This essay is part of the Middle East-Asia Project (MAP) series on "Israel: The Future is Asia". The series investigates Israel's expanding relations with Asia -- the forces propelling and impeding their growth, the progress made in their development, and their as yet unrealized potential. See more ...
Over the last three decades, most if not all countries have expanded their relations with China systematically and substantially by choice or necessity (or both). China, “a quarter of mankind,” can no longer be ignored. Economic reform is not the essence of Deng Xiaoping’s revolution; opening China to the outside world is. Israel is part of this phenomenon. After thirty years of no relations (and even mutual hostility); ten years of unofficial relations; and more than twenty years of official relations, both countries have managed to overcome their earlier illusions and to come to terms with the limits of their bilateral relations. These limits will affect their future relations and, if these constraints remain unchanged, the future of Israeli-Chinese relations will be exactly like the past. However, if these constraints change, then Sino-Israel relations may improve dramatically. Ultimately, this depends on three variables that concern China, Israel, and the United States.
The First Variable
The first variable has to do with China’s continued economic growth. China’s attractiveness for Israel has nothing to do with its political values (which most countries, including some of China’s allies, reject); its culture and history (which are more of academic interest); or its military power or international posture (which are still of relatively marginal significance given Beijing’s reluctance to take part in settling outstanding conflicts worldwide). China has become attractive to Israel and the rest of the world primarily because of its phenomenal economic growth, the opening of its domestic market to trade and investments, and its integration in the world economy. Despite U.S. calls for China to become “a responsible stakeholder,” only a few countries really want China to play a greater and more proactive role in international affairs, least of all in the Middle East or in the Arab-Israeli conflict.
Since the early 1990s, just before the establishment of official diplomatic relations, Sino-Israeli trade has grown over 1,000 times. In 2013, the value of imports from China (except for diamonds) reached around $7.8 billion, higher―for the first time―than imports from the United States ($7.5 billion). This, however, does not reflect Israel’s total imports from China; nearly 28 percent of Chinese-made goods imported to Israel originate in other countries. China’s share in Israel’s total import was 3.2 percent in 2002 and grew to 12.4 percent in 2013. In the first seven months of 2014, nearly 36 percent of Israel’s import from Asia came from China, although its share in Israel’s export to Asia is only 16.4 percent. In recent years China has increased its investments in Israel, triggering a debate about the potential negative implications of this economic penetration, including questions raised by some about whether Beijing’s political and strategic goals in the region align with Israeli interests, and by others about Chinese firms’ commitment to ensuring that intellectual property is protected. Some people are concerned about Beijing’s takeover of “strategic” assets and the threats to Israel’s security. This debate, however, does not seem to stop or even slow down Sino-Israel economic relations, which benefit both parties and offer future opportunities―provided that China’s economic growth and political stability continue.
Observers voice some doubts about that. They point to China’s economic problems, gaps between its regions and provinces, its housing bubble, endemic corruption, and the impact of the world economic crises―all leading to a slowdown in its economic growth. Yet the Chinese version of economics is a little different from the Western version, and China has the capacity to overcome such difficulties given its centralized legacy, political system, social discipline, and obedience. If China indeed continues to grow―even at a slower pace, but still much faster than other countries―it will become a potential market of immense importance for Israel, and not just because of numbers. Beyond its size and growth rates, China’s significance for the Israeli economy is that no strings are attached. Unlike the European countries, and to some extent even the United States, Beijing would hardly boycott Israeli goods, would not stop trade or investments for whatever reason (e.g., an identification with the Palestinians, the Iranians, the Turks, or the Arabs; hidden anti-Semitism). In this sense, Israel’s economic future is undoubtedly in China.
