoy to the Middle East, Zhai Jun, who accused the US of “bullying” tactics and noticed that “China never set obstacles to US-Israel cooperation, so I don’t think it makes any sense for the US to question China-Israel cooperation.”
Currently (May 2020) it is still too early to evaluate how the aggravating US pressure will influence Israeli policies toward Chinese investment in technological sectors, and whether or not this pressure will continue unabated. What is clear is that this pressure has the strong potential of utterly jeopardising relations between Israel and China insofar as Netanyahu’s major achievement, the Comprehensive Innovation Partnership agreement with China, is concerned.
Infrastructure Projects
In the first two decades of the twenty-first century, China built what is arguably the best infrastructure worldwide. Its engineers, workers, and construction companies gained unparalleled experience in building highways, railways, ports, and airports. In light of inevitable and foreseeable end to the current infrastructure spree, China’s leaders are most willing to capitalize on the country’s expertise by exporting it to anybody willing to pay. This consideration was among the triggers of the Belt and Road Initiative. The core of the initiative is improving China’s image abroad through sharing its experience, technology and capital, especially in infrastructure construction, and, more generally, on promoting regional and trans-regional economic cooperation. From the year 2014 on, China became engaged in a spree of investment and infrastructure projects, especially in the field of transportation along the lines of traditional Silk Road and Maritime Silk Belt. Israel, which is considered a BRI country was one of the beneficiaries of these projects.
China’s first major pre-BRI project conducted in Israel was a relatively modest one: in 2007 China Civil Engineering Construction Corporation bored the Carmel tunnels, which became arguably the first major infrastructure project in Israel delivered ahead of schedule. In a few years, as China’s reputation as a major player in the field of infrastructure development matured, a set of new contracts and Memorandum of Understanding were signed, causing an observer to predict confidently in 2015: “China to be Israel’s biggest infrastructure partner.” The approved projects included excavation of the tunnels on the Akko-Karmiel train line, developing subway in Tel Aviv, building the Eilat-Ashdod (the so-called “Red-Med”) railway (which did not materialize), and, most significantly two port projects: expansion of the Ashdod port and partial construction and operation of a new container terminal at the Haifa port for 25 years starting with 2021. It is the latter project which attracted the utmost opposition in Israel and in US, and it would be the focus of my discussion here.
Haifa is Israel’s major port, part of which is used by the Israeli navy and it is frequented by the US Sixth Fleet. In 2015 the Shanghai International Port Group (SIPG) won a tender to build and operate a new terminal there. Initially, there was not much concern over the deal, but in 2018 the situation changed dramatically. In August 2018, at the University of Haifa’s Workshop on Future of Maritime Security in the Eastern Mediterranean conference, Israeli and US participants expressed strong dissatisfaction with leasing such a strategic location to a Chinese company. At the conference Retired Admiral Gary Roughead, the former chief of US naval operations warned that a Chinese-run port in Haifa meant American ships could not regularly use the Israeli naval base nearby because of fears of being monitored. His concerns were echoed by the retired Rear Admiral Shaul Chorev, former Director General of the Atomic Energy Commission, who said a new mechanism was required to keep an eye on Chinese investments in Israel. The pressure soon intensified with the intervention of the former US ambassador to Israel, Dan Shapiro, who called upon Israeli authorities to deal with their “mistake” of allowing the Chinese company to win the tender “sooner rather than later.” This was followed by a series of mutual blaming among different Israeli ministries, regarding who was responsible for “a huge mistake.” Soon enough John Bolton, then the US National Security Advisor, added his concern during his visit to Israel in January 2019. In the eyes of many the situation started resembling that of the Phalcon and Harpies affairs: whereas yielding to US pressure would dramatically aggravate Israel’s relations with China, jeopardizing military alliance with the US would be simply unthinkable to Israeli policy-makers. Despite all these pressures, the project continued. On May 10, 2020, an Israeli newspaper reported that, notwithstanding the COVID-19-related mess, the shipment of the first batch of four ship-to-shore (STS) cranes and two rail-mounted gantry (RMG) cranes for Haifa Automatic Terminal went ahead as a major step toward starting the port’s operation.
