Sources reveal PM's office, Foreign Ministry and defense industry exporters trying to loosen restrictions on defense exports to China.

The Prime Minister's Office, the Foreign Ministry and exporters in the defense industry are seeking to challenge the limitations on Israeli defense exports to China, according to new reports. The limitations are currently being imposed by the US.

Sources within the defense industry revealed to The Marker that various firms and government ministries are trying to ease restrictions on "dual-use" technology, namely products with civilian and military applications. According to senior sources, these limitations generally hamper the hi-tech industry's exports to China.

The US restrictions on defense exports were highlighted a week ago when the US expressed fury over an Israeli sale of military equipment to China.

Meir Shalit, the Department Head for Defense Exports at the Defense Ministry, resigned in an apparent gesture of apology for authorizing the transfer of military hardware. In particular, technology featuring a miniature refrigeration system manufactured by Ricor, used for missiles and in electro-optic equipment, raised American concerns over the deal.

The sale demonstrated the rapidly expanding ties between Israel and China.

Those ties were most recently on display during Chinese Foreign Minister Wang Yi's first visit to Israel earlier in December. The budding alliance was welcomed by Foreign Minister Avigdor Liberman, who in November said Israel needs to find new allies.

The new initiative, which would further develop the alliance, seeks a change allowing the sale of older technologies such as last-generation unmanned aerial vehicles (UAVs). Additional, eased restrictions on dual-use technology exports, which currently requires approval from the Defense Ministry, is also sought.

The Economy Ministry has confirmed it is examining dual-use export guidelines in an attempt to ease restrictions while still complying with treaty obligations to the US.

Aside from China, the US has demanded that Israel add India to its list of sensitive countries for defense exports. Nevertheless, reports Monday indicate India intends to buy 15 UAVs from Israel.

Israel's newly emerging China alliance is not without its uncertainties.

Foreign Ministry spokeswoman Hua Chunying on Tuesday welcomed the Israeli release of 26 terrorists in a "gesture" to the Palestinian Authority (PA). Hua told Xinhuanet that her country urges Israel to stop construction in Judea and Samaria, and to work with the PA to advance peace talks.