Israel eyes trade deals from China visit

Date: 11-22-06

by Jean-Luc Renaudie

JERUSALEM (AFP) - The largest Chinese delegation yet to visit Israel met Israeli leaders with the Jewish state eyeing the Asian giant as a key trading partner ahead of the 2008 Beijing Olympics.

The delegation, in Israel for three days, is headed by Liu Qi, president of the Beijing Olympic organising committee and member of the Chinese Communist Party's politburo.

The team held separate meetings with Israeli Prime Minister Ehud Olmert, Foreign Minister Tzipi Livni and Defence Minister Amir Peretz.

Among the delegation are 11 chairmen and leaders of some of the largest Chinese enterprises in the field of electronics, telecommunications, finance, infrastructure and energy, said Boaz Hirsh of the Israeli trade and industry ministry.

Contracts worth several tens of millions of dollars are due to be signed during the visit, Hirsh added.

China only forged diplomatic ties with Israel in 1992, and has long been one of the strongest allies in Asia of the Palestinian Authority.

But Beijing has also sought closer ties with Israel in recent years, particularly in trying to source military technology and hardware.

Last year, Israeli exports to China amounted to 725 million dollars and Chinese imports rose to 2.3 billion dollars.

Chinese exports are due to increase again this year by 25 percent, based on Israeli estimates.

"For Israeli businesses China has become unavoidable -- this market is a real challenge for us," said Dan Catarivas of Israel's Industrial Association.

"Our two countries complement one another. We have a niche strategy for high value-added technological products while the Chinese sell us more traditional industrial products which, in the vast majority of cases, do not compete with our companies," added Catarivas.

His association also indicated that Israeli businesses are hoping to reap security and protection contracts ahead of the 2008 Olympic Games, with China planning massive anti-terrorist measures.

Catarivas also noted an Israeli predilection for joint ventures with Chinese partners, with firms taking advantage of the large pool of Chinese labour.

To underscore the importance Israel accords to China, the red carpet was dusted off for the visit and a string of meetings with the most senior members of the cabinet.

The two countries have also enjoyed a fruitful association in terms of military hardware, despite this creating friction with Israel's main ally and supplier of defence systems, the United States.

Last March, the defence ministry in Tel Aviv re-authorized Israeli companies to export military hardware to China after trade was blocked for months under US pressure over a deal to upgrade Chinese drones.

The green light came after Israel agreed to accept stricter controls requested by the United States to ensure that military hardware containing US components was not exported without Washington's prior approval.

Last year, the US briefly froze Israeli participation in the development of a new generation F-35 fighter jet in protest over Israel selling sensitive military technology and equipment to China.

The spat centred on an Israeli deal to upgrade Harpy Killer drones it sold to China, amid concerns that advanced US defence technology contained in Israeli equipment could be used against Taiwan.

Washington said the deal, for which China had already paid 50 to 60 million dollars, would threaten its strategic interests.

In 2004, Olmert headed an Israeli delegation to China, which he predicted would be "the most sought after market for Israel in the next decade."


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