The Second Variable
The second variable has to do with the Arab-Israeli conflict. Although China’s role in the Arab-Israeli conflict and the Palestine problem is marginal, there is little doubt that both have been detrimental to Sino-Israeli relations in Mao’s time―and still are. The Chinese should always take into consideration the implications of their relations with Israel for the Arabs, the Palestinians, the Iranians, and others. These conflicts limit not only China’s role in the Middle East but also Israel’s access to China. A recent and visible example is Benyamin Netanyahu’s visit to China in May 2013. Submitting to Palestinian demands, Beijing decided to invite Mahmoud Abbas, Palestinian Authority president, in order to maintain a “balance.” Needless to say, the continuation of the Arab-Israeli conflict is one (although by no means the only) source of Middle Eastern instability, which the Chinese dislike.
So far, Beijing has avoided playing any significant role in the settlement of the Arab-Israeli conflict. Yet Beijing’s refusal to take sides and become more involved politically in settling Middle Eastern conflicts still leaves the door open to greater involvement economically. Much like in Europe after World War II, when the United States had provided economic and financial aid (known as the Marshall Plan) thereby laying the foundations for a later unification, China has accumulated the means, the experience, and the goodwill to undertake or underwrite large-scale economic infrastructure projects, and it could contribute―perhaps more than any other country―to paving the ground for greater economic cooperation in the Middle East.
To be sure, most if not all peace plans from the late 1940s have failed―perhaps because they did not offer an attractive alternative, a well-defined horizon, and enough incentives to the parties concerned. Adopting a different strategy that underlines “peace dividends” and the benefits of long-term stability may be acceptable, all the more so if China would promote it, rather than the United States or the European Union. Needless to say, this would upgrade Sino-Israeli relations (as well as China’s relations with the entire Middle East). This might take years or even decades, as long as it has taken Europe to overcome countless violent conflict stretching for centuries. In this case, China will become the future of the Middle East―and of Israel.
The Third Variable
The third variable, probably the most important, has to do with U.S.-China relations. From the very beginning, Sino-Israeli relations have been affected by the United States. In the 1950s and 1960s, Washington blocked Israel’s attempts to improve relations with China, least of all to the establishment of Sino-Israeli diplomatic relations. In a 1980s U-turn, Washington tolerated―or even encouraged―Israeli unofficial arms sales to China. However, as US-China relations deteriorated in the early 1990s, Washington has forced Israel to stop military relations with China and to cancel a number of arms deals. To this very day, Israeli high-tech transfers to China are limited because of the ambiguity of the U.S. restrictions not just on the export of military technology to China but also on dual-use technologies―a major component of Israel’s total export―in which China is very much interested.
Occasionally, the Sino-U.S. honeymoon that began in the early 1970s and then gathered momentum in the 1980s is usually regarded as an aberration. Sino-U.S. relations began to deteriorate soon after the Tiananmen crackdown and the Soviet collapse in 1991. China was no longer needed as an ally against Moscow, and this alteration of its role change of mind immediately led to U.S. opposition to Sino-Israeli military relations. (China and Israel finally established diplomatic relations in January 1992.) Still, given Russia’s reemergence under Putin and the Sino-American economic interdependence, the Sino-U.S. honeymoon of the 1980s should by no means be regarded as an aberration but, on the contrary, as a precedent, a model, and a pattern to be followed again. There is no direct or potential conflict between China and the United States, territorial or other. Russia, on the other hand, is still holding territories historically (yet tacitly) claimed by China, based on unequal treaties. In a long-term view, Russia rather than the United States is China’s potential enemy. If Washington is smart, it will devise a replay of the 1980s honeymoon, letting Beijing become the “responsible stakeholder,” not in Sudan, Libya, or Iran―but in East Asia. The United States, the last power of the Western intruders in East Asia, will have to leave the region sooner or later, willingly or not.
