{"id":48090,"date":"2022-07-21T15:28:45","date_gmt":"2022-07-21T13:28:45","guid":{"rendered":"https:\/\/libmod.de\/schmidt-china-will-in-israel-erfahrungen-fuer-den-europaeischen-markt-sammeln-sammeln-copy\/"},"modified":"2022-07-21T16:27:07","modified_gmt":"2022-07-21T14:27:07","slug":"schmidt-china-is-learning-business-in-europe","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/schmidt-china-is-learning-business-in-europe\/","title":{"rendered":"China is Learning in Israel how to do Business in Europe"},"content":{"rendered":"

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In Israel, Chinese invest\u00adments are increas\u00adingly viewed criti\u00adcally, partly because of China\u2019s relations with Iran. On the other hand, China offers enormous economic oppor\u00adtu\u00adnities, according to Galia Lavi of the Institute for National Security Studies in Tel Aviv.<\/h2>\n<\/div>\n

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The interview was conducted by Till Schmidt for LibMod.<\/p>\n

How would you charac\u00adterize Israeli-Chinese relations?<\/em><\/p>\n

There are three phases. With the start of official diplo\u00admatic relations in 1992, new life was breathed into economic relations in particular. But military relations also came into the picture at that time, but they ended around 2005, when the U.S. vetoed sales of Phalcon radar systems and Harpy drones to China. That was a big issue here in Israel and it took us a lot of time to get back on track with China. Never\u00adtheless, with the estab\u00adlishment of the Export Control Authority in the Ministry of Economy and Industry in 2006, the export of military goods to China stopped.<\/p>\n

In 2013, then-Prime Minister Benjamin Netanyahu visited Beijing, ushering in the honeymoon phase of Israel-China relations. It included greater levels of trade, Chinese investment in Israel, tourism and academic cooper\u00adation. However, under US President Donald Trump, this phase ended again. The US admin\u00adis\u00adtration pressured Israel to downgrade relations with China. Netanyahu, however, responded mainly with rhetorical gestures. Never\u00adtheless, Chinese investment in Israeli infra\u00adstructure and in the high-tech sector has fallen sharply.<\/p>\n

Is this due exclu\u00adsively to pressure from the USA?<\/em><\/p>\n

That plays a major role, even under Joe Biden. But there is also the decision by Chinese President Xi Jinping not to make it easy to invest outside China. This is not limited to Israel, however, but is a global trend. In addition, Israel 2020 estab\u00adlished a screening mechanism for foreign investment in infra\u00adstructure projects. How exactly the committee justifies its decisions, for example whether it is always security concerns that tip the scales, is unclear, because the committee does not publish its justi\u00adfi\u00adca\u00adtions. But the numbers make it clear that since the committee began its work, there has been a decline in Chinese investment.<\/p>\n

How has U.S. strategy changed since Joe Biden took office?<\/em><\/p>\n

Trump was the elephant in the room; it remained unclear what exactly was meant by deals that could now no longer be done. Are people still allowed to buy T\u2011shirts? Dig tunnels and have roads built? And why is the U.S. itself still allowed to do business with China? Biden commu\u00adni\u00adcates more clearly and takes a stance that is more aimed at joining forces and sticking together. There is a different atmos\u00adphere, a kind of comman\u00adder\u2019s spirit. Even if there is no corre\u00adsponding legis\u00adlation, it is clear what is at stake.<\/p>\n

What do Israel and China expect from the joint relationship?<\/em><\/p>\n

For Israel, China is an enormous economic oppor\u00adtunity. After all, it is the largest market in the world, which Israel cannot simply ignore. China also sees Israel as a political mediator in its relationship with the United States. Thus, Chinese government repre\u00adsen\u00adta\u00adtives repeatedly asked Israel to bring the U.S. closer to the Chinese position.<\/p>\n

But China is also and above all concerned with economic relations, specif\u00adi\u00adcally with gaining experience in Israel. In order to be able to do business in Europe on a large scale, it needs qualified experience in an indus\u00adtri\u00adalized country. Repre\u00adsen\u00adta\u00adtives of China say this quite clearly, for example Miao Qiang, the CEO of Shangai Inter\u00adna\u00adtional Port Group, which now operates the Haifa BayPort. Chinese companies consider Israel small and insignif\u00adicant enough not to let a possible failure count. Conversely, however, Israel is important enough to include success in the corporate portfolio.<\/p>\n

Where do you see the heart of the conflict of interest between Israel and China?<\/em><\/p>\n

China is known for using its massive economic expansion for political influence. This is a big risk. All companies are linked to the Chinese Communist Party. In addition, the US, Israel\u2019s most important ally, sees cooper\u00adation in the high-tech sector as a threat to its own security. But unlike the military sector, no regulation exists here in the form of a law or a screening mechanism. The US is therefore pressuring Israel to establish something similar to CFIUS (Committee on Foreign Investment in the United States). But Israel does not want to regulate its hugely important and innov\u00adative high-tech sector.<\/p>\n

Are dual-use exports a problem?<\/em><\/p>\n

Dual-use is, of course, difficult to define. An initially innocent camera may find military use tomorrow. However, there has been a small unit in the Israeli Ministry of Economy for several years to screen for dual-use goods. The unit is small, however, and not well-funded. Meanwhile: The high-tech sector is a good place to observe what I called earlier the Comman\u00adder\u2019s Spirit: It is clear that for companies doing business with China, the US market is lost. The high-tech companies in particular under\u00adstand that. So there is a kind of informal screening mechanism.<\/p>\n

