China-Israel Ties on the Rise

China has become Israel’s third largest trading partner.

China’s investments in Israel are moving beyond start-ups and the high-tech sector. As Israel joins the China-led Asian development fund (AIIB), the bilateral trade relationship is emerging into a broader regional partnership. From a meager $50 million in the early 1990s, trade between the two countries has risen to $11 billion. Today China is Israel’s third largest trading partner.

In recent months, Israeli agriculture trade fairs like Agrivest and AgriTech have witnessed large Chinese delegations and greater participation from Chinese state-owned and private players. China’s Rising consumer demand and increased pressure on agricultural land has prompted the Asian giant to increasingly look at Israeli agriculture technology to boost crop yields and dairy production. Last year, China and Israel decided to set up an agriculture technology incubator in Anhui Province, China – enabling joint development of agriculture technologies and solutions in keeping with requirements on the ground.

In March, Israel joined China’s newly constituted Asian Infrastructure Investment Bank (AIIB), becoming a founding member of the institution.

This regional lending institution will have an initial authorized capital of $100 billion and will invest in projects throughout Asia. China will provide 50 percent of the capital. The fund would open opportunities for Israeli companies to partner in infrastructure projects in Asia.

Israel resisted the initial pressures from the Obama administration, urging it to refrain from China-led fund.

China is also involved in large infrastructure projects within Israel. A subsidiary of China Harbour Engineering Co. is building a commercial port near Ashdod, a project worth $950 million.

China remains upbeat about growing bilateral trade ties with Israel. Last month, the newly appointed Chinese Ambassador Zhan Yongxin talked about doubling bilateral trade over the next decade. The envoy’s statement comes as China and Israel plan to start negotiations on a Free Trade Agreement.

Despite rapid growth in trade relations in the recent years, China still accounts to roughly 10 percent of total Israeli trade volume. Europe still takes the lion’s share, accounting for the third of overall trade, followed by US.

However, Israel is increasingly engaging with Asian trading partners such as China, India and Japan – to offset flagging growth in Europe. Furthermore, Unlike European counterparts who often use their clout as economic partners to put political pressure on Israel, increasing trade with Asian economies comes with less political strings attached.

[Vijeta Uniyal is an Indian journalist based in Europe and Contributing Editor for Jewish Business News]