Certainly the US has legitimate concerns about Chinese espionage given the tensed relations between China and US. But does the Haifa port terminal project really jeopardize the Sixth Fleet security? Even if one dismisses the classified security appendix to the franchise agreement with SIPG in which the Chinese are committed to respecting Israel’s security as nothing more than a sheet of paper, one still can wonder whether or not building a port is the best way to gather espionage. Some people in charge, such as Yigal Maor, the director-general at the Transportation Ministry’s Administration of Shipping and Ports remind that “there are much better places” to gather valuable intelligence than the area where SIPG will be in charge. Recall also that the US was not irritated by the franchise agreement prior to the recent escalation of US-China tensions, nor did it prevent the taking over of cargo terminals by Chinese state-owned companies in ports across Europe, such as Zeebrugge in Belgium, as well as ports in Spain, Italy, and Greece. It is likely that in the case of the Haifa port, security concerns are a convenient veneer for the real matter: the US dislike of the expansion of China’s activities among US allied countries.
To demonstrate this dislike one can mention most recent developments around the tender for establishing a new desalination factory Sorek 2, the would be largest desalination factory worldwide. China’s Pan-Mediterranean Engineering Company (PMEC, a wholly-owned overseas subsidiary of China Harbour Engineering Co., Ltd.) passed the first round of the tender but was disqualified in May 2019 due to an apparent “lack of experience,” although it had previously established a desalination plant in Singapore. Lior Gutman opined that disqualification of PMEC was due to US pressure to prevent Chinese companies from bidding for vital infrastructure projects. Needless to say, in terms of security itself, desalination projects do not appear to be extra sensitive. If, indeed the US pressure was behind the PMEC disqualification, this augurs badly for the future of Israel-China ties.
The two finalists of the Sorek 2 tender were an Israeli company IDE Technologies and Hong Kong based Hutchison Water, a daughter company of CK Hutchison Holdings. The latter, a private company which is certainly not run by the Communist Party of China was probably not expected to generate the US antagonism, but this was not the case. On May 13, 2020, less than two weeks before Israel was supposed to decide who would win the tender, the US Secretary of State Mike Pompeo arrived for a brief visit. The US delegation’s spokesmen did not hide the major reason for this visit: it was to voice Pompeo’s concern over Chinese investment in Israel. In an interview with a public television, Pompeo warned Israelis that China’s gaining “access to Israeli infrastructure” could “put Israeli citizens at risk” and endanger the “capacity for America to work alongside Israel on important projects.” This time the pressure succeeded: on May 26, less than two weeks after Pompeo’s visit, Israel announced that the tender had been won by IDE Technologies. Israeli media uniformly described this decision as yielding to US pressure.
It is worth remembering here that CK Hutchinson Holdings operate in Hong Kong under the aegis of the Li Ka-Shing Foundation, owned not by a Communist Party member but by one of the richest Hong Kong tycoons with long history of cooperation and investment in Israel. That Pompeo considered the investment by this group as dangerous enough to warrant a brief personal visit to Israel amid the ongoing COVID-19 crisis in the US is remarkable. It is possible that Li Ka-Shing personally was blacklisted by US authorities because of his active role in investments in Israel and “fostering knowledge transfer between China and Israel.” Alternatively, it is possible that any major infrastructure project in Israel initiated by an ethnic Chinese is now suspicious in the eyes of US leaders. I am not in a position to evaluate the reasons behind Pompeo’s interference; nor can I currently evaluate how much his pressure contributed to the Hutchison Water loss of the tender. Yet what is clear from this case is that the US pressure with regard to China’s role in Israeli economy is aggravating and that the future of China’s infrastructure projects in Israel is currently unclear.
Academic Exchange
The twenty-first century witnessed a significant upsurge in educational and academic exchanges between China and Israel. Since internationalisation became an important criterion for the universities’ global assessment, both Israel and China are happy to expand bilateral and multilateral academic ties to enhance their universities’ prestige and international ranking. Advances in the Chinese academy also made it a more attractive partner for Israeli universities. Academic exchanges are further encouraged by both governments, e.g. through fostering the abovementioned “7 + 7” inter-university cooperation system. For the sake of brevity I shall focus here on a single aspect of the burgeoning academic relations between Israel and China, that is the flow of students from China to Israel.
Student exchanges between the two countries started in 1993 with a modest agreement of a few exchange scholarships. Only around 2012 did the allocation of fellowships start to expand rapidly. In that year, the Israeli Committee for Higher Education (CHE), in cooperation with the Israeli Ministry of Finance began implementing a comprehensive plan aimed at developing academic ties with China and India. The programme provides 350 scholarships annually to attract Chinese students to study in Israel. Among these scholarships, 40 were set for BA degree and 60 for MA Degree in the fields of Desert Studies, Chemistry, Civil Engineering, Electrical Engineering, Archaeology, Islam & Middle East Studies and Business Management. The rest of the 250 scholarships were for summer courses. From 2017 and on, Israel allocated 200 annual scholarships for summer courses which were supplemented by travel support from the China Scholarship Council (CSC).
