Israeli Economist: Business With China Should Hinge on Long-term Ventures

The head of a government team on bilateral ties plays down the importance of promoting exports by individual companies.

Israel should expand its commercial ties with China through long-term projects sponsored by government rather than encourage individual companies to step up exports, Eugene Kandel, the head of the National Economic Council, said Thursday.

“In our view, if we head into the comfort zone where the Chinese have much to gain, we’ll be able to cooperate over the long term,” Kandel told a conference of the Institute for National Security Studies and the Washington-based Azrieli Institute. Israel should invest in people like commercial attaches, who would provide a great return by reaching financial agreements to support trade, he said.

“The bottleneck isn’t funding; money is no barrier,” said Kandel, who heads a government team crafting a strategy to boost economic ties with China. Long-term projects will be the centerpiece of the panel’s recommendations when it reports to a ministerial committee next week.

Israel has been pondering its strategy as China becomes increasingly important in everything from tourism to high technology. Although the official figures probably understate the magnitude, two-way trade with China amounted to $7.7 billion in the first 11 months of this year.

But Kandel said he doubted that basing economic ties on trade alone was enough for the two countries to fully benefit. Israel is too small to become a major factor in China’s overall trade, and its exports are constrained by limits imposed by the United States on dual civilian- and military-use technology. Still, Israel’s small size has an advantage: It doesn’t present a competitive threat to the Asian giant.

“In lieu of this, by 2030 we should be enjoying very deep strategic cooperation with China in a great many areas, many of which will address the daily problems facing ordinary Chinese,” Kandel said.

Both countries are interested in joint ventures in areas such as water, agriculture, dairy products and natural gas, as well as cleantech and high-tech sectors such as distance learning and health. The government team says food security is a major area where Israel could increase ties with China through government involvement.

And Kandel isn't concerned that the economy could lose manufacturing capacity to lower-cost China if Israeli companies teamed up with Chinese partners.

“We’re interested in expanding the economy, and it doesn’t make a difference if the investment is done here or there,” he said. “We have no strategy of moving factories from Israel to China, but ... some operations can move to China and we can still increase the value added here at home.”

Matan Vilnai, the Israeli ambassador to China, told the conference that Chinese tourism to Israel was a key factor. He said Israel aimed to increase the annual number of Chinese tourists to Israel to 100,000 from 20,000 in the next three years.

As part of the effort, the visa-application process had to be made easier, Vilnai said. He called the Interior Ministry an obstacle to addressing the issue but said he aimed to solve the problem in the next several months.

AP
Ofer Vaknin