Israel’s Relationship with China Reveals Much About Its Hubris

Joseph Dana

From the United States to Japan, Taiwan, the European Union and beyond, governments have been wary of Chinese technology making its way into their critical infrastructure. At the same time, there is worry of Chinese acquisition of foreign proprietary technology through less-than-transparent means. There is a conundrum almost every government face in their relationship with China: they need the country for its affordable manufactured goods, investments and, indeed, its industrial technology (think, 5G telecoms), but at the same time, they must question whether China’s commercial interests can be divorced from Beijing’s strategic and security interests. That is a matter hard to resolve definitively, and there are as many supporters of deeper engagement – commercially and diplomatically – as there are skeptics.

Israel, however, doesn’t seem too worried, and has in fact been less fussy about its commercial ties with Beijing. But it will soon have to think about this as it weighs the pros and cons of its relationship with its main ally, the United States, with a deeper engagement with China.

With its ambitions to reroute trade to Beijing through a global infrastructure project called the Belt and Road Initiative, China has been courting Middle East countries with the promise of large investments. These have not been without controversy. Chinese companies have bought stakes in Israeli infrastructure such as Haifa Port, which often hosts American military ships, and a Chinese state company now controls Tnuva, Israel’s largest food manufacturer.

The Chinese also have been interested in the Israeli technology and surveillance sector. Chinese investors like the Shenzhen-based technology group, Kuang-Chi, are emblematic of the Chinese interest. In 2016, Kuang-Chi invested $20 million in the Israeli firm eyeSight Technologies, which pioneers computer vision and gesture control.

Israeli Prime Minister Benjamin Netanyahu has touted his country’s relationship with China as proof that Israel has one of the most innovative technology sectors in the world. While the level of Chinese investment might be a touch overblown – $308 million was raised from China by Israeli tech companies in 2017 and slightly more last year according to provisional data – it is forecast to grow comfortably larger this year. And that has American officials increasingly concerned.

Last year, US Deputy Secretary of Energy Dan Brouillette said in Tel Aviv that Israel should more aggressively evaluate foreign investments, otherwise any vulnerabilities could put US-Israeli intelligence-sharing at risk.

It was a stunning statement for a senior US official to make and revealed a serious gap in the so-called special relationship. US National Security Advisor John Bolton has also raised concerns about how Israel’s relationship with Chinese electronics manufacturers ZTE and Huawei could affect US intelligence-sharing with Israel.

Part of the problem as the US sees it is that some Israeli companies, particularly in the high-technology sector, benefit from their collaboration with US companies. As such, elements of American technology may be revealed to Chinese firms and to the Beijing government through Chinese investments into Israeli firms and Chinese purchase of sensitive Israeli goods. The US also worries that the adoption of Chinese high technology in Israel’s infrastructure might pose a security threat to the Americans.

Additionally, the continuing US-China tension over trade doesn’t make things any easier for Tel Aviv. China analysts have warned that the US is pushing Israel to scrutinize Chinese investments as a way of placing more pressure on China’s economy.

Remarkably, Israeli officials have mostly declined to comment on the possible tensions with the US over China. Their attempt to assuage US concerns has been feeble at best, as it appears Israel’s strategy is to wait and hope that tensions between the US and China will blow over.

Israel walks a tight rope with America over its relationship with China. Continued cooperation at current levels – with hints of further acceleration – threatens the country’s alliance with the United States and specifically with the Trump administration, which has made Chinese influence a major political issue. And that is to say nothing about the White House’s concerns about sensitive technology in which the US has an interest, being acquired by Beijing.

Cooperating with China is not in the same league as, for example, Israel’s engagement with Apartheid South Africa to allow the latter to avoid international sanctions during the 1980s. For one thing, it isn’t as visibly and clearly abhorrent as cooperation with an international pariah, such as the old South Africa was. Rather, Israel’s insistence on deepening its relationship with China is in line with the country’s history of blithe disregard for caution and prudence. Moreover, that Israel is willing to risk an open confrontation with the United States over China demonstrates the general feeling among Israeli lawmakers that the country is beyond scrutiny.

Joseph Dana, based between South Africa and the Middle East, is editor-in-chief of emerge85, a lab that explores change in emerging markets and its global impact.