The bilateral fellowships exchange is further augmented by many dozens of exchange agreements between universities in China and Israel, which promote staff and student exchange (not all of these agreements are implemented, though). Besides, from 2012/13-2017/18 CHE offered up to 100 additional annual fellowships (of up to three year’s duration) to outstanding post-doctoral researchers from China and India in all academic fields. The ambitious programme was later trimmed. Currently (the 2020/21 academic year), a smaller number of 55 two-year Post-Doctoral Fellowships is offered for outstanding researchers from China and India.
The language barrier is arguably the highest hurdle facing by the international students who are eager to come to Israel, which is especially true for the Chinese students. Things are changing, though. In 2019, the CHE decided to expand the bilingual Hebrew and English academic programmes in the universities through conversion of academic educational programmes from Hebrew to English. The declared goal of this action is to strengthen internationalization of Israel’s higher education and attract more outstanding students from abroad. The CHE is not shy to talk about political aspects of the new steps:
Promotion of internationalism in higher education is extremely important from political (diplomatic ties with foreign countries), social, and economic standpoints, as well as from a Zionist standpoint of opening these institutions to worldwide Jewry and turning Israel into a beacon of academia.
According to CHE data, the percentage of international students studying in Israel currently stands at approximately 1.4%. This percentage is significantly lower than the average in OECD countries, which currently stands at approximately 6%. The goal of CHE is to have 24,000 international students studying in Israel in 2022, and clearly the Chinese students are among the most targeted groups. Currently there are about 1000 Chinese students studying in Israel every year (including students in both short- and long-term programmes), which consists of less than 10% of the currently enrolled international students in Israel. In order to attract more incoming Chinese students, the CHE has decided to continue providing scholarships for outstanding Chinese (and Indian) students in the academic year of 2020 (including support for short term Summer Courses). The scholarship will cover the fields of agriculture, humanities, business management and other majors in which Israel is considered to be advanced. Among the fields in which majors are offered one can identify high-tech and otherwise sensitive fields such as Nano-Photonics (Bar-Ilan University), Data Mining and Business Intelligence for Cyber Security (Ben-Gurion University of Negev), Food Safety and Security (Tel Aviv University), and various programmes in Engineering and Science provided by the Technion.
With the deterioration of US-China relations, the attitude toward Chinese students in the US became more restrictive, resulting in the flow of many of Chinese students to other destinations, such as UK, Australia and New Zealand. Israel could potentially benefit from the changes in the flow of Chinese students abroad. Should this happen, a question can be raised: would the US policy-makers oppose to this type of Israel-China cooperation as well? The answer is not simple. On the one hand, in contrast to high-tech cooperation and infrastructure projects, academic ties between Israel and China were not a source of public concern by US politicians. For instance, the RAND report did not single out academic exchanges between Israel and China as something worrisome. On the other hand, in the atmosphere of accelerating “decoupling” between China and US, it is difficult to imagine that the US will remain indifferent toward any aspect of Israeli cooperation with China. In May 2020, the Bloomberg website reported that “Israeli academics’ ties with China are on the U.S.’s radar” and that the US has started pressing Israel to “dial down” its academic cooperation with China in the fields of “technology research and development.” Just a few days later, it was reported that three US lawmakers proposed a bill to ban mainland Chinese from studying science and technology in the United States, arguing that they pose a threat to national security. If this bill passes, one may expect an acceleration of US pressure on Israel to terminate or downscale academic exchange with China on the basis of “security concerns.” Time will show whether or not this happens. In any case, unless CHE succeeds in lowering the language barriers significantly, it is difficult to expect a massive influx of Chinese students to Israel.
“Between the Elephant and the Dragon”: Israel’s Balancing Act
Israel-China relations are exemplary of mutually beneficent bilateral relations of the type that China pursues with most countries in the world. Whereas Israel and China will never be allies, which explains why full-scale military cooperation between them is impossible, their economic relations are reflective of what Chinese politicians usually call the “win-win situation.” China is Israel’s third largest trade partner and an increasingly important country in terms of investment, infrastructure projects, and (at least potentially) academic cooperation. From the Chinese point of view, trade with Israel is not very significant (it accounts only for 0.3 percent of China’s total foreign trade; China’s investment in Israel only represents 0.4 percent of China’s global investment; and Chinese tourism to Israel constitute only 0.1 percent of China’s outbound visits). Yet Israel is important primarily in terms of potential collaboration in a variety of high-tech fields. Israel’s strong R&D basis and its image as a “start-up nation” made it an attractive destination for Chinese capital and for China’s collaborative projects. It seems that in the recent decade the two countries have discovered a convenient way of cooperation which focuses on common interests and downplays ideological, cultural and political differences between the two.
