Vice President Wang Qishan will travel to Israel to attend the fourth China-Israel Innovation Committee conference next week. He is the highest-ranking Chinese to visit the country since then President Jiang Zemin in 2000.
Prime Minister Benjamin Netanyahu will host the conference, which will be attended by senior officials of the two countries, as well as a large Chinese business delegation, including Alibaba Group chairman Jack Ma. The last such conference was held in Beijing in 2017. Wang will be in Israel from Oct. 22 to 25.
Wang is the second most powerful person in China, after President Xi Jinping. His presence shows the importance his government attaches to the “startup nation” and its expertise in innovation and high technology.
The committee was established in 2014 to promote innovation cooperation in various fields and includes ministries and government agencies from the two countries, as well as leading universities and research institutions.
Economic and trade relations between the two countries are booming. Bilateral trade last year reached nearly US$10 billion, more than double what it was a year earlier. In the first seven months of this year, trade was nearly US$1.5 billion more than in the same period of 2017.
Chinese firms have invested heavily in Israel’s infrastructure projects, including the expansion of the Haifa and Ashdod ports, the construction of the Carmel tunnels in Haifa and the building of the Tel Aviv light rail system.
At the GoForIsrael investment conference in Foshan in June, more than 100 Israeli companies in such fields as artificial intelligence, Internet of Things, life sciences, cybersecurity and autonomous driving technologies presented their products to Chinese investors. These included Alibaba, Ping An Insurance, Sailing Capital, GF Securities, Fosun and Haitong Securities.
Hong Kong is an important part of the Israel-China economic nexus. From Sept. 3 to 6, Financial Secretary Paul Chan Mo-po led a 72-member delegation on an official visit to Israel to strengthen ties in economy, innovation and technology. The business leaders represented financial services, venture capital, biotechnology, financial technology and smart city development. They met senior Israeli officials, including the ministers of finance, and economy and industry, and the chief scientist of the Israeli Innovation Authority.
During his meetings, Chan emphasized Hong Kong’s unique strengths as a leading financial center and the government’s initiative to become the preferred listing platform for emerging and innovative enterprises from Israel. “I see much potential for Israeli tech entrepreneurs and talent with Hong Kong in developing high-tech solutions,” he said.
Chan’s delegation visited The Floor, the fintech innovation center of the Tel Aviv Stock Exchange, as well as the Technion-Israel Institute of Technology, the Hebrew University of Jerusalem and Tel Aviv University.
But, as relations between China and the United States deteriorate, Israel must tread carefully and not offend its most important ally.
In August, Shaul Chorev, former chairman of the Atomic Energy Commission, told a conference in Haifa that Israel needed to create a government mechanism to ensure that Chinese investments do not pose a risk to Israel’s security interests. He voiced concern that allowing a Chinese company to operate the Haifa Port may limit cooperation with the US Navy because of security concerns.
An Israeli businessman in Hong Kong said that there was a lively debate in his country on this issue. “Many countries put venture capital into our startups, not only China,” he said. “Chinese firms do not predominate. On the other hand, some ask why we do not keep ownership of these firms in Israeli hands and turn them into multinationals. Why let foreign companies reap the benefit?”
With the West, and the US in particular, increasingly excluding China from access to its military and high-end technology, Beijing is looking to acquire such technology from elsewhere, including Israel.
In 2000, Israel learned a bitter lesson from ignoring the wishes of Washington. In a contract worth US$250 million, it sold to the People’s Liberation Army an advanced Phalcon Airborne Warning and Control System, to be installed on Russian-built Ilyushin-Il-76 aircraft. The Israelis had developed the technology themselves.
The sale appeared to be proceeding well during an exceptionally long visit of President Jiang in April 2000. It went ahead despite repeated warnings from the US government that the new system would alter the strategic balance in the region, including the Taiwan Strait.
In July that year, Washington forced Israel to cancel the sale. Beijing was enraged. Israel had to pay US$350 million for canceling the deal and endure a cooling of relations.
As Prime Minister Netanyahu faces Vice President Wang across the table, the Phalcon sale will probably be at the back of his mind. Important as the China market is, it is nowhere more important than his closest friend and ally.
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