The Taiwan question in Israel-China tech cooperation - comment

Former Israeli ambassador to China Matan Vilnai issued a stark warning to remain neutral because “We are outside the picture. It is not connected to us.”

 TAIWANESE PRESIDENT Tsai Ing-wen speaks next to US House of Representatives Speaker Nancy Pelosi and American Institute in Taiwan Director Sandra Oudkirk, during a meeting at the presidential office in Taipei, last month. (photo credit: TAIWAN PRESIDENTIAL OFFICE/REUTERS)
TAIWANESE PRESIDENT Tsai Ing-wen speaks next to US House of Representatives Speaker Nancy Pelosi and American Institute in Taiwan Director Sandra Oudkirk, during a meeting at the presidential office in Taipei, last month.
(photo credit: TAIWAN PRESIDENTIAL OFFICE/REUTERS)

In mid-August, China’s top diplomats warned Israel not to allow United States pressure to damage their bilateral relations. As Washington and Jerusalem prepare for their first Strategic High-Level Dialogue on Technology this fall, against the backdrop of increased cross-strait tension, China’s top diplomats are getting nervous. Israeli officials reported that Liu Jianchao, who heads the Chinese Communist Party’s international affairs department, emphasized to the Israeli ambassador to Beijing, Irit Ben-Abba, the importance of bilateral relations and especially, cooperation on technology.

On July 13, the US and Israel issued a joint statement on launching a Strategic High-Level Dialogue on Technology, designed to enhance bilateral technology cooperation, especially in the fields of pandemic preparedness, artificial intelligence, climate change and quantum computing. It would coordinate policies to build trusted tech ecosystems, including investment screening and export controls, and hold its first meeting in Israel in the fall of 2022.

The dialogue would be in an inter-agency format, but what is interesting is that rather than being led by ministries of science or economy, it would be led by both countries’ national security council, underscoring the importance of security concerns and the long shadow cast by a particular country over this partnership: China.

When the announcement was followed, a few weeks later, by the Biden administration’s hesitancy over US House Speaker Pelosi’s Taiwan trip and subsequent firing of Chinese missiles around the island, this prompted renewed debates in Israel about cross-Strait tension. In an August 4 The Jerusalem Post article titled “Taiwan, US, China – what is Israel’s position?” former Israeli ambassador to China Matan Vilnai issued a stark warning to remain neutral because “We are outside the picture. This is a complicated issue between the Chinese and the US. It is not connected to us.”

But is Israel really outside the picture?

 Taiwan's President Tsai Ing-wen visits soldiers at a military base in New Taipei City, Taiwan in this handout picture released August 23, 2022.  (credit: TAIWAN PRESIDENTIAL OFFICE/HANDOUT VIA REUTERS) Taiwan's President Tsai Ing-wen visits soldiers at a military base in New Taipei City, Taiwan in this handout picture released August 23, 2022. (credit: TAIWAN PRESIDENTIAL OFFICE/HANDOUT VIA REUTERS)

Given Israel and its technological prowess have become an important piece of China’s Middle East strategy, it inevitably has important security implications for Israel-US relations. This in turn needs to be viewed within the context of China-US relations with Taiwan as the cornerstone of this relationship. As such, Sino-Israel relations will automatically bring in two other actors of the US and Taiwan in a quadrilateral dance.

Taiwan – the elephant in the room

This is especially concerning to Taipei and Washington, given “Beijing’s prime interest in Israel is advanced technology,” wrote Mordechai Chaziza from Ashkelon Academic College in a July INSS report. Over the past 20 years, 97% of Chinese investments in Israel were in the technology sector and according to Ambassador Matan Vilnai, about half of Israel’s exports to China are semiconductors manufactured at Intel’s plant in Kiryat Gat.

Intel’s Fab 28 plant at Kiryat Gat has been manufacturing 45 nm chips since 2008, and plans a new $10 billion expansion for Fab 28 to produce 22 nm and 10 nm chips. According to the Israel Export Institute, in 2018, Israeli semiconductors sales to China soared 80% to $2.6 billion (NIS 8.8 billion), with Intel Israel accounting for at least 80% of those sales.

China is also interested in Israel’s advanced drone technology. At a 2013 Herzliya Conference, when asked what China hopes to get from upgrading ties with Israel, a Chinese Central Party School official admitted “Unmanned spy planes, that is what we want to get.” Indeed, China has been building a drone fleet as part of its military modernization and on August 24, showcased one of them over Taiwan, when Taiwan’s military confirmed the authenticity of a photo circulating on Chinese social media depicting Taiwanese soldiers looking up at a Chinese drone.

It is precisely these types of provocative military scenarios that the US, Taiwan and Asian allies, such as Japan and India, are warily eyeing China-Israel technology cooperation. When China fired missiles, on August 4, around Taiwan, Japanese Defense Minister Nobuo Kishi said five of them landed within Japan’s exclusive economic zone (EEZ) and immediately rebuked China. Back in June, minister Kishi already stated Taiwan’s security is directly linked to Japan’s and in July, Tokyo issued a 500-page defense white paper underscoring this linkage.