China also maintains relations with Iran, Israel\u2019s biggest enemy, which denies the Jewish state\u2019s right to exist, supports terrorism, especially in the region, and is working on its own nuclear program. Is this an issue in Israeli-Chinese relations?<\/em><\/p>\n

For a long time, Israeli govern\u00adments had hoped that deeper economic relations with China would change Chinese attitudes. One hoped, for example, for more UN support, including on Iran. However, this did not happen, a fact that was finally acknowl\u00adedged by the Israeli side. In talks, Israeli government repre\u00adsen\u00adta\u00adtives and we at the Institute for National Security Studies (INSS) always emphasize that doing business with Iran also involves supporting terror. The Chinese take note of this \u2014 but let it bounce off them. They usually make it clear: We simply see things differ\u00adently, our relations and business with Iran are none of your business. Politics and business are separated here.<\/p>\n

Is there any opposition to this, for example in the Knesset or in the Israeli media?<\/em><\/p>\n

Yes, there is always criticism, especially in the media. For example, Efraim Halevi, former director of the Mossad foreign intel\u00adli\u00adgence service, and the former head of the Shin Bet domestic intel\u00adli\u00adgence service, Nadav Argaman, have published several articles, some of them in English. But it is clear that a severance of relations by Israel would not deter the Chinese from doing further business with Iran. China is simply too powerful. Moreover, not only would enormous economic potential disappear for Israel, but also the possi\u00adbility of commu\u00adni\u00adcating with a China that might at some point be positioned differ\u00adently. The point is to keep channels of conver\u00adsation open.<\/p>\n

What is the Chinese leader\u00adship\u2019s position on Iran\u2019s nuclear program and the renego\u00adti\u00adation of the Vienna nuclear agreement, the Joint Compre\u00adhensive Plan of Action (JCPoA)?<\/em><\/p>\n

China is in favor of an agreement and against the U.S. withdrawal from the JCPoA in 2018. However, China is also in a quandary: because on the one hand, it wants to see Iran back in an agreement, and on the other hand, it knows how to use the lack of an agreement polit\u00adi\u00adcally for its own benefit to portray the U.S. as an irrespon\u00adsible actor. Overall, the Chinese do not regard the JCPoA as a perfect agreement, but at least as a basis for further talks. After a new agreement, Israel\u2019s security concerns could then be negotiated, so the credo goes. But this shows how little the Chinese have under\u00adstood about the threat posed to Israel by the Iranian regime in general and its nuclear program in particular!<\/p>\n

Do human rights issues in China \u2014 such as the oppression of the Uyghurs in Xinjang province or the conflicts over Taiwan and Hong Kong \u2014 play a role in diplo\u00admatic relations between Israel and China?<\/em><\/p>\n

This has not really been addressed by Israeli govern\u00adments. After all, Israel itself is often criti\u00adcized on human rights issues, so govern\u00adments don\u2019t see themselves in a position to lecture others. There have been minor excep\u00adtions, such as in the course of the Israeli military operation \u201cGuardian of the Walls\u201d in May 2021 (against the terrorist organi\u00adza\u00adtions Hamas and Islamic Jihad in Gaza, editor\u2019s note<\/em>). At the time, China was stirring things up against Israel in the UN Security Council, using it as a scapegoat in the conflict with the United States. Israel, in turn, responded by supporting Canada\u2019s attempt at the UN to have independent observers inves\u00adtigate the human rights situation in Xinjang.<\/p>\n

The oppression of the Uyghurs is a recurring theme in the European media. In addition, eye-witness reports by camp survivors who have fled have appeared regularly in the major publishing houses. Is there anything compa\u00adrable in the Israeli media?<\/em><\/p>\n

There are only a few publi\u00adca\u00adtions on this topic, and when there are, they are mostly in foreign and English-language media. It\u2019s sad but true: Here in Israel we are so busy with our own problems that we don\u2019t look at countries on the other side of the world. Asked about the biggest threat, most Israelis would answer: Iran, Syria or Lebanon. China is very far away for us.<\/p>\n

What is the prevailing image of China in Israel?<\/em><\/p>\n

The general public hardly knew anything about China until Netanyahu\u2019s trip to Beijing. That has changed signif\u00adi\u00adcantly in the meantime. More Chinese are now coming to Israel, and there is a lot in the local newspapers about Chinese invest\u00adments, such as at the port in Haifa. Some Israelis are impressed by the way China has built two hospitals for Covid patients in Wuhan within a few days. Others criticize the dicta\u00adtorial form of government or the oppression of the Uyghurs. Surveys, however, are few and far between, and in any case not detailed. For example, a Pew survey found that in 2019, 70 percent of Israelis thought positively of China; in 2022, that figure was down to 48 percent.<\/p>\n

And vice versa: What do Chinese think about Israel?<\/em><\/p>\n

There don\u2019t seem to be any polls here. But what I do know is that in the general public, Israelis are often stereo\u00adtyp\u00adi\u00adcally seen as \u201csmart\u201d and Israel as a \u201cgood country.\u201d I\u2019m always surprised that the Chinese have even heard of our small, insignif\u00adicant country (laughs).<\/p>\n

Galia Lavi is a China expert at the Institute for National Security Studies at Tel Aviv University. Her research focuses on Israeli-Chinese relations, partic\u00adu\u00adlarly in the areas of infra\u00adstructure and China\u2019s foreign policy.<\/p>\n

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