China Seeks to Double Trade with Israel

From DefenseNews

China Seeks To Double Trade with Israel

By BARBARA OPALL-ROME, TEL AVIV

China hopes to double its trade with Israel over the next three years, from nearly $2.5 billion registered in 2004 to $5 billion or more by 2008, according to Beijing’s top diplomat here, who declined to discuss specifics of the two countries’ defense trade.

In an April 7 lecture at the Hebrew University of Jerusalem, Ambassador Chen Yonglong noted that Sino-Israeli trade is growing at an annual rate of some 40 percent.

When asked specifically about bilateral defense trade ties, however — and about U.S. claims that Israel is Beijing’s second largest supplier of arms and military technology after Russia — Chen demurred from providing additional data. He insisted, however, that China does not constitute a military threat to the United States, and that pressure from Washington to trample Sino-Israeli defense trade is unjustified.

“In principle, if I do business with you, I don’t think others should interfere,” Chen said.

Intense U.S. government pressure — coupled with veiled threats to curtail the more than $2 billion that Israel receives each year in U.S. military aid — forced Israel to cancel in May 2000 a signed and legally binding contract with China for the sale of aerial early warning aircraft. Israel suffered heavy monetary and political penalties as a result of the contract violation.

Now, U.S. officials are insisting that Israel suspend work associated with a 1997 contract for radar-killing drones sold to the Chinese military. China shipped several systems and related components back to Israel several months ago, ostensibly for repair. U.S. officials, however, suspect the systems were returned to Israel for upgrading, including the incorporation of real-time data transmission capabilities. Until the U.S.-Israeli impasse on the matter is settled, the Harpy systems and related subsystems are being held in storage by Israel Aircraft Industries, prime contractor for both the Phalcon aerial early warning planes and the Harpy anti-radiation drones.

In his April 7 lecture, Chen noted that bilateral trade between China and Israel is “skyrocketing ... Our interests are very complementary, and there is a solid base of cooperation that has been established in a relatively short period,” Chen said, referring to Beijing’s formal establishment of diplomatic ties with the Jewish state in 1992.

He said the two countries are discussing the establishment of a bilateral research and development fund to encourage more Israeli and Chinese firms to engage in joint development projects. Chen noted that as of 2003, there were 146 Israeli investment projects in China, with a contracted value of some $203 million. “China-Israeli cooperation is leaping to a new stage,” Chen said. “It’s becoming more mature. Our two countries are joining in a strategic partnership to bring about a brighter tomorrow.”

And while the bilateral trade balance still tilts in favor of Chinese exports to Israel, Chen said China is importing an increasing amount of Israeli products and technologies, principally from the agricultural, telecommunications, aviation, medical and other high-technology market sectors. “In 2004, Israel became China’s seventh largest trade partner; its fifth export market and its 10th import market in the West Asia/North African region,” Chen said.