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Israel's International Relations: Israel-China Relations

(Updated March 2016)

Israel and China first established diplomatic relations in January 1992. They have since developed their relations steadily, culminating in the historic visit of Chinese President Jiang Zeming to Israel in 2000. Four Israeli presidents and three prime ministers, including most recently Prime Minister Bejamin Netanyahu in May 2013, have made diplomatic and trade visits to Beijing. The basis for expanded Israel-Chinese relations lies in simple economics: Israel is a world leader in technology that can achieve scale with China as a global economic power with a population exceeding one billion.

Two-way trade volume between Israel and China increased almost 200 times since relations were officially established, from only a little more than $50 million in 1992 to $9.91 billion in 2012.  In essence, the bilateral trade of two days in 2013 equals that of the whole year of 1992. Cooperation has expanded from primarly agricultural to almost all areas, such as science and technology, education, culture, arts, tourism and academia.

In 2008, the China Civil Engineering Construction Corporation (CCECC) was awarded the contract for digging the Carmel Tunnel in Haifa as well as for the civil engineering aspect of the Red Line of Tel Aviv’s light-rail project, which will connect Petah Tikvah with Bat Yam.

Also in 2008, ZPMC, a Chinese manufacturer of cranes and metal equipment, won the tender to supply seven bridge cranes to the Haifa port.

Zhou Hui, China's former economic and commercial attache to Israel, confirmed in 2008 that his government encourages Chinese firms to come to Israel.  Zhou also noted that there were many more Chinese-Israeli joint projects in the pipeline. One of them, for example, is a future tender for renovating existing rail lines. In addition, a huge Chinese home-appliance manufacturer is considering opening a research and development center in Israel, and representatives of the Chinese car manufacturer BYD visited Israel to examine the possibility of cooperating in the field of electric vehicles and hybrids.

In May 2013, during his second-ever diplomatic visit to Beijing, Israeli PM Netanyahu oversaw the signing of a $400 million trade agreement that was officially penned by signed by Israeli Finance Ministry Accountant-General Michal Abadi-Boiangiu and officials from China’s Finance Ministry.

As H.E. Gao Yanping, China's Ambassador to Israel, wrote following Netanyahu's visit in China in 2013: "With the interdependence between countries deepening in the globalized world, China and Israel have a shared destiny. The closer our cooperation is, the more benefits will accrue for both our peoples, and the more contributions we will be able to make to regional stability, world peace and global prosperity."

In September 2013, Tel Aviv University President, Professor Joseph Klafter, and Professor Zhang Zhi, President of the Jiao-Tong University in Shanghai, China, signed an agreement to establish a special research center for Israel Studies at the Chinese college.  The research center, which will address contemporary issues in the Middle East and Israel, is the first of its kind in China. The agreement was signed in the presence of the Israeli Ambassador to China, Matan Vilnai, Israeli consular officials and representatives from the business community, as well as the Jewish community.

In October 2013, Chinese magnate Li Ka-Shing, among Asia’s richest businessmen, donated $130 million to Israel’s Technion Institute of Technology as part of a joint venture with Shantou University that will establish the Technion Guangdong Institute of Technology (TGIT). The gift, one of the largest ever to an Israeli university, is indicative of a deepening in the connection between Israel and China and also marks the first time a school from any other country has been invited to establish an entirely new academic college based in China.

In December 2013, Chinese Foreign Minister Wang Yi visited Israel on a commerce trip to "pursue stronger cooperation between our two countries," he told Netanyahu. The Chinese and Israeli economies "are highly complementary, and the mutually beneficial cooperation between us enjoys a very bright future." Yi also discussed the Iranian nuclear threat with Israeli President Shimon Peres during his visit, and characterized the November 2013 Interim Iran Nuclear Deal as a "an important, also preliminary, agreement marking the first step towards the settlement of the Iranian nuclear issue."

In April 2014, Ambassador Yanping expressed the blossoming China-Israel relationship in an op-ed in the Jerusalem Post. He applauded that tens of thousands of people travel between the two countries annually, numbers that have the potential to rise. In the cultural realm, Chinese performance groups visit Israel to share Chinese culture with Israelis. For instance, Chinese artist Yao Yuan presented his "Sculpture for World Peace" in Haifa and Chinese tourists post photos of their Israel trips on social media that encourage more Chinese people to visit. Yanping celebrated the wide range and high volume of cooperation between Israel and China that has expanded from "agricultural cooperation in the early days to almost all areas today, such as science and technology, education, culture, arts, tourism and academia." He expressed China's desire to strengthen the bilateral ties: "China would like as always to make joint and persistent efforts with Israel to enhance our mutual respect and trust, expore the great potential of cooperation and streer the relations into an even greater and brighter future," he wrote.

