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The Most Crucial Issue for U.S.-Israel Relations – and It’s Not Iran

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A woman taking a selfie at Tiananmen Square to mark the 100th anniversary of the founding of the ruling Chinese Communist Party in Beijing, earlier this month.
A woman taking a selfie at Tiananmen Square to mark the 100th anniversary of the founding of the ruling Chinese Communist Party in Beijing, earlier this month.Credit: Andy Wong/AP

On July 1, the Chinese Communist Party celebrated its centenary. The “great, glorious and correct” party, as it gleefully describes itself, was established in 1921 in the midst of a civil war, took power in 1949 after World War II and the Japanese occupation, and has ruled China for 72 uninterrupted years.

“The Sick Man of Asia,” as China was once described, was at the time a poor, backward country of some 400 million, taken over by communists who became a unique brand of Maoists. Mao Zedong’s “Great Leap Forward” claimed the lives of approximately 36 million people, and China never really began to emerge from that period until Mao’s death in 1976.

Today, China’s population is over 1.4 billion and its GDP is estimated at $15.6 trillion, making it the second largest economy in the world behind only the United States. It is regarded as an economic and military superpower, capable and willing to project its strength and extend its influence in the Western Pacific, stretching from the Korean Peninsula and Japan in the north, down to Taiwan, leading to Southeast Asia, into Asia’s heart, and farther south and west into Africa, the Middle East and Europe.

Western predictions of the impending and inevitable decline of the Chinese Communist Party (CCP) failed to materialize. These predictions were based on Western modes of thinking: one-party rule is incompatible with the freedoms that accompany an entrepreneurial economy; the vast, growing and prospering middle class will demand political liberties; the economy will run out of steam.

They were all confounded by the CCP. The Chinese, it appears, are thankful to the party, indebted to it for their newfound status and relish China’s stature in the world.

That they are repressed, surveilled, their online presence and preferences monitored and censured is true. Changing that, if at all, will have to wait for after Xi Jinping.

The U.S. and China

The very same day the Chinese were celebrating, the Congressional Research Service submitted a report to the U.S. Congress titled “China Naval Modernization: Implications for US Navy Capabilities.”

In the first paragraph of the executive summary of the 56-page report, the researchers determined the following, both reflecting and setting the tone for contemporary U.S. thinking on China: “China’s military modernization effort, including its naval modernization effort, has become the top focus of U.S. defense planning and budgeting. China’s navy, which China has been steadily modernizing for more than 25 years, since the early to mid-1990s, has become a formidable military force within China’s near-seas region, and it is conducting a growing number of operations in more-distant waters, including the broader waters of the Western Pacific, the Indian Ocean, and waters around Europe.”

A few days later, following Beijing’s continued crushing of political dissent in Hong Kong, Kurt Campbell, U.S. National Security Council coordinator for the Indo-Pacific, warned China that the U.S. has tried to send “a clear message of deterrence across the Taiwan Strait” and that any attempt by China to move on Taiwan would be “catastrophic.” And Japan’s deputy prime minister, Taro Aso, stated that Japan will defend Taiwan alongside the U.S., “if China attacks the island.”

Chinese and U.S. flags flying along Pennsylvania Avenue near the U.S. Capitol in 2011.Credit: Hyungwon Kang/REUTERS

Last month, U.S. Secretary of Defense Lloyd Austin issued a department-wide “Directive on China Task Force Recommendations,” stating that Beijing is Washington’s “number one pacing challenge.” Accordingly, the Pentagon’s 2022 budget continues the trend of treating China as a long-term, so-called “over-the-horizon” threat.

Though China is not a belligerent country, nor has it been militarily aggressive since 1949, the United States regards it as a rival and a potential threat. The conventional thinking in Washington holds that China is threatening the order and disrupting power relations in a way that imperils U.S. interests.

Whether it is trade relations and imbalances, intellectual property issues, cyberespionage, naval power projection or geopolitical, hegemonic aspirations, China is gradually becoming for the U.S. what the Soviet Union was during the Cold War: The be-all and end-all of foreign and defense policy.

What does China want?

The success of the CCP is attributed to three factors:

1. It was ruthless and unrelenting, overcoming crises such as the Tiananmen Square protests in 1989, the dissolution of the Soviet Union and, most recently, dissent in Hong Kong.

2. Ideological agility: Two years after Mao Zedong’s death, his successor, Deng Xiaoping, scrapped workers communes, and allowed the maligned and disdained “market forces” to partially guide (via party monitoring) China’s economy.

The U.S. Navy guided-missile destroyer USS Curtis Wilbur patroling in the Philippine Sea in 2013.Credit: Handout ./REUTERS

Once China began to prosper and grow, the current and powerful leader Xi reverted to ideological orthodoxy. The party, bureaucracy, military and police all underwent purges under the guise of “anti-corruption.” Simultaneously, China developed an expansive foreign policy in a patient, comprehensive and methodical effort to mold and maintain China as a superpower worthy of its size and growing economic might.

3. China avoided becoming a kleptocracy. This doesn’t mean there is no corruption, but given the size and volume of activities, the danger of descending into a kleptocracy was real and the party prevented wealth being concentrated in the hands of just a few families or state-owned companies.