These mutually beneficent relations stand, however, on shaky foundations. Back in 2005, in the aftermath of the Harpy affair, Yitzhak Shichor, the leading specialist on Sino-Israeli relations, argued that in the triangular China-Israel-US relationship, “Washington represents the independent variable whose uncompromising policy toward China is being systematically consolidated.” In his view, both China and Israel were dependent variables with little room to manoeuvre. Several years later, just when China-Israel relations started to warm up again, Shichor prophetically noticed:
Sino-Israeli relations are expected to expand and diversify as long as Sino-US relations remain stable and steady. However, based on the past experience, deterioration in Sino-US relations, not to mention confrontation … could impose limits also on Sino-Israeli relations—not only in military fields (which is obvious) but also in other fields (e.g., science and technology, communications, or diplomacy).
Recent developments have proved the accuracy of Shichor’s evaluation. Facing the US pressure, which derives much more from the US domestic choices rather than from Israeli actions, Israel discovered itself in a highly vulnerable position. It can never sacrifice its vital alliance with the US, but nor can it allow itself to disentangle from China. This quagmire was briefly summarised in a perceptive op-ed penned by Oded Eran, a senior researcher at the Institute for National Security Studies and former Israeli ambassador to Jordan and the European Union. Eran has reminded the readers that “Israel depends heavily on the US for two major ‘existential’ reasons—the supply of sophisticated weapons and the veto the US can impose on draft resolutions in the UN Security Council that could be putting Israel at risk.” Yet having said this, Eran expressed veiled dissatisfaction with the arbitrary US pressure:
The boundaries between what is strategically vital and what is not are not clear or similarly defined and shared by those considered as US allies. The various US departments and agencies will do well to provide rather more nuanced policy guidelines that they can share with other governments. Whatever is presented to other governments can be imposed on them and should take into consideration the specific circumstances of allies.
Eran concluded:
The cabinet has appropriately held in recent weeks several discussions searching for a strategy which safeguards continued US support, continued strong economic cooperation with China and the competitiveness of Israel as the Start-Up Nation. It is not easy to find an option other than “either-or.”
I find Eran’s analysis and conclusions very convincing, but I want to shift from Israel-US to the Chinese perspective. I think that China’s problem in Israel (and elsewhere) derives not only from the fact that the country cannot be compared with the US in terms of its military and diplomatic power, but primarily from the deficiency of its “soft power.” It is an open secret that China’s image abroad, especially in the countries that define themselves as liberal democracies, is far from positive. Whereas the country’s rapid development had allowed it to shed once common perception of China as a poor underdeveloped country unable to produce anything valuable, this change was not accompanied by a parallel rise in tolerant attitudes toward China’s political and social system or its cultural outlook. On the contrary, it may be asserted that the more powerful (and respectful economically) China becomes, the more criticism is waged against its perceived threat to world stability.
Take Israel, for instance. Despite the overall positive experience of economic interaction with China, suspicions remain high with regard to any major deal with the country. Elsewhere I discussed what I believe were entirely groundless fears regarding China companies’ acquisition of Tnuva or the attempted acquisition of an Israeli insurance company. Similar fears remain a powerful antidote against increased cooperation between Israel and China. Thus, even Yigal Maor, who had strongly defended leasing the Haifa port terminal to a Chinese company admitted, “I agree that we don’t fully understand China—they have a different mentality than we do.” This postulate of “different mentality” explains the somewhat irrational fears of China among segments of Israeli security and political circles. See for instance a report about a recent (2019) meeting between members of Australian and Israeli right-wing think-tanks:
… an Israeli expert expressed concern over Chinese infrastructure contracts, such as the Tel Aviv subway. “Its route is 200 meters from the IDF headquarters, from the military intelligence headquarters and from the Ministry of Defense,” an expert noted. “It’s not only that they are digging the tunnels,” he added, “They’re also providing the trains, and God knows what they’ll put in the trains.”