In May 2014, 400 Chinese business and government officials visited Israel for a week of conferences, summits and business deals. Tel Aviv University announced a partnership with Beijing's Tsinghua University to invest $300 million to establish the XIN Research Center that will focus on researching early-stage and developed technologies in biotech, solar energy, water and the environment. The week-long visit also included the first-ever Israel-China Economic Summit that the Israel China Interflow Association and Knesset Hi-Tech Caucus host. Israelis and Chinese visitors participated in the largest tech event in Israel in 2014 called Tell Aviv's MIXiii 2014 conference. According to Shangyan Fen, who leads strategic investment and development at China Everbright Ldt and manages a joint Israel-china investment fun helping israeli companies develop technology for the Chinese market: "we need to upgrade China's industrial base and deploy structural changes, move to a high-tech economy and improve manufacturing systems to reduce pollution." She added that "Israel has the technology that China needs to move ahead, so it's no wonder that we come to do business with Israel."

Spearheaded by Israeli Minister of the Economy Naftali Bennett, the "water city" project aims to take Israeli water solutions and apply them to China's increasing water problems. The project was announced in late November 2014 during an Israeli diplomatic visit to China featuring 15 Israeli companies looking to expand their business into the booming Chinese economy.  This project is being supported by the joint Israel-China Mission, in hopes to increase economic and political cooperation in the future.  Rapid population and industry growth has left much of China's water polluted and contaminated, and the Israeli companies have come to the table with solutions for desalination, sewage management and conversion, irrigation, and recycling of water for agricultural use.  The "water city" project will first be unvelied in Shougang, and the Israelis hope that seeing the real world applications of their water solutions will convince the Chinese government to adopt their solutions throughout China.  Shougang was chosen as the flagship city for this program through a selection process involving both Chinese and Israeli officials. 

Chinese tech giants such as Baidu and Alibaba visited Israel frequently in 2014, looking for startups to purchase to bring new innovations back to China. These Chinese companies are interested in the Israelis advanced technology and the Israeli companies are interested in expanding their markets. Manager of one of Intel corporation's internal venture capital firms Richard Hsu stated that "the alliance between Israeli startups and Chinese tech giants is a kind of ideal combination. Many Chinese companies consider investing in Israel."  Israeli venture capital firms that have investments in multiple startup companies have become extremely attractive to Chinese businessmen looking to get started in the Israeli market. Israel's desire to export it's technology and startups comes from the fact that they have very little natural resources to export besides newly discovered oil fields.  Venture capital investment in Israel is double the amount of venture capital investment in the United States.  Alibaba has invested millions of dollars in Israel companies, most notably QR code company Visuallead, and investment firm Jerusalem Venture Partners.

Israeli tech firm Radware and Chinese company China Railways began a mutually beneficial journey in mid-2015 aimed at improving the public transport systems in both countries. Radware helped facilitate the development of China Railways new online ticketing system by providing vizualization and analytics services to help the railway determine seat availability and price options. China Railways Tunnel Group was awarded a $750 million project by Israel's NTA Mass Transit System to build the“red line.” This proposed subway will be 24 kilometers long, run underground, and when completed will be the first metro system in Israel to criss-cross the Tel Aviv metropolitan area. The idea to build the red line had been circulating around the Israeli government since at least 2000, but had been continually pushed aside due to other circumstances.

For the first time, in 2014 Israel imported more goods from China than it did from the United States ($8.1 billion and $7.4 billion, respectively). Israel and China signed an Authorized Economic Operator (AEO) agreement in early 2015, which promised to facilitate an increase in economic cooperation between the nations. Under the AEO agreement, Israel and China will enjoy a fast-track customs program, making trade between the nations less complicated and more streamlined. Until the signing of this agreement, the United States was the only country that Israel had signed an AEO with.

Ground was broken on December 17, 2015, in Shantou, China on the new Guangdong Technion-Israel Institute of Technology (GTIIT), a joint venture by the Technion-Israel Institute of Technology and the Chinese government. The Institute will foster creativity and collaboration between the two nations, and is expected to ring in a new era of cooperation in agricultural and consumer technology. The ground-breaking ceremony was attended by Israeli President Shimon Peres, Israel's Minister of Science, Technology and Space Ofir Akunis, and Chinese business leaders.

