In the aftermath of the most recent fighting in Gaza, China loudly expressed its support for the Palestinian side. However, its extensive investments in Israel belie these statements. Now Israel could come under pressure for transferring technology to the Chinese.
In a nutshell
- China has adopted a tougher tone toward Israel
- It still has extensive economic ties with the country
- The Israeli tech sector is a lifeline for Beijing
Relations between China and Israel have been intensifying since 1992, and especially over the past decade. Both sides have a lot to gain from each other. However, Beijing’s reaction to the recent clash between Israel and Hamas has led some observers to believe relations between the two countries could take a turn for the worse.
The year 2021 will be challenging for Chinese leadership. Human rights abuses in Xinjiang have created considerable international backlash against the Chinese Communist Party (CCP), forcing Beijing to look for ways to improve its image. In Washington, the Biden administration seems more concerned about these issues than its predecessor.
The Chinese presidency of the United Nations Security Council in May 2021 coincided with the renewed Israeli-Palestinian conflict. Beijing decided to use this opportunity to discredit the United States and show the world that it has the moral high ground. By supporting Palestine, the CCP wanted to convince Arab countries that China is not the enemy of Muslims and that the Xinjiang abuse accusations are a complete fabrication. Of course, coming across as a responsible power that advocates for the weak would also help its Belt and Road Initiative, as well as its energy security. (Half of the oil China imports comes from Arab countries in the Middle East.) But these two needs were far less urgent than the image of the CCP abroad.
China has not invested substantially in helping the Palestinians, while the U.S. and other countries have done so.
China used the platform of the UN Security Council to organize several meetings during the Israel-Hamas conflict. The U.S. used its veto in the Security Council three times in the span of one week, rejecting any statement that contained a condemnation of Israel. Beijing made good use of this occasion to denounce the Biden administration. The CCP also invited Palestinians and Israelis to peace talks in Beijing. Officials made the most of the publicity opportunities in both domestic and international media, adopting a tougher tone against Israel. The Israeli embassy in China denounced the comments of a presenter on state television, saying it was “appalled to see blatant anti-Semitism expressed in an official Chinese media outlet.”
In the wake of this uproar, has Beijing achieved its objectives? It appears to have partially done so. When China offered to invite the Palestinians and Israelis to direct negotiations, at least the Palestinian Authority responded positively. Israel ignored the initiative. Both sides know that Beijing is not sincere and does not have the diplomatic capacity to solve the conflict. The authorities’ praise of Palestine and criticism of Israel were a show of gratitude for Palestine’s backing on the Xinjiang issue.
Facts & figures
China also supports establishing an international independent commission to investigate the human rights violations of the Israeli Army, as proposed to the United Nations by the Palestinians and the Organization of Islamic Cooperation. But the Palestinian side understands that this is mostly talk. China has not invested substantially in helping the Palestinians, especially in Gaza, while the U.S. and other countries have done so. China’s investments in Palestine are far from comparable to its investments in Israel over the last 20 years.
In fact, Sino-Israeli relations have grown closer. Beijing does not care about finding a solution to the Palestine-Israel conflict. Instead, Chinese policymakers privately believe that Palestine itself is divided, and that the Palestinian issue has been greatly marginalized in the Arab world over the last decade. Of course, this did not prevent China from paying lip service to the Palestinian cause and adhering to the two-state solution.
After the May fighting, Chinese leadership began to sense that it was criticizing Israel too harshly. On June 8, when Isaac Herzog was elected president, Xi Jinping immediately called to congratulate him. President Xi stated that “in recent years, China and Israel have had the closest ties at all levels,” and he added that he wanted to promote a new level of innovative and comprehensive cooperation between the two countries.
Israel’s arms sales to China
Since 1979, Israel has sold China billions of dollars in military equipment and technology, mostly key components and technology prototypes. Although Western countries also sold weapons to China prior to 1989, Israel significantly contributed to improving the quality of the Chinese military’s weapons.