This level of argumentation (God knows what …) can easily be dismissed as an anonymous expert’s paranoia, but it is not necessarily the case. Mistrust of China is evident across the spectrum of Israeli mass media. The easiest and most recent example would be the coverage of the (still ongoing as I am writing this article) coronavirus (COVID-19) crisis. I happened to be in Israel as the crisis unfolded and I was watching closely media reports. These were overwhelmingly negative. Even before Trump and Pompeo started accusing China of conspiracy and inflaming anti-China rhetoric, mass media in Israel were already overwhelmingly critical of the country’s fight against the pandemic. China’s ruling party was singled out as guilty of the epidemic’s outbreak, as untrustworthy, as paying no attention to the people’s suffering, as seeking only propaganda success without any concern for the real situation on the ground, and the like. Even when the situation in China had shown marked improvement, the tone of most reportaging remained strongly negative, especially in the liberal Haaretz, which faithfully followed the anti-China line of the New York Times. This is not exceptional. Deep mistrust of China in liberal media (not to say of populist media) is one of the major hindrances to enhanced Israel-China cooperation.
In my earlier study I have noticed a marked lack of balance in terms of “soft power” between China and Israel. Whereas Israel’s image in China is largely positive, and whereas Israel’s interests in China are promoted by a mixture of Jewish groups such as SIGNAL or native Christian groups, there is no parallel dissemination of positive views of China in Israel. Although China’s official media outlets in English (such as China Global Television Network, CGTN) and in Hebrew (China Radio International, CRI) do attempt to improve China’s image abroad, the low level of credibility of these outlets and a very low level of exposure to their messages makes them ineffective. Aside from a few positive coverages of China’s development by former students of Asian studies working in China, overwhelmingly the country’s image is being shaped by its critics. It is not my intention to discuss to what extent critical coverages of China in Israeli media are justified. What matters is that insofar as the negative view overwhelmingly dominates mass media, one cannot expect development of amicable views of China among Israeli public or policy makers.
Another problem regarding China’s image in Israel is marked lack of in-depth coverage of China in Israeli media. This is not surprising. To the best of my knowledge, not a single Israeli media outlet employs an expert on China. The majority of Israeli reports about China are based on translations from the US (or UK) media, with little local input. Lost in translation are many nuances. Lack of expertise is particularly notable insofar as China’s long-term developments are concerned. This perplexing lack of professionalism can be directly relevant to inaccurate (if not necessarily intentionally hostile) discussions of aspects of China-related projects in Israel. Take just the recent example of the Hutchison Water company debacle, mentioned in Section 2.2 above. I have read a dozen Israeli media reports about the case but each of them invariably referred to the company as “Chinese,” paying no attention to its Hong Kong rather than Mainland China basis. This lack of understanding of China’s complexity is yet another negative factor that shapes both Israeli public opinion and, at least potentially, its policy-makers.
Yet allow me to end on a positive note. Despite the overall negative media coverage of China, Israel lacks a strong anti-China lobby within its political establishment. There is no Israeli counterpart of China-bashers such as US senator Marco Rubio. Even when occasionally members of Knesset call upon more vigilance directed against China, this does not amount to a consistent anti-China stance. Nor has China become a pawn in Israeli partisan politics. Besides, negative media reports notwithstanding, the Israeli public overall (60% according to 2019 PEW survey) considers China’s economic growth in general and its investment in Israeli economy as a good thing. As such there is much hope that Israeli policy makers will follow Eran’s advice and find a viable way of maintaining robust economic and scientific ties with China without sacrificing Israel’s alliance with the US.
Summary
It is imprudent to try to predict the outcome of Israel’s delicate balancing act between what Eran dubs “the Chinese dragon and the American elephant.” It is even less prudent to try to do so in the middle of COVID-19 related anti-China hysteria in the United States with its manifold negative repercussions on US allies worldwide. Conceivably, Israel will do its best to preserve economic ties with China without jeopardizing its alliance with the United States. Whether or not it succeeds depends partly on its flexibility and partly on the intensity of the US future pressure, which is currently impossible to estimate. As of May 2020, insofar as Israeli policy-makers are concerned “the best case scenario may be hoping that Trump gets distracted by his re-election campaign and Israel can continue to walk the fence in the meantime.” Time will show whether or not these hopes are prudent.
From a Chinese perspective, it is clear that, economically speaking, China was hugely successful in convincing Israelis that partnership with Chinese companies, China-led infrastructure projects, and increasing academic engagement with China is a good choice. This is impressive once we recall that just a decade and a half ago China was associated with cheap labour and cheap but low-quality products. On the other hand, it is also clear that China dramatically lacks soft power. It is unable to shed its image as a strange state, an ultimate other, who cannot be really trusted. An old Chinese saying “they are not of our kind, their hearts should be different [from ours]” (fei wo zulei, qi xin bi yi 非我族類 , 其心必異) regrettably is fully applicable to China’s image in Israel. Without improving this image, China will always face an uphill battle when dealing with the US influence worldwide in general and in Israel in particular.