Israel is bringing home the gold from China. Israeli business is the big medal winner, that is, not its Olympic athletes. China is Israel's top Asian trading partner, something that often gives Washington major heartburn. Pursuit of the gold has at times blinded Israeli leaders to the larger implications of their actions, especially when selling weapons. Israel has been forced to give up billions in sales to China, a loss that has to be weighed against the value of the relationship with the United States. Those deals - Phalcon early warning aircraft in 2000 and the upgrading of Harpy drones in 2004 - were quashed because Washington feared the technology Israel was selling to China might some day be turned against American forces. But other sales have been blocked because American industry saw them as competition and got its friends in the White House and Pentagon to run interference. On another occasion, the US and Israeli governments colluded behind the backs of the Jewish community and Israel's friends on Capitol Hill. When the pro-Israel lobby (I was then the legislative director of the American Israel Public Affairs Committee) and the Congress mobilized in 1981 to stop the sale of AWACS early warning aircraft and F-15 enhancements to Saudi Arabia, we thought we had the Israeli government's tacit backing. What we didn't know was that while we were insisting the sale was bad for Israel, some of that equipment was actually being built at Israel Aircraft Industry's factory near Tel Aviv, profiting the Jewish state. I later saw it in crates addressed to the Royal Saudi Air Force and bearing a return address of Tulsa, Oklahoma. I don't know if the Saudis were aware that their F-15 add-ons were made in Israel. Nearby, Israel was also producing gun barrels for Chinese tanks, although the two countries would not establish formal relations for another 11 years. Actually, China and Israel had been doing military business since 1972, encouraged by Washington as a gambit in the standoff with Moscow. But with the end of the Cold War, Washington began looking at China increasingly as a potential adversary, particularly under the current Bush administration. THE ISRAELIS seemed oblivious to the change in attitude in Washington, particularly at the Pentagon where officials have long harbored suspicion that Israel illegally sells US technology to third countries, particularly China. In late 2004, the feud got to the point that a top Israeli defense official was accused of lying about sharing technology, and a senior Pentagon official demanded he be fired. The Israeli official "retired" and Israel signed an agreement to clear future military sales with Washington in advance. Unfortunately, Israel has no similar leverage over the US, which has shared Israeli military secrets with third countries, secrets that eventually wound up in the hands of Israel's enemies. Israel's coziness with China alienates many of its natural allies, including human rights advocates, arms producers, democracy advocates, religious groups and folks who fear China's strategic and economic growth, said an Israeli diplomat and Washington veteran. Israel made a mistake in the Phalcon case by assuming that since Congress is so friendly, it would overlook its qualms and help salve administration objections, the diplomat said. If Israel's arms sales to China give Washington heartburn, the Chinese are returning the favor, especially when it comes to Iran. Israel has no control over with whom Beijing, like Washington, shares Israeli technology. It has been reported that China plans to sell Iran its F-10 fighter, which bears an uncanny resemblance to the Israeli Lavi, which was developed with US financing and technology but never put into production. BEIJING, ALONG with Moscow, has been protecting Iran from the intense international pressure Israel considers essential to persuading the ayatollahs to abandon any plans to become a nuclear weapons power. China and Russia have undermined US-led efforts to win UN Security Council approval of stiff sanctions, insisting that while they don't want to see a nuclear Iran, they feel negotiations can produce a peaceful resolution. The real reason may be that sanctions are bad for business. Both have signed major energy and arms deals with Iran at the expense of the Americans and Europeans who support the trade restrictions. Other factors may be their rivalries with the US and their concerns that Iran may stir up Islamist movements inside their borders. The early clandestine trade between Israel and China led to political, diplomatic and commercial relations. Israeli companies doing business in China include agriculture, environment, electronics, software, medical, security, water treatment and consumer products. In Israel, state-owned Chinese corporations are involved in building tunnels, rail lines, bridges and other major infrastructure projects. Since 1992, when China granted Israel most favored nation status, Israeli businesses have been bringing home the gold. Trade has soared from $500 million to more than $5 billion and continues expanding. The growing relationship may be good for business, but its impact on Israel's most vital alliance - with the US - is far from clear.