After Western countries banned arms sales to China, Beijing turned to Russia, Ukraine and Israel. According to a report by the U.S.-China Economic and Security Review Commission, since 2010 Israel has ranked second after Russia as a supplier of weapons systems and sophisticated military technology.
Israel wants access to Chinese markets.
One notable export is the Python missile. This technology was licensed by China’s Xi’an Aircraft Company in 1989 and became the PL-8 missile, which is still in service today. Other technologies transferred include the E/LM-2035 Doppler radar (a derivative of which is installed on the J-8 and J-10 fighters) and the Tamam inertial navigation system.
In the 1990s and 2000s, Beijing sought additional military technology from Israel, including a $1 billion deal for the airborne early warning (AEW) system in 2000 and an upgrade to the Harpy assault drone in 2005. In both cases, Washington raised objections. Israel had to respond to U.S. concerns by canceling these sales. In other words, since 2000, the U.S. has intervened directly in Israel’s arms sales to China, and Israel has had to hold back – in theory.
But even so, incidents still occur from time to time. In February this year, Israel’s internal intelligence agency, Shin Bet, arrested at least 20 Israelis for their involvement in the illegal development, manufacture and sale of loitering munitions to “an unnamed Asian country.”
Acquiring Israeli tech
China was outraged by the cancellation of Israeli arms sales. However, it has not given up on developing relations with Israel in all areas, especially now. The CCP knows that Israel has leading competencies in artificial intelligence, big data and agricultural technology. Israel currently hosts more than 430 research and development centers for world-renowned companies. In the latest World Economic Forum Global Competitiveness Report, Israel ranked second in innovation. There are almost 9,000 Israel-based technology companies. Intensifying cooperation could greatly improve China’s military, industrial, agricultural and medical technology.
For its part, Israel wants access to Chinese markets. The Israeli embassy and the four consulates in China have been instructed to vigorously promote commercial relations with Beijing.
Chinese enterprises are handling important infrastructure projects in Israel. Shanghai International Port Group was awarded a 25-year contract for the Haifa terminal, and China Harbour Engineering Group will work on the Ashdod terminal. Both locations are adjacent to Israeli naval bases, a situation that has greatly irked Washington.
By the end of 2018, Israel had exported $2.6 billion worth of semiconductors to China.
From 2001 to 2018, bilateral trade between Israel and China soared from just over $1 billion to nearly $12 billion. The Toga network became the research and development center for Chinese telecom giant Huawei. Now Alibaba, ChemChina, Peacock, Lenovo and Xiaomi have all invested in Israel, mostly in companies focused on cloud computing, artificial intelligence, semiconductors and communication networks. Israeli technology companies have learned to exploit the opportunities offered to them by the Chinese market – all the while ignoring U.S. advice not to transfer the latest technologies, particularly dual-use ones, to their Chinese partners.
Israel has become an enclave for China to acquire cutting-edge technologies. The Israeli government rarely intervenes in the deals between Israeli companies and Chinese state-owned and private companies, which are de facto under government control.
Without outside pressure, Israel would have expanded its cooperation with China even more, especially in the high-tech field. With Beijing barred from the West’s advanced technology sector, Israel is a lifeline for the CCP.
Given the latest developments, the U.S. is likely to increase its pressure on Israel. But Washington may struggle to offer alternatives to markets and infrastructure upgrades. The U.S.’s most valuable tool to lure Israel away from China is certainly military aid, and additional investments could also prove helpful. However, in terms of markets and infrastructure, it will not be able to compete.
Unless Israel creates a legal framework for technology export, U.S. efforts to prevent technology transfer to China may prove useless. By the end of 2018, Israel, which develops and manufactures the world’s most advanced microchips, had exported $2.6 billion worth of semiconductors to China, accounting for 56 percent of Israel’s exports to the country. These figures are still growing. However, the Israeli government’s recent support of the UN resolution on the Xinjiang genocide may suggest that the new government is reconsidering its policy toward China.