What’s next for Israel’s growing tech partnership with China?

The fourth Israel Innovation Summit kicks off this week with the notable presence of Chinese Vice President Wang Qishan. The vice president’s visit to Israel is testimony to the warming Israeli-Chinese relations during Prime Minister Benjamin Netanyahu’s term.

This will be the first visit to Israel in a decade by a senior Chinese government official. The vice president will also be accompanied by a group of Chinese business leaders including Jack Ma, the CEO of the Asian e-commerce giant Alibaba.

Experts on Sino-Israeli relations see Wang’s attendance during the October 24-25 summit as a significant move, given that he is a close and trusted ally of Chinese President Xi Jinping. The Israeli side appears to be reciprocating; Netanyahu is scheduled to be in attendance for the duration of the event, which is organized by the Prime Minister’s Office and will feature events in Jerusalem and Tel Aviv.

The summit began in Beijing in 2015 and has long focused on agriculture and health care technology exchanges. Matan Vilna’i, a former Israeli ambassador to China, told The Media Line that the conference had also been focused on “achieving a mutual understanding of the meaning of innovation, and exploring how innovation can be shared between two countries.”

“Most importantly,” Vilna’i added, “is acknowledging the Chinese as key players in innovation.”

A representative from the Chinese Embassy in Tel Aviv echoed those sentiments: “High-level visits between China and Israel are frequent and the Joint Committee on Innovation Cooperation is an intergovernmental cooperation mechanism that contributes much to productive relations.”

Omer Dostri, an expert on Israeli foreign policy, told The Media Line that “during Netanyahu’s 2017 visit to China, 25 cooperation agreements were signed in various fields, which the Chinese estimate to be worth about $2 billion. In addition, during the visit both sides agreed to expedite the establishment of a free-trade zone between the countries. As part of that visit, China launched a direct airline between Shanghai and Tel Aviv.”

Since then, trade relations have predictably expanded. According to the Central Bureau of Statistics, Israeli exports to China have increased by 62% in the first eight months of 2018 – compared to last year which saw imports jump from $2.14b. to $3.5b.

Imports from China have also risen significantly, by 10% from $4.45b. last year to $4.9b. in 2018. Strengthening trade relations therefore underscores the importance of the upcoming talks.

WHILE THE summit’s official focus has yet to be announced, some observers suspect that the presence of such high-level diplomats and business leaders portend weightier goals than just promoting innovation.

“Chinese delegates like to be discrete and we cannot know whether the published reasons for the visit are the true ones,” Tal Reshef, an intercultural business specialist, told The Media Line.

“China is aiming to become a technological superpower. In order to get to that point, the Chinese need to build their research and development infrastructure and they need to acquire newer technologies. Israel is the obvious choice. Relatively speaking, there are more start-ups and innovation in Israel than in Europe and the United States, where Chinese influence is limited. By investing in and protecting data and security companies China can work on its goals,” Reshef said.

Despite such growing cooperation, Israel has taken steps to rein in Chinese influence in its markets and technology sectors.

Over the past few years, Chinese firms have played a prominent role in the development of Israeli infrastructure and agricultural projects. Recent Chinese expansion into shipping and naval activities, however, have raised red flags among Israeli officials.

Former Atomic Energy Commission chairman Shaul Chorev believes that Israel should create a government mechanism capable of putting holds on runaway Chinese expansion into the country. His recommendations have been echoed by others, like Ephraim Halevy, the former head of the Mossad, Israel’s national intelligence agency, who has argued that growing Chinese influence in Israel constitutes a viable security threat if left unchecked.

Commenting on the matter, Dostri added, “It is not surprising that Netanyahu instructed Meir Ben-Shabbat, a national security adviser, to formulate a mechanism for monitoring Chinese investment in Israel.”

In fact, Israel has already taken such steps. In 2016 and 2017, Israel’s Commissioner of Capital Markets Dorit Salinger blocked a Chinese conglomerate from buying a majority share of stocks in Israeli insurance companies. Later, Salinger stopped similar Chinese attempts to buy a majority stake in a large Israeli investment firm. In 2014, however, China successfully purchased controlling shares of Tnuva, Israel’s largest food manufacturer.

As trade relations warm up further, Dostri added, “There is concern about Chinese espionage and cyberspace activity using smart phones from Chinese companies. However, Israel is a cyber power and is well aware of the risks in the field, especially from the Chinese side, and is taking precautionary measures.”

The growing partnership between the two countries and the multi-faceted nature of relations have demanded new approaches and strategies for both sides. The upcoming summit will be an opportunity to test the waters for both cooperation, as well as determining the limits of technological exchange.