Flourishing in the new era: China-Israel economic and trade cooperation

Tthe cooperation between China and Israel is a marriage made in heaven.

October 21, 2018 19:15
3 minute read.
TRANSPORTATION MINISTER Israel Katz (right) and Ambassador Zhan Yongxin of China

TRANSPORTATION MINISTER Israel Katz (right) and Ambassador Zhan Yongxin of China take part in an event marking the beginning of underground construction work of the light rail, using a Tunnel Boring Machine (TBM) in Tel Aviv, February 2018. (photo credit: REUTERS)


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Bilateral trade is a cornerstone of the China-Israel relationship. From 1992 to 2017, bilateral trade has grown from $50 million to $13.1 billion. Now, China is Israel’s No. 1 trade partner in Asia and No. 3 trade partner in the world.

In 2017, Chinese imports from Israel reached $4.2 billion and exports were US $8.9 billion, registering a year over year increase of 32.4% and 9% respectively. And in the first half of 2018, China’s import from Israel reached $2.77 billion, achieving the growth of 47.2% compared with the same period in 2017.

Chinese exports to Israel are highly diversified. There are products important for manufacturing and construction in Israel, such as mechanical equipment, metals and chemicals. Consumer goods like cosmetics and home appliances provide quality, yet affordable choices that improve Israeli life. Similarly, the hi-tech exports from Israel also help China improve its industrial structure and productivity.

Progress in FTA negotiations

Negotiating a Free Trade Agreement (FTA) is determined by our leaders. The China-Israel FTA negotiations began in 2016 with the aim of streamlining China-Israel trade procedures and deepening bilateral economic links.
China and Israel are working together to expand FTAs. We have already finished four rounds of negotiations and reached extensive common understanding.

The FTA will generate win-win results. More Chinese products with high quality and attractive prices will enter Israel, and more Israeli products will have access to the Chinese market and to the entire Asia-Pacific region. It is hoped that bilateral trade volume will double after the conclusion of the FTA.

Thriving two-way investment

Two-way investment has been a highlight of the China-Israel economic relationship. Currently, China’s non-financial direct investment to Israel is over $7 billion.

The two-way investment between China and Israel has three components. First, Chinese investment is highly diversified and includes, but is not limited to, medical equipment, agriculture tech, IT, manufacturing, food and chemicals.

Second, Chinese investment is flexible. There is direct investment and cooperative arrangements with Israeli venture capital firms, joint ventures and funds. More Chinese multinationals, such as Everbright Holding Group, Alibaba, Baidu and Fusion Hi-tech Group are actively engaging in various forms of investment in Israel.

Third, Chinese investment serves as a boost to Israeli innovation and its hi-tech industry. By investing in Israeli companies, Chinese investors enable them to grow stronger and thus create greater values. The process speeds up the industrialization of Israeli hi-tech industry and brings more jobs to Israelis.

Fruitful joint projects

The joint projects have achieved fruitful outcomes. In recent years, Chinese companies, with their engineering and construction capacity, have participated in the bidding and construction of such joint projects as Israeli railways, highways, ports, municipal projects and so on.

At present, Chinese firms have signed contracts worth $4.1 billion. Some of these large-scale infrastructure projects are well-known in Israel, like the Carmel Highway Tunnel, the Gilon Railway Tunnel, the Ashdod South Port and the Tel Aviv Light Rail. These projects are a win-win. They demonstrate the outstanding engineering capabilities of the Chinese enterprises, promote the economic and social development of Israel and, in particular, bring convenience to the people of Israel.

Labor cooperation for people’s well-being

A top priority of the Israeli government is to increase housing supply and cap property prices, in order to improve people’s lives. The Chinese government fully understands this concern and is ready to help.

During Prime Minister Benjamin Netanyahu’s visit to China in 2017, China and Israel signed the agreement for recruiting Chinese construction workers. With their participation, it is believed that more houses will be built at a faster pace, but with higher quality and lower costs. This will help Israel solve its housing problem and improve Israelis' quality of life.

As Prime Minister Netanyahu said, the cooperation between China and Israel is a marriage made in heaven. And indeed, we have brought tangible benefits to our countries and peoples. But that’s not the end of the story. China and Israel still have a lot to offer to each other, and a huge potential awaits to be fully tapped.

In March 2017, Chinese President Xi Jinping announced with Prime Minister Benjamin Netanyahu the establishment of the China-Israel Innovative Comprehensive Partnership, unveiling a new era for China-Israel relations. We have every reason to believe that with China’s market and capital, Israel’s hi-tech industries, and both people’s innovative spirit, we will score even greater achievements in the new era.

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