Builders urge caution in using Chinese state firms for infrastructure

"Interests of the Chinese government do not necessarily coincide with Israeli interests," the builders' letter stated.

January 29, 2018 23:52
3 minute read.
Light rail train car on display in central Tel Aviv.

Light rail train car on display in central Tel Aviv.. (photo credit: YOCHEVED LAUFER)


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Israel should further scrutinize Chinese state-owned companies that build roads and railways and operate ports, local contractors and builders have urged regulators here.

Raising the specter of security concerns and unfair foreign competition, the Association of Contractors and Builders called on Israel’s antitrust regulator to intervene and possibly bar future contracts with Chinese state-owned firms in developing critical infrastructure.

“A small number of large [Chinese] state-owned groups are currently in control of a significant part of Israel’s vital infrastructure that has been allocated to this day,” wrote Gera Kaushanski, vice chair of the association’s infrastructure division, in a letter sent to Antitrust Commissioner Michal Halperin at the end of December.

“One concern is the harm to public interests from Chinese government activities through companies that control the local economy.... Interests of the Chinese government do not necessarily coincide with Israeli interests,” the letter stated.

When a Chinese state-owned company operates foreign infrastructure, it is unclear how that proprietary data can remain separate from the government.

That has led to other countries reviewing contracts with Chinese state firms.

“The world has begun to place regulatory barriers on companies controlled by the Chinese government, especially in the field of infrastructure,” the letter said, noting that regulators in the EU and US have heightened scrutiny of such deals.

Some experts worry that China’s political and strategic goals in the region – its energy dependence on Iran and Saudi Arabia – could run counter to the Jewish state as it gains control of critical infrastructure.

The Defense Ministry has been granted a veto over contracts and tenders to less expensive Chinese state firms. But other ministries may not be allowed to favor more expensive Israeli contractors, especially when the latter can bid at much cheaper prices.

The Transportation Ministry wasn’t available for comment as of press time.

When asked as to the possible savings for taxpayers, Kaushanski said monopolistic concerns trumped cost.

“Price isn’t everything,” Kaushanski told The Jerusalem Post. “There is no Israeli company that can match the financial capacity and the ability of the Chinese government. But you should be worried about the Chinese state-owned companies taking over this market, and that local companies might get killed by the governmental companies... coming here.”

The livelihoods of nearly 270,000 Israeli workers and 50,000 Palestinian workers could be at risk, said a spokesperson for the Association of Contractors and Builders.

Today, Chinese state-owned company China Railway Tunnel Group is bidding to operate the communication systems for Tel Aviv’s Red Line light rail, which is under construction and scheduled to open in 2021.

If granted the tender, the Chinese government-controlled company would operate an estimated 3,000 closed-circuit surveillance televisions adjacent to the Red Line in the Tel Aviv metropolitan area, along with the wi-fi, radio frequencies and communication in the tunnels, according to a former staffer in the Economy Ministry. That raises privacy and security concerns, with the threat of surveillance being conducted by a foreign government.

Other current or future projects that Chinese-owned companies have expressed interest in operating and building are Highway 16 to Jerusalem; Jerusalem’s light-rail Green Line extending to the south of the city; Tel Aviv’s Green and Purple light-rail lines; and the proposed Eilat-Tel Aviv railway – a project that is “rigged for China,” the staffer said.

In Ashdod, the China Harbor Engineering Company is building and participating in a separate tender for Route 16. In Haifa, Shanghai International Port Group got the tender for operating the port at Haifa. And the China Civil Engineering Construction Corporation won the tender for building the city’s Mount Carmel tunnels.

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