In foreign policy, Xi accelerated China’s integration in the world by challenging the status quo. The Belt and Road Initiative, both its land and maritime routes, is a strategic fact of life. It has a big navy and many naval bases (China is eying new bases in Cambodia, Tanzania and, most alarmingly for the U.S., in the United Arab Emirates and the Pacific island of Kiribati), and has modernized the country’s nuclear arsenal (119 new silos are built in the Gansu desert in north-central China). The effort was designed carefully, based on geography: Close to home (Taiwan, Hong Kong, the Korean Peninsula), into the South China Sea, along Southeast Asia, and westward to the Middle East, Africa and southern Europe.

China and Israel

After establishing full diplomatic ties in 1992, Chinese-Israeli relations expanded at a rate commensurate with China’s ascendency. The 1990s saw bilateral trade grow from $25 million to $1 billion in 2001. Between 2001 and 2018, that volume soared to $12 billion. The last pre-pandemic figures in 2019-20 show Israeli exports to China at $3.3 billion and imports from China at $6.6 billion. While China is after Israeli technology innovation in IT and derivatives, Israel imports primarily consumer goods.

Israel saw China as a potential target market for advanced weapons systems sales, but two major deals were overridden by American concerns and objections. The famously botched sale of the airborne early-warning Phalcon radar system in 2000 was canceled after the Clinton administration gave Israel no choice, while the Harpy armed drone deal was canceled in 2005 once the Bush administration made its opposition abundantly clear. While China was cognizant of the pressure the U.S. exerted on Israel, given their “special relationship,” these incidents clarified to China that there are limits to its relationship with Israel.

As for China’s investments in Israel, it has focused on infrastructure, consistent with Xi’s Belt and Road Initiative: a water desalination plant at Soreq, Haifa Port, the Tel Aviv light rail system and other projects. The desalination contract was eventually won by an Israeli company, IDE, over the Chinese-held company Hutchison Whampoa (now known as CK Hutchison), after the U.S. expressed its uneasiness over the Hong Kong-based company.

Then-Prime Minister Benjamin Netanyahu with Chinese President Xi Jinping in 2013.Credit: ASSOCIATED PRESS

Similarly, after the U.S. telecoms regulator declared Chinese communications companies Huawei and ZTE as “threats to national security … with ties to China’s security establishment” in June 2020, Israel all but mothballed whatever plans it had to allow Huawei to install 5G cellular network infrastructure across the country.

China got the message. When having to choose between the U.S. and China, no matter the issue, Israel will invariably do what the Americans ask, even against its own economic and diplomatic interests.

Over the last year, Chinese-Israeli relations gradually cooled. Nothing spectacular or acrimonious happened, but those following the trajectory of Chinese-Israeli relations saw the unequivocally clear signs.

First came the 25-year, $400-billion strategic partnership China struck with Iran. While Israel conveniently ignored the deal, explaining defensively that it will only bear fruit years from now and doesn’t include advanced weapons systems (it doesn’t actually know that), Israeli intelligence and Iran observers know it’s potentially a very big deal. It may not immediately alleviate the burden on the Iranian economy or mitigate the effect of U.S. sanctions. But from an Iranian perspective, China is an ally that can shield and try to extricate Tehran from isolation and a diplomatic siege.

Then came the recent flare-up in Gaza. China, a permanent member on the UN Security Council, was a vocal critic of Israel. Traditionally, China followed Moscow’s lead at the Security Council on the basis of an old axiom: If the U.S. is for it, we are against (and vice versa).

But this time was different. Chinese Foreign Minister Wang Yi called on “all parties, especially Israel,” to “exercise restraint and stop hostilities immediately” – diplomatic language Russia refrained from making.

Some in Israel downplayed this as a Chinese ploy to divert attention from the reported suppression and widespread killing of members of the Uighur community in Xinjiang. However, if you connect the dots – tangible U.S. pressure on Israel to scale back economic relations with China; a virtual veto on defense relations; a general Israeli pledge of allegiance to U.S. presidents; the agreement with Iran; the Gaza reaction; and Israel’s expanding ties with India, China’s most formidable Asian rival – a picture forms of a relationship being constricted by design.

Then-Prime Minister Ehud Olmert visiting the Forbidden City in Beijing 14 years ago.Credit: REUTERS

Could there be a U.S.-Israel rift over China?

The dilemma for Israel involves not being forced to make a binary choice between the United States and China. In terms of their relative importance to Israel, they are essentially asymmetrical and patently unequal. China is an ascending superpower with tremendously broad and deep economic power, with an increasing role and clout in international affairs. Israel is fully aware of this reality shaping global politics.

The United States is a central and indispensable pillar of Israel’s national security, manifested in military aid, access to advanced military technologies and a wide diplomatic umbrella.

But the more rancorous the U.S.-Chinese rivalry becomes, the longer it persists and the broader the areas it extends to – not to mention an implausible (but not beyond imagination) escalation in the Pacific Rim – the more likely it is that Israel may find itself having to choose a side.

That side will undoubtedly be the United States, almost regardless of whether it is right or wrong on any particular issue. Despite that, it will test Israel’s diplomatic independence and room for maneuver.

If there is one issue that threatens the well-being of the U.S.-Israeli relationship, it is not the Iran nuclear deal or the Palestinian conflict. It may be China.

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