US President Donald Trump speaks at the South Korean National Assembly in Seoul, South Korea, November 8, 2017.
(photo credit: REUTERS / JONATHAN ERNST)
US President Trump recently concluded his historic visit to Asia.
While his agenda was broad, politicians and the press have focused mainly on economic concessions in China and prospects for any resolution on the North Korean crisis. Yet, Jewish and Israeli observers should not ignore the wider implications for Israel and the Jewish community. China may be distant geographically, but it keeps getting closer to the Middle East reality.
In recent years Chinese direct investments in America have been steadily rising – in 2016 alone Chinese investment in the US amounted to $46 billion.
Chinese investment allowed American companies to find new sources of liquidity after the financial crisis and connect to Asian markets, and helped the Chinese emerging multinational entities deploy capital outside their own market.
While some transactions have raised national security concerns in America, the issue has been the subject of careful review by the US government. Recently, concerns shifted from national security to job security, reciprocity, and the ability of Americans to invest in China in similar industries. Chinese President Xi Jinping’s vision for China and recent commitments to President Trump may change this reality to some extent and open the Chinese market.
Israel may find itself in a similar position. Recent Israel-China governmental dialogue and market forces have increased Chinese investments in Israel dramatically. However, Israeli companies may find a Chinese wall on the other side. Recent developments in US-China economic relations may bring more Israelis to competitive industries, such as semiconductors and aerospace technologies.
In addition, Israel’s start-ups and venture capital funds have continued to raise funds from Chinese entities in recent years. The combination of “America First,” the unique US-Israel nexus and the recalibration of US-China economic relations may lead to growing pressure on Israeli companies to give the US market a priority.
On the North Korean front, the growing consensus before and after Trump’s visit continues to be that only a growing pressure on Chinese economic institutions that are involved with North Korea, such as banks and energy exporters, can lead China to change its approach in North Korea and bring more stability to the region. While the North Korean and Iranian crises are different in nature, we can still learn quite a bit about the importance of economic leverage in Trump’s foreign policy in Asia. The significant role of several businesspeople and financial experts in many parts of the new US government emphasizes this trend.
Israeli policy makers should follow these developments closely. Trump’s mixed approach to the US-Iran nuclear deal may be driven moving forward by similar economic factors.
When it comes to Middle East policies and peace negotiations more generally, there is no doubt that US hegemony is behind us. The message coming from the recent conference of the Chinese Communist party and Trump’s visit is that China is looking for a bigger role in the world, pushing for globalization and political intervention. Indeed, the Chinese leadership is loud and clear about its rejection of intervention in other countries’ internal political and economic affairs, but China is aggressively looking to reshape the Western-dominated international institutions, start new ones and introduce new rules that reflect the emerging world where the US and China rule together. From the Asian Infrastructure Investment Bank to China’s deeper involvement with the UN Security Council, Israel may need to engage with China differently.
Recent reports about a new US Israeli- Palestinian peace plan may test this new bipolar reality, since China may challenge some of the new proposals in various multilateral institutions.
The Jewish community should take note as well. Traditionally, the American Jewish community has paid limited attention to Asian governments and Jewish diplomacy in China. The theory was that unless there is a direct impact on Jewish life in Asia, which is limited to start with, or on Israel’s ability to execute certain political and security strategies, limited presence is desirable. That should change. Trump’s visit to Asia reminded us of the importance of longterm efforts to build sustainable bridges between the American Jewish community, China and other rising Asian nations. It may also force us to think about ways to change the structure and leadership of many existing institutions to reflect this changing reality.
The author is an international economic law and business professor, media commentator, and an adviser.
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