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The Evolving Israel-China Relationship

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The Evolving Israel-China Relationship The Evolving Israel- China Relationship Shira Efron, Howard J. Shatz, Arthur Chan, Emily Haskel, Lyle J. Morris, Andrew Scobell C O R P O R A T I O N For more information on this publication, visit www.rand.org/t/RR2641 Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-1-9774-0233-2 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2019 RAND Corporation R® is a registered trademark. Cover: Photo by esfera via Shutterstock. Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Preface Since the early 2000s, relations between China and Israel have expanded rapidly in numerous areas, including diplomacy, trade, investment, construction, educational partnerships, scientific coopera- tion, and tourism. China’s prime interests in Israel are advanced tech- nology and its location as part of the Belt and Road Initiative. Israel seeks to expand its diplomatic, economic, and strategic ties with the world’s fastest growing major economy and diversify its export markets and investments from the United States and Europe. Although evolving relations with China present Israel with impor- tant opportunities, they also pose a variety of challenges. This report discusses the growing relationship and the challenges it poses for Israel and for Israel’s most important ally, the United States. It concludes with two recommendations for Israel and one for the United States. Israel would benefit by (1) gaining a better understanding of the oppor- tunities and challenges deeper ties with China could bring, including developing better knowledge of China; and (2) using the experience of other countries to develop policies toward China that account for these challenges and opportunities. The United States, in turn, would benefit by working more closely with Israel to deconflict, shape, and advance a mutually agreed upon China-related agenda and by helping Israel build its knowledge base and understanding of China. iii iv The Evolving Israel-China Relationship This report examines the nature of Israel-China relations with a greater emphasis on the Israeli perspective and implications for the United States. It should be of interest to policymakers, analysts, and academic researchers studying Israel, U.S.-Israel relations, and China and China’s international relations. RAND Ventures The RAND Corporation is a research organization that develops solu- tions to public policy challenges to help make communities through- out the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND Ventures is a vehicle for investing in policy solutions. Philanthropic contributions support our ability to take the long view, tackle tough and often-controversial topics, and share our findings in innovative and compelling ways. RAND’s research findings and recommendations are based on data and evidence, and therefore do not necessarily reflect the policy preferences or interests of its clients, donors, or supporters. This venture was made possible through several funding sources. One was a generous gift from the Cyrus Chung Ying Tang Foundation. Through this gift, the RAND Center for Asia Pacific Policy (CAPP) established the Tang Institute for U.S.-China Relations in 2007, within which this research was conducted. Funding for this venture was also provided by the contributions of the CAPP Advisory Board and the RAND Center for Middle East Public Policy (CMEPP) Advisory Board, and the research was con- ducted within CAPP and CMEPP, both part of International Pro- grams at the RAND Corporation. Contents Preface ............................................................................. iii Figures .............................................................................vii Tables .............................................................................. ix Summary .......................................................................... xi Acknowledgments ............................................................ xxiii Abbreviations ................................................................... xxv CHAPTER ONE Introduction ....................................................................... 1 Challenges Associated with Israeli-Chinese Ties ............................... 3 Data and Methods ................................................................. 8 The Plan for This Report ......................................................... 9 CHAPTER TWO History of Israel-China Relations ............................................11 The Early Years: The Path to Normalization ..................................12 Defense Technology Transfers Were the Bedrock of Ties Until 2005 ......15 The Shift from Defense Cooperation to Economic Cooperation .......... 20 Conclusion ........................................................................ 22 CHAPTER THREE Chinese Perceptions of and Interests in Israel .............................25 v vi The Evolving Israel-China Relationship A Model for High-Tech Innovation ............................................ 26 Defense, Security, and Counterterrorism ..................................... 30 The Geostrategic Importance of the Middle East .............................32 The Belt and Road Initiative.................................................... 38 Mixed Attitudes Toward Israel ................................................. 40 Conclusion ........................................................................ 44 CHAPTER FOUR Measuring Israel-China Relations ............................................47 Diplomatic Relations ............................................................ 48 Defense Relations .................................................................51 Economic Relations ...............................................................65 Education and Cultural Relations ..............................................69 Conclusion ........................................................................ 80 CHAPTER FIVE Chinese Investment and Construction in Israel ...........................81 Investment and Construction Overview .......................................82 Chinese Entities ...................................................................85 Israeli Companies ............................................................... 113 Conclusion ....................................................................... 121 CHAPTER SIX Policy Implications of Growing Israeli-Chinese Ties ................... 123 Policy Recommendations ...................................................... 127 Implications of Israel-China Relations for the United States .............. 142 Concluding Thoughts .......................................................... 145 APPENDIXES A. Data Collection and Methods ........................................... 147 B. Differences in Trade Data by Source ................................... 153 References ....................................................................... 159 Figures 4.1. High-Level Chinese Visits Under Each Chinese Leader, 1992–2018 ............................................................49 4.2. High-Level Visits to China Under Each Chinese Leader, 1992–2018 ............................................................51 4.3. Top-Level Defense Visits to the Middle East Under Each Chinese Leader, 1992–2018 ....................................... 56 4.4. Top-Level Defense Visits to China Under Each Chinese Leader, 1992–2018 ...................................................57 4.5. Arms Exports from China, 1992–2015 .......................... 60 4.6. Arms Exports from Israel to Various Countries in Asia, 1992–2016 ............................................................61 4.7. China Exports to Israel, 1992–2016 .............................. 66 4.8. China Imports from Israel, 1992–2016 ...........................67 4.9. Chinese and Israeli Patents, 1992–2015 .......................... 68 4.10. Chinese Tourists to Israel, 2014–2017 ............................76 5.1. Chinese Investment in Israel by Sector, 2007–2018 .............85 5.2. Aerial Image of the Haifa Port Area ............................. 108 5.3. Aerial Image of the Ashdod Port Area .......................... 110 B.1. Hong Kong Exports to Israel, 1991–2016 ...................... 156 B.2. Hong Kong Imports from Israel, 1991–2016 ................... 157 vii Tables 3.1. Chinese Public Opinion of Israel’s Influence, 2006–2017 .....45 4.1. Chinese
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