Likewise, India, as a member of the Quadrilateral Security Dialogue (The Quad), is increasingly aligning with fellow members regarding Taiwan security – the elephant in the room. New Delhi had been hesitant to make public statements about Taiwan due to its complex relations with China: an ongoing border dispute, a fellow member in the Eurasian security bloc Shanghai Cooperation Organization (SCO), needing China’s cooperation on Afghanistan, Pakistan and counter-terrorism, and its history as a non-aligned country. However, given geopolitical shifts in the Indo-Pacific region over the past years and the rise of Taiwan as a critical node in the global semiconductor supply chain, some scholars from India’s Observer Research Foundation are seeing a Taiwan moment for India to upgrade ties.

As such, Sino-Israel technology cooperation not only has security implications for the US and Taiwan in a cross-strait scenario, but also for other Asian allies in the Indo-Pacific region. As conveyed in a March 2022 joint report by the Center for New American Security (CNAS), Foundation for the Defense of Democracies (FDD) and Israel’s Institute for National Security Studies (INSS) entitled Aligning US-Israeli Cooperation on Technology Issues and China, it is important to bridge the threat perception gap and that Israel be more cognizant of national security implications of technological collaboration with China.

Threat perception gap

The current threat perception disparity between Washington and Jerusalem is understandable, given the US is a global superpower while Israel is a small country surrounded by hostile powers. For Israel, Iran ranks higher than China on the threat matrix and Jerusalem needs Beijing as a permanent member of the UN Security Council to influence Iran.

As such, Israelis are cautious about alienating China and push back against the US desire to dampen their technology cooperation. Tuvia Gering of the Jerusalem Institute for Strategy and Security is aware of Washington’s concerns over China “but we aren’t pushing it to US levels of alarmism.” Likewise, Ilan Maor, president of the Israel-China and Hong Kong Chamber of Commerce disagreed with the US definition of “strategic technologies” and complained, “Basically, it covers everything other than toilet paper, I guess.”

Yitzhak Shichor, Israel’s foremost sinologist, views the US narrative of the China threat as problematic and has led to wrong policies that pushed Beijing closer to the Soviet Union and later, with Russia. He played down China and Iran’s 25-year strategic agreement, signed in March 2021, and said if Beijing sends arms to Iran under this agreement, Israel can threaten to renew its arms supply to Taiwan. In 1977, the New York Times had reported that Israel secretly sold Gabriel surface-to-surface missiles to Taiwan, due to the Nationalist Government’s anticipation of the US derecognizing Taipei to recognize Beijing and break their mutual defense treaty, which did occur, in 1979.

Nonetheless, in an August 10 Newsweek article by Didi Tatlow titled “China Targets Israeli Technology in Quest for Global Dominance as US Frets,” Washington’s main concern is that the Chinese acquisition of Israeli emerging digital technologies may provide backdoors into US technology, given the deep US-Israeli innovation and defense ties. Due to China’s military-civil fusion (MCF) strategy of acquiring civilian technology for its military modernization, the fact that Israel’s investment screening mechanism excludes technology is a sore point for the US.

The Israelis see the high-tech sector as the private sector and do not want government intervention, and as such in several instances have inadvertently allowed Chinese military-related entities to acquire Israeli technology. For example, in 2016, Israeli journalists reported Huawei’s secret purchase of Toga Network, which currently acts as Huawei’s R&D outpost in Israel, and some Chinese companies operating and investing in Israel are also on the US Department of Commerce’s trade blacklist.

When Tatlow requested a statement from the US Department of State for the Newsweek article, she received a strongly worded statement of “We have been candid with our Israeli friends over risks to our shared national security interests.” In a diplomatic talk, Tatlow surmised that “candid” means people yelled.

It is thus within this context of trying to bridge the threat perception gap that CNAS, FDD and INSS released their report, in March, that helped launch the US-Israel Strategic High-Level Dialogue on Technology.

Bridging the gap

The main goals of the upcoming dialogue are to foster understanding and deconfliction of US and Israeli strategic perspectives on China, narrow differences in respective regulatory regimes vis-a-vis Beijing, and deepen US-Israel technological and economic cooperation. To be fair, Israel had legitimate security concerns when the Netanyahu government looked east to China for closer ties as a hedge against the growing western Boycott, Divestment and Sanctions (BDS) movement and a perceived anti-Israel Obama administration. Sino-Israel relations reached their heights in 2017, when prime minister Netanyahu called it “a marriage made in heaven.”

However, the Trump administration began to dampen Sino-Israel technology cooperation, which continues to this day, and as observed by Brigadier General (ret.) Assaf Orion, who heads the newly launched Israel-China Policy Center at INSS, “The honeymoon in relations between Israel and China is over”, especially given the entry of the US and Taiwan in the marriage. And in light of Taiwan’s rise as a critical node in the global semiconductor supply chain, with increasing support from NATO, EU and US Asian allies in the Indo-Pacific, Taiwan will likely be an important topic of discussion in the upcoming US-Israel strategic dialogue.

The writer is a guest scholar at the National University of Kaohsiung and a 2022 Taiwan Fellow with Taiwan’s Foreign Ministry. She has extensive US government experience working on China security issues, including policy planning at the Department of Defense, the National Security Council and the Department of State, and is the author of The New Silk Road: China’s Energy Strategy in the Greater Middle East (Washington Institute for Near East Policy, 2011).