Report Tells Israel, ‘Beware of China’

A Chinese company, Hong Kong-based CK Hutchison Holdings, recently lost a bid to build a $1.5 billion water desalination plant, the world’s largest, in Israel. The contract went to an Israeli company after an unannounced visit to Israel by U.S. Secretary of State Mike Pompeo, who reportedly warned against Chinese investment in the Jewish state.

U.S. officials also warned Israel against awarding Chinese companies the contracts to build two lines of the Tel Aviv Light Rail network. Three of the six international bids came from Chinese state-owned firms, most of which also worked on railway projects in Iran.

Meanwhile, Israel has blocked the Chinese telecommunications company Huawei from operating its fifth-generation (5G) wireless network in Israel. Israeli security officials expressed concern that China could use its involvement to spy on Israel.

A recent report by the American think tank RAND warned that China has close ties with Iran, and “the Chinese government might require Chinese companies doing business in Israel to share insights with the Iranian government in order to win friends and influence in Tehran.” The report added, “If Israel seeks to strike Iran, China could damage infrastructure operations in Israel to signal to Israel that it should not attack.”

Economic ties between Israel and China date to the 1950s, long before China formally recognized the Jewish state. Diplomatic relations were formalized in 1992. Israel’s ties with China began in earnest in 2013 when Prime Minister Benjamin Netanyahu visited Beijing. Since then, bilateral trade and investment have surged. Chinese companies have become more involved in Israel, purchasing Israeli companies and successfully bidding on key infrastructure construction projects.

Shanghai International Port Group is building a new container port in Haifa, which some U.S. officials believe could be used to spy on the U.S. 6th Fleet. Chinese companies are building another Israeli port in Ashdod.

In a recent policy paper, Ilan Berman, senior vice president at the American Foreign Policy Council, wrote that over the past decade, China has invested billions of dollars in the Israeli economy, touching everything from agriculture to software to infrastructure, focusing notably on Israel’s high-tech industry. “So significant are China’s overall investments that estimates now predict the PRC [People’s Republic of China] could eclipse the U.S. as the single largest investor in Israel in coming years.”

China now directly controls, or has influence over, as much as one-quarter of Israel’s multi-billion-dollar tech industry, including defense contractors working on sensitive projects being developed with the United States, Berman said.

“The Trump administration is very pro-Israel, but these investments have caused growing concern in the White House,” he added. “If they continue to grow, they will invariably impact sensitive collaborative defense-industrial projects that are part of the U.S.-Israeli strategic relationship.”

Dr. Yoram Evron, senior lecturer in the Department of Asian Studies at the University of Haifa, stated the United States’ main concerns with China’s involvement in Israeli infrastructure projects: “First, it allows China growing access to Israel’s long-term plans, databases, homeland security arrangements, and proximity to sensitive facilities (a nuclear research facility and an air base in this case), thus potentially undermining its national security. The second concern is the proximity of certain infrastructure facilities where Chinese companies are involved to facilities that serve U.S. forces (e.g., the Haifa naval port).”

The RAND report warned, “China’s positions and priorities in the Middle East are often contradictory to Israel’s, especially China’s close ties with Iran. . . .Given the trade war between the United States and China, Israel could risk finding itself on opposing sides with Washington—its most important security, diplomatic, and economic patron.”