China – Israel Relations: Trains, (Spy) Planes & Automobiles

Israel - China

I have just returned from a trip to Egypt, Israel and Palestine and being a fan of dry, dusty desert landscapes I was struck by the beauty of the Negev Desert in the South of the country.  I listened with great interest to stories about the wildlife in the desert; the Kibbutz which thrive even in that arid climate and the history of the region. The first recorded long distance trading took place in this region; copper from the Sinai Peninsula was transported to early Mesopotamian civilizations, via the Negev.

My other more contemporary interest lay in the proposed Chinese built high speed rail line from Tel Aviv to Eliat. Look on a map and the strategic value of the southern port to Israel is obvious, it offers a gateway to the Red Sea, otherwise the country is dependent on the Mediterranean for access to shipping. The high speed rail line will help develop Eliat, increase its population and access to the rest of the country. For the Chinese it is another opportunity to develop overseas markets for their construction firms, another sign they are making major inroads into advanced economies.

Another interesting facet of Chinese – Israeli cooperation is the development of a new car, the Chery Qoros, which is a joint venture between Chery (China’s biggest car manufacturer) and Israeli Corporate. The car is set to be released very soon and will herald a major partnership in a high profile industry.

Beyond these two high profile cases, Israel and China have enjoyed trade, political and military ties for some time, despite China’s rhetoric regarding Palestine. China has looked to Israel as an innovation centre, keen to learn from its success with robotics, solar power and agribusiness. China has also purchased arms from Israel in the past, but following pressure from the US not to sell China an advanced reconnaissance plane and other equipment, Israel has followed the US embargo on military sales to China. Although ties are said to be warming up once again, with top level military visits between Beijing and Jerusalem, arms exports are surely off the table for now.

For Israel, the attractions of the world’s second biggest economy are obvious and China is now its third biggest trade partner after the EU and US. The future looks fairly bright as things stand, but if China becomes more politically engaged with the Middle East, it could be forced to “take sides” in the various clashes that afflict the region.



Categories: Country Investment Analysis, Kula Ring Trade Blog

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