Exports to China totaled more than $1 billion in the first half of 2011, a 33 percent increase compared with the corresponding period last year, the Israel Export Institute reported Wednesday.

Nevertheless, an additional NIS 900 million in potential exports would go untapped this year, the institute’s director, Avi Hefetz, said at the first annual Israeli-Chinese business conference in Ramat Gan.

“The Chinese economy is expected to continue to grow in the coming years, as well, and is in need of a technological infrastructure upgrade,” he said.

This presents an opportunity for Israeli companies in the areas marked by the Chinese government for development in the next five years, such as water, the environment, semiconductors and medical devices, Hefetz said.

China is now the fourth-largest export destination for Israeli products, according to the institute’s data, rising from 10th place in 2010. However, 70% of Israeli exports are concentrated in just three of China’s 33 provincial-level regions: Shanghai, Guangdong in the South and Sichuan in the southwest.

Dan Katrivas, head of the Manufacturers Association of Israel’s foreign trade department, said Israel-China trade relations could not move forward as long as Israel remains subservient to the United States. He cited Israel’s $1b. sale of Falcon aircraft to China in 2000 and a multimilliondollar sale of Harpy UAVs in 2000, both of which were canceled due to US pressure.

“The limits that Israel has placed on its relationship with China because of the US has created a situation in which all of Israel’s elite in the field of dual-usage technology [for civilian and military purposes] aren’t part of exportation to China,” Katrivas said, “and these are the things that are most needed in China.”

“This will continue for many years – as long as our agreements with the Americans continue, as long as they sit here and here,” he said, pointing to his shoulders and neck.

Katrivas said manufacturers should take note that the Chinese are not so interested in buying products made abroad, but rather are “interested in us coming to them and selling over there.”

“If I were Chinese I would say the same thing,” he said.

“We say, ‘Buy blue and white’; they say, ‘Buy red.’ The Chinese want us for technology, knowledge and training and to get the maximum possible out of it."

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