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The threat from China – should Israel act?

A study by TAU identified no less than 463 investments, mergers and acquisitions by Chinese companies in Israel from 2002 to December 2020.

Israel-China Netanyahu with Wang Xiaotao,   deputy chief of the National Development and Reform Commission (NDRC) / official
Netanyahu with Wang Xiaotao, deputy chief of the National Development and Reform Commission (NDRC) / official

by Neville Teller

On 6 December US intelligence warned that Beijing intends to set up a permanent military base on the coast of Equatorial Guinea, giving it an Atlantic naval capability opposite the US.  The announcement made sense of the news, the same day, that the US has decided its diplomats will boycott the 2022 Beijing winter Olympics­ – officially in protest at China’s poor human rights record. 

As of December 2021 no less than 140 countries, ranging from Afghanistan to Zimbabwe, have signed a formal memorandum of understanding with China, and joined its Belt and Road Initiative (BRI).  Israel, heavily involved with Chinese companies and government agencies across a wide range of projects, has not.  But Sino-Israeli connections are now so extensive that to many it seems only a matter of time before they to are formalized.  There are some good reasons why this might be a step too far. 

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   China’s Belt and Road Initiative, adopted by the Chinese government in 2013, is the centre-piece of President Xi Jinping’s foreign policy.  Originally dubbed One Belt One Road (OBOR), Belt and Road incorporates a heady vision of massive Chinese investment, and thus in-depth involvement, in countries across Asia, Africa and the Middle East.  Belt and Road, considered by some the largest infrastructure and investment project in history, is regarded by others as a Machiavellian plan to achieve eventual Chinese world domination.  

The US and the UK regard China’s expanding global influence as of great concern.  In November 2020 the US Secretary of State’s office published a 72-page document which it called: “The Elements of the China Challenge”.  Amid seven examples of what the authors call China’s “quest for preeminence in world affairs”, they cite the Belt and Road initiative.  The idea, they believe, is to expand foreign markets for Chinese companies, thus drawing nations, and particularly their political and economic elites, into Beijing’s geopolitical orbit. Sometimes BRI projects involve 50- to 100-year relationships that confer power long-term to China over key parts of the host country’s infrastructure.

On December 1, in his first public address since becoming chief of MI6, Britain’s secret intelligence service made famous in the James Bond films, Richard Moore declared that China was the agency’s “single greatest priority”.  He cited Beijing’s large-scale espionage activities in the UK, but also China’s carefully coordinated plan to lure poor countries into what Moore termed “debt and data traps”, a policy designed to consolidate Chinese influence across the globe.

Israel is strategically located at the junction of three continents – Europe, Asia and Africa – which perhaps explains China’s particular interest in developing projects in Israel. In reviving the historic “Silk Road”, China acknowledges Israel’s potential for connecting China to the west. (“Belt” refers to these ancient overland trade routes; “Road” to new Indo-Pacific sea routes).

A recent study by Tel Aviv university analyzes China’s economic involvement in Israel. It identified no less than 463 investments, mergers and acquisitions by Chinese companies in Israel from 2002 to December 2020. The study revealed that Chinese state-owned enterprises invest primarily in Israeli infrastructure, while private companies and venture capital funds are more focused on the high-tech sector. Starting from a base of about $1 billion in 2001, China-Israel trade reached a peak of $11.4 billion in 2018.  The authors ascribe the small subsequent decline to the coronavirus pandemic, and perhaps to US security-related concerns.

Washington has certainly indicated misgivings, for example, about the new $1.7 billion Haifa port facility built by one Chinese company, to be operated for the next 25 years by another, the Shanghai International Port Group. The idea of Israel cancelling that operating contract has been mooted.  Other recent major deals inside Israel include Chinese companies winning the contract to construct parts of the Tel Aviv Light Rail, a $2 billion tender to build the “Med-Red” railway linking Ashdod port with Eilat, and donations of $130 million and $300 million respectively for a Technion research centre and a joint research facility between Tel Aviv and Tsinghua universities. China has also recently acquired a $1 billion controlling stake in Israel’s iconic Tnuva dairy company.  All of which hands China considerable influence over Israel’s internal development.

The question for Israel is how far it should go in embracing China as a business partner, given American suspicions about China’s true motives. Are all such Chinese investments pieces in a vast jigsaw designed to secure China unassailable political and economic global supremacy?

The West is losing former firm alliances.  Pakistan, once a key Western ally in the war on terror, has become a Chinese client state, following the billions of dollars Islamabad has received for supporting Belt and Road.  When Sri Lanka failed to repay Chinese loans worth $1.3 million, it was forced to hand over a key southern port, Hambantota.  On both the east and west coasts of Africa, China in involved in multi-billion dollar construction projects.

Of particular concern is Beijing’s deepening involvement in Nigeria, a Commonwealth country that has seen its historic ties to Britain superseded by growing dependence on Chinese riches. Beijing has invested around $10 billion in developing Nigeria’s transport infrastructure.  Leading politician, Dr Bukola Saraki, said: “There is a real concern that, without a concerted effort to change this trajectory, our long-term future will lie with China rather than democratic allies like the UK.”

There is a growing recognition by both the US and the UK that more needs to be done to safeguard long-standing alliances against the Chinese marauder.  While many nations continue to succumb to the lure of Chinese gold, giving more weight to immediate benefits than to longer-term dangers, Israel would do well to take the longer view and avoid signing up formally to Belt and Road.  A cooling of Sino-Israeli economic collaboration might also be advisable.

The well-known warning by the Roman poet Virgil comes to mind: “Beware of Greeks bearing gifts.”

The writer is Middle East correspondent for Eurasia Review.  His latest book is: “Trump and the Holy Land:  2016-2020”.  Follow him



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