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China and Israel signed a trade accord yesterday to boost trade in another sign of bilateral economic cooperation between the two countries.

The accord recognized Israel as a "preferred investment destination" for China, and the signing ceremony was attended by Trade and Industry Minister Ehud Olmert and Chinese Deputy Trade Minister Wei Jianguo.

The two officials agreed to set up a $3 million joint research and development fund, which will be equally shared by the two countries, and will concentrate on telecommunications, agrotechnology, biotechnology, environment, water and medical equipment. Olmert and Wei also agreed to set up a working team to encourage closing the trade gap between the two countries through additional bilateral joint ventures involving large-scale projects.

Olmert welcomed the agreements, and said that so far this year, trade between the two countries has grown by 26 percent, to $2.37 billion. However, the ministry said yesterday that most of this amount - $1.8 billion - is imports from China.

Wei said yesterday he hoped that by the end of 2008, trade between China and Israel would reach $10 billion. Trade and Industry Ministry Director Ra'anan Dinur estimated that trade between the two nations would reach $3 billion this year.

China plans to invest $40 billion on 860 infrastructure projects for the 2008 Olympic Games in Beijing. Dinur said that Israeli firms could be involved in some of this work, particularly telecommunications, security and environmental projects.

Israel and China also agreed to forge more cooperation on economic matters in an accord signed by the head of the Israel Small & Medium Enterprises Authority, Amiram Bukspan, and his Chinese counterpart.