In mid-December, Israel resumed talks with China about a trade deal that has been in the works since 2016. According to an anonymous Israeli official who contacted Bloomberg News, Israel hopes to cement the trade agreement in early 2020. However, talks may be complicated by the much deeper issues at play in this potential trade agreement: one of Israel’s greatest allies, the United States, has been pressuring Israel to reduce China’s economic influence on the nation and to distance themselves from China across the board. Many believe that Israel is essentially being asked to choose between an allegiance to the United States or China and that continuing friendly relations with both may be impossible.
Two of Israel’s strongest supporters in Washington, Secretary of State Mike Pompeo and U.S. National Security Advisor John Bolton, issued warnings to Israel regarding China in 2019. Bolton cautioned Israel to cease relations with Chinese electronics giants Huawei and ZTE, while Pompeo threatened that if Israel does not stop cooperating with China, the U.S. might choose to stop sharing security intelligence with Israel.
So which side should Israel choose? It’s certainly a difficult decision. As far as the ongoing trade talks, China is a distant second to the United States in terms of trade volumes with Israel, but Israeli exports to the United States have decreased each year since 2015 while exports to China have increased by two-thirds, according to the Israel Export Institute. Evidently, while the United States remains the top trade partner for Israel, the nation’s dealings with China also play a key role in Israel’s economy and will likely continue to grow, provided Israel continues with the trade deal against the United States’ wishes.
Beyond the trade deal, China is also a major investor across the Middle East, particularly in Israel. Choosing whether to maintain friendly relations with China affects two major projects that are in progress in Israel. The first is Israel’s critical Haifa port, which Israel plans to award to China’s Shanghai International Port Group, which has invested $2 billion into the port’s development. The other is the system behind a commuter rail line in Tel Aviv, which will be constructed and operated by the China Railway Tunnel Group. The group won the tender for the commuter rail with a bid of nearly $1.4 billion. There are also numerous smaller projects that hinge on Chinese involvement, including the construction of advanced 5G wireless infrastructure.
While losing these trade relations and infrastructure projects would be costly, maintaining talks with China may not be in Israel’s best interests—for more reasons than just the United States’ demands. China continues to economically support Iran and other enemies of Israel in the Middle East and still purchases Iranian oil despite U.S. sanctions on the nation. While many believe that choosing the United States over China, the choice Israel seems poised to make, will be a result of having to please the U.S. government, there are also definitely genuine national security issues that arise from Israel dealing so closely with China. With this key decision looming large, security and safety may be the tipping point for the Israeli government to give up the benefits of cooperative dealings with China.