Israeli and Chinese officials signed an agreement in January 2016, with the goal of expanding cooperation in the fields of energy technology research and development and renewable energy resources. Israeli Energy Minister Yuval Steinitz held meetings with Chinese energy leaders at events organized by the Chinese Ministry of the Economy and the Israeli embassy in Beijing during late 2015 and early 2016, leading up to the agreement.

The first ever China Israel Technology Innovation and Investment Summit took place in Beijing, China on January 5 and 6, 2016. Israeli businessmen eagerly exchanged business cards with their Chinese counterparts, looking for potential business partners and investors in their technology innovations.

Chinese President Xi Jinping addressed the Arab League in Cairo on January 21, 2016, and called for the establishment of a Palestinian state with East Jerusalem as it's capital. Jinping stated through an interpreter, “China supports the peaceful process in the Middle East [and] the establishment of a Palestinian state with its capital being eastern Jerusalem.” During the address the Chinese President announced a 50 million Yuan aid package for the Palestinian people. President Jinping signed 21 copperative agreements with the Egyptian government while visiting, and presented a $1 billion grant to Egypt's central bank.

Israeli Ben-Gurion University of the Negev, and China's biggest university, Jilin University, signed a cooperative agreement to establish a joint R&D center for entrepreneurship and innovation in Jerusalem on March 31, 2016. The first event of this new R&D center will be a global entrepreneurship conference to be held on May 16, 2016, at Ben-Gurion University.

The world's tallest and longest glass-bottomed bridge opened to visitors 1,000 feet above a ravine in Zhangjiajie National Park, in China's Hunan province, during late August 2016. The bridge project, which cost $3.4 million and consists of ninety-nine 3-layer glass panes, was designed by Israeli architect Haim Dotan. Chinese officials publicly staged repeated tests of the bridges safety in the weeks leading up to the grand opening, including driving a van full of passengers over the bridge, and striking the glass panes with sledgehammers.

Representatives from the Israeli Robotics Association attended an expo in Guangzhou, China, in early December 2015, seeking to cooperate in the development and sale of medical robots. Israel has built various types of robots designed to do many things, including assisting in spinal surgeries, ensuring proper dosage of medicines, and helping disabled individuals use the bathroom, climb stairs, and do other daily tasks. More than 40 Chinese companies attended the expo, eager to learn about Israeli robotic innovations.

An estimated 50,000 Chinese tourists visited Israel in 2015, rising 43% from the number of Chinese tourists in 2014. The number of tourists from India also increased dramatically, with 40,000 Indian nationals vacationing in Israel in 2015.

Exports from Israel to China are still dwarfed in comparison to exports from Israel to the EU/the United States. Israel exports approximately $36 billion worth of products to the European Union and the United States last year, while Israel only exported $2.7 billion to China during the same period.

Although China accounts for only 10% of Israeli trade, Israel's trade turnover with China topped $11 billion in 2014 (double the amount from 2010). China's investment in Israeli startups tripled in the period from 2012-2015, and in 2015 40% of all veture capital flowing into Israel came from China. China and Israel have drastically increased their cooperation since the turn of the century.

Sources: Gao, H.E. “The 'start-up nation' and the Chinese dream,” Jerusalem Post, (May 4, 2013);
Shear, David. “Israel, China sign $400 million trade deal,” YNET News (May 10, 2013);
“Israel Studies - In China,” Arutz Sheva (September 17, 2013);
Traiman, Alex. “BDS antidote may come from China,” JNS, (October 6, 2013);
Levitt, Josh. “Israel, China economic cooperation in focus with Chinese FM Visits to Jerusalem,” Algemeiner, (December 19, 2013);
Gao, H.E. “China-Israel relations are bound to blossom,” Jerusalem Post, (April 3, 2014);
Shamah, David. “Israel, China to open $300 million research center,” Times of Israel, (May 19, 2014);
Kloosterman, Karen. “Israeli water technologies migrate to China's 'water city,'” Green Prophet, (November 24 2014);
Kanemastu, Yuichiro. “Chinese net giants meet their matches with Israeli startups,” Nikkei Asia Review, (December 14 2014);
“Chinese investment in Israeli companies rises,” Financial Times, (May 14, 2015);
Shamah, David. “Israel-China trade to flourish under new customs deal,” Times of Israel, (May 27, 2015) ;
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“China, Israel embraces golden age for innovation cooperation,” Xinhua News (January 6, 2016);
Grave-Lazi, Lidar. “Israeli and Chinese universities to establish entrepreneurship center,” Jerusalem Post (March 31, 2016);
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