Can China Blunt Israel’s Isolation?

The business conference last week at the Tel Aviv five-star hotel had a familiar sound: wall-to-wall praise for Israel’s technology prowess and tributes to the creative juices of the so-called “start-up” nation.

But the investors and executives gathered weren’t from Silicon Valley or the Wall Street investment banking scene. Set against the backdrop of Israeli and Chinese flags, the conference instead brought together executives from Shanghai and Tel Aviv to explore the potential for growing business ties between China’s giant economy and Israel’s flourishing tech sector.

At an afternoon session, a top Chinese technology executive was making a pitch for Israeli life sciences start-ups to roll out their products in the Far East.

“Israel has great technology, and China is a big market,” said Liu Jiren, the chairman and chief executive officer of Neusoft Corporation, a leading Chinese provider of software and engineering services. “If we can combine the tech knowledge of Israel and the market demand in China, we can build a great ecosystem.”

An unusual business alliance? In recent years, less so. Most of Israel’s exports do go to the U.S. and Europe. But in recent years, there’s been a growing rapport and cooperation between Israel and China. Trade levels are surging.

Israeli trade official Zvia Eger said that she has worked with dozens of Chinese delegations circling through Israel. “The country is full of Chinese investors,” Eger said.

The growing economic romance with China and other non-Western countries have been highlighted by government officials and other commentators to argue that the pro-Palestinian efforts to boycott Israel’s economy are failing and that the Jewish state is much less isolated internationally than Israel’s mainstream media and international news outlets suggest.

Those ties were stressed last month by Israeli Prime Minister Benjamin Netanyahu during an address to the United Nations. Over the summer, Netanyahu visited Africa to widen commercial relations, and in the coming months he is expected to visit China. At the U.N., he suggested that the demand for commercial ties with Israel will eventually lead to a diplomatic surge to improve Israel’s standing — even helping to reverse Israel’s isolation at the world body.

“Governments are changing their attitudes toward Israel,” Netanyahu suggested. “More and more nations in Asia, Africa and in Latin America see Israel as a potent partner.”
But will growing trade ties with the non-Western world help Israel to reverse the criticism it faces from the U.S. and Europe? Can the soft power from Israel’s cyber and defense know-how be leveraged to improve Israel’s foreign relations, even as the world continues to object to Israel’s settlement growth in the West Bank?

In an article published last month in The National Interest, Yizthak Klein, an expert on government at the Kohelet Institute, wrote that Israel is reaching out to new countries because of a “deterioration” in ties with its Western allies.

Speeches by Netanyahu, Klein wrote, create the impression that “Israel is making efforts to shift the pattern of its economic relations, reducing dependence upon Europe and expanding ties with other nations that may be more willing to embrace the advantages of trade and technology exchanges with Israel on Israel’s diplomatic terms.”

Jonathan Rhynhold, a professor of political science at Bar-Ilan University, said that Israel could indeed convert commercial ties and economic aid with African countries into more support at the U.N. He said that Greece is an example of a European country that used to be politically critical of Israel, but in recent years has forged an alliance in part because of Athens’ economic crisis. That said, Israel’s commercial ties won’t be robust enough to remove all of the pressure it faces over the Palestinians.

The Chinese want to do business with everyone,” Rhynhold said. “So Israel can’t stop China from trading with Iran, but the Iranians can’t stop China from doing business with Israel. I don’t see Israel having diplomatic leverage over China. But if you have a boycott against Israel, the Chinese aren’t going to sign up for it.”

Back at the China-Israel Investment Summit in Tel Aviv, Amir Gal-Or, a managing partner at the Infinity Group, which runs an Israel-China private equity fund, was talking to the prime minister’s office to arrange a meeting for some of the Chinese executives.

“For the Chinese, Israel is a source of technology, and a place to learn how to innovate,” he said. “Israel has no market, and Chinese has the highest-growing market. The other issue is capital.”

The visiting executives sounded agnostic about the Israeli-Palestinian conflict, and few sounded aware of the efforts to boycott Israel’s economy by pro-Palestinian activists. Bing Xue, a Shanghai-based lawyer who helps find investors interested in Israel for the Infinity Group, said the issue of Israel’s conflict with the Palestinians doesn’t register for many investors.

He said that the Chinese are mostly focused on their own government’s lack of democracy and corruption. Israel’s regulatory environment is more of a concern than are accusations over Israel’s treatment of the Palestinians. “We are less concerned about democracy and controversy about human rights,” the lawyer said.

Mike Zhou, the founder and chief executive of an online platform for pharmacy wholesalers, said came to Israel looking to partner with companies that specialize in business intelligence and data mining. “I like this country, the culture and the people,” he said.

When asked about Israel’s political challenges, Zhou said that he felt safe in Israel. His approach to Israel’s conflict with the Palestinians is agnostic. “It’s tough to judge what’s politically correct or not about the political positions,” he said. “There’s a long history of religion and conflict.”