If China and the United States become allies once again, the impact on Sino-Israeli relations could be mixed. On the one hand, the limits imposed by the United States on Israeli high-tech transfers to China would perhaps be removed, but on the other hand Israel would now have to compete with US companies in military, dual-use, and high-tech transfers. Israel would not need to play the role of a U.S. proxy as Washington would deal directly with Beijing and, given Israel’s dependence on the United States, Washington could (and probably would) still block Israel’s arms export initiatives as it has occasionally done in the past with South Korea, Taiwan, India, and Eastern Europe. Nevertheless, improved Sino-U.S. relations would by necessity facilitate improved Israeli-Chinese relations as well. However, based on past experience, a deterioration in Sino-U.S. relations, not to mention confrontation (e.g., over the Taiwan Strait) could also harm Sino-Israeli relations―not only military exchanges (which is obvious) but also in other fields (e.g., science and technology, communications, diplomacy). Whatever the future of Sino-U.S. relations―and contrary to conventional wisdom―the United States is unlikely to withdraw from the Middle East and is likely to remain the dominant political power in this region. Beijing will willingly accept its own exclusion as a political player in the Middle East.
Since Israel had become the first country in the Middle East to recognize the People’s Republic of China in early January 1950, their relations―and non-relations―did not reflect bilateral issues but trilateral and multilateral pressures. The long delay in establishing diplomatic relations was caused by third parties (the United States, the Arabs, the Palestinians, others) – some of whom still affect bilateral relations today and may still affect future bilateral (and especially military and political) relations. Yet, whereas these relations will remain “on probation,” China may become Israel’s future primarily―or only―in economic terms. Beijing will never be able, or willing, to replace the United States as Israel’s military or political protector. Similarly, Israel―whose orientation has always been toward the West and which is still suspicious about China’s motives―does not regard China as a political and military substitute to the United States. This is unlikely to change in the future, all the more so since the two have begun to undergo a process of mutual demystification in the first decade of the 21st century.
Unrealistic expectations had to be put aside or scaled down. Based on harsh lessons and following initial enthusiasm and illusions, each party is aware of the other’s limitations, as well as its own, and has come to respect each other’s interests that do not necessarily nor always converge. It is within these limits that Sino-Israeli relations would continue in the future. China’s continued economic growth would create greater economic opportunities for both. (Israel’s trade with China is already higher than Egypt’s, whose population is ten times bigger than Israel’s.) Improved US-China relations would entail a further expansion of Sino-Israeli horizons but also U.S.-Israeli competition in China. Most beneficial, though most unlikely, is a settlement of the Arab-Israeli conflict in which China, for once, could make a significant contribution, primarily in economic terms. In this case, China would be not only the future of Israel but of the entire Middle East―and the world at large.
 Dick Wilson, A Quarter of Mankind: An Anatomy of China Today (London: Penguin, 1968).
 These and the following data are adapted from Israel Central Bureau of Statistics, Press Release, No. 137 (26 May 2014).
 Regarding this debate, see for example, Yoran Evron, “Chinese Investments in Israel: Opportunity or National Threat?” INSS Insight, No. 538, 8 April 2014, http://www.inss.org.il/index.aspx?id=4538&articleid=6842.
 “7 Problems China’s Rise to the World’s Largest Economy Will Not Solve,” International Business Times, 30 April 2014; “China Premier Warn on Economic Slowdown as data Fans Stimulus Talk,” Reuters, 23 May 2014; “China’s Economy Faces Challenges Despite Steady Performance,” Xinhuanet, 27 August 2014.
 Jin Zhongxia, “Zhongguo de ‘Maxieer jihua’ – tantao zhongguo duiwaijichu sheshi touzi zhanlue” [China’s Marshall Plan – A Discussion on China’s Overseas Infrastructure Investment Strategy], Guoji Jingi Pinglun [Internationals Economic Review], No. 6 (2012), 57-64.
 Yitzhak Shichor, “Quid pro Quo: US-China Middle East Relations in an East Asian Perspective,” U.S.-China-Israel Trilateral Conference: Challenges and Opportunities in the Middle East, The Brookings Institute, 12-13 February 2014. See also Gary Schmitt, “Pivoting Away from Asia,” Los Angeles Times, 11 August 2014.
 Yitzhak Shichor, “Israel and China: Mutual Demystification in Chinese-Israeli Relations,” in Colin Schindler (Ed.), Israel and the World Powers (London: I.B. Tauris, 2014), 106-124.
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