Growing Chinese influence in Israeli technology sector, US asks Israel to decrease its ties with China

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The Middle East region is of an utmost strategic and economic significance for China. The region is critical for its Belt and Road initiative (BRI) as well as an important maritime element due to China’s dependency on imports by sea route between Asia, Africa and Europe through the BRI.

Unlike the USA, China has tried not to take sides and remain politically neutral. It is trying to position itself in a state of equilibrium in the region by striking a balance between the Islamic countries and Israel. This narrative has worked so far for China. Consequently, Israel is coming closer to China.  

China began to pay attention to Israel with the advent of the Xi Jinping regime. After Jinping took over the Chinese government and the Chinese Communist Party (CCP), China began to enhance its diplomacy, investments and trade with Israel. There has been a substantial increase in Chinese investments and Chinese trade in the country. 

However, the germination of the bilateral relations between both countries began during the 1970s. Israel followed the US and the rest of the world in embracing China. Military ties began to sprout between both the countries after the six-day war when China was much interested in acquiring Soviet military equipment from Israel as it had captured a lot of this equipment during the war.

As per some analysts, to further its expansionist agenda and learning from the past experience of the US in the Middle East, China is making a calculated move in the region. China is slowly and quietly starting to make gains in the region under the excuse of economic relationship and cooperation. By committing an amount of US $20 billion in loans for reconstructing in the Arab world and the US $3 billion loan for the banking sector of the region in 2018, it has displayed its ambitions.

Israel, due to its strategic location, has the potential to become the focal point – a linchpin of the BRI. According to China’s modus operandi in the BRI project, It has invested in infrastructure in developing countries and in technology in developed ones.

Interestingly, China is making both kinds of investments in Israel. Rather making huge investments in R&D for economic development, China is betting on R&D coming in from developed and technologically advanced countries including Israel. Hence Israel becomes important for China’s strategic as well as economic needs-promoting it to make both the kinds of investments therein.

China, on the other hand, plans to invest in Israeli tech companies and acquire all such technologies that have commercial as well as military applications- including artificial intelligence, quantum computing, edge computing, autonomous vehicles, biotechnology and other related technologies.

Recent deals of China are worrying the US leaders across lines-Republicans as well as Democrats. The US administration has cautioned Israel about Chinese investments in critical infrastructure and high tech sectors of the country.

“The United States believes that Chinese control of or investment in infrastructure and companies abroad presents a serious security threat. U.S. officials have been hard at work convincing allies, including Israel, to create a level of distance from the country.” as per a report published in JNS.

If it is seen, at least 90 deals have taken place in the past ten years, involving 42 Chinese companies .Connection of Chinese companies with the Chinese Communist Party (CCP), People’s Liberation Army (PLA), and Chinese government are world known. Hence there are hidden strategic interests besides the economic interests of Chinese companies in host nations.

Certain companies operating in Israel are also causing concerns. For example, the company working on the Light Rail project in Tel Aviv is also constructing a rail line from Isfahan from Tehran. Similarly, China Communications construction company (CCCC), which worked on the Ashdod Port project also worked on the military projects for the PLA and built a satellite station for it in Argentina. CCCC Dredging –the parent company of CCCC is facing accusations of reclaimed islands in the South China sea.

In other concerning cases, ZTE has invested in an Israeli company Rainbow Medical. ZTE faces accusations by the US government of violating sanctions in Iran. Similarly, Chinese giant Baidu has invested in five Israel companies and venture capitals. Companies like Huawei, Togan networks, HexaTier have also made significant investments in Israeli companies.

Due to its geostatic location and advancement in technology, Israel has placed itself in an important position. It has become an important player in China’s ambition to acquire advanced technology.

The democratic countries should be concerned about Chinese investments in critical infrastructure and technology in Israel. Though Israel considers the US as an important strategic partner and relies heavily on it for its military and diplomatic needs, it has also flirted with China to gain investments. However, the most interesting thing would be to see how China manages its relations with Israel while actively supporting Iran’s nuclear and missile programmes.