Made in China – innovated in Israel

PAULA SLIER

The soldier couldn’t stop laughing as he relayed that just before us a busload of Chinese tourists had passed through. “Made in China, Made in China!” he kept repeating, to booming laughter all around. The joke was lost on me. It turned out that while products bearing the label “made in China” were commonplace across the country, Chinese people were a rarity.

Algerians thought it very funny that not only goods, but people too, could be “made in China”.

It’s the most recognisable label in the world today – “Made in China” – and it talks to the country’s standing as the largest manufacturer and exporter in the world. But “Made in China” doesn’t readily translate to “invented in China” and for this, the country of nearly 1,4 billion people is looking more and more to a country in the Middle East that is 60 per cent desert and home to only eight million. 

China’s economy is some 35 times larger than Israel’s, but when it comes to cutting edge technology, the Jewish State punches far above its weight. And so, a mutually beneficial relationship is born – Israel innovates and China buys.

The result is that China has become Israel’s largest trading partner in Asia and third largest in the world, with trade volumes reaching over $11 billion.

No wonder then that Israeli Prime Minister Benjamin Netanyahu, along with about 100 Israeli business leaders and five government ministers, recently spent five days in Beijing signing agreements with the country’s largest corporations whose turnovers reach into the tens of billions of dollars.

In the words of Netanyahu, it was a “marriage made in heaven”. While China gets to access Israeli know-how aimed at reshaping its economy from one based on cheap labour to one driven by technology and innovation, Israeli companies get to seek out new opportunities and markets in Asia, specifically in China.

Slowly but surely Israel is pivoting eastwards. This was Netanyahu’s second visit to China in four years, hot on the heels of visits he made – the first by an Israeli Prime Minister – to Singapore and Australia last month.

Later in the year Indian Prime Minister Narendra Modi, plans to visit Israel – this too will be the first such visit by a sitting Indian prime minister. In the Middle East where political considerations are never far in the background, the implications of these meetings are important.

The European Union remains Israel’s largest trading partner – but Asia is steadily closing the gap. An important difference between the two, observers will point out, is that much to the chagrin of Jerusalem, co-operation with the EU comes with political pressures.

The EU has published guidelines for member states to place consumer labels on products originating in the settlements, indicating they’re not made in Israel, and has also supported Palestinian construction in Area C of the West Bank, which is under Israeli military and civil rule. By comparison, the Chinese seem to be interested only in Israeli technology with no political strings attached.

Still, it would be foolhardy to believe that Israel carries as much importance for China as China clearly carries for Israel. Beijing has good relations with all parties in the Middle East and her ties with Iran, Turkey, and the Arab world are rapidly growing.

Over the last nine years, Chinese investments and contracts worldwide reached a staggering $780 billion. Israel represents only 0,02 per cent of that total compared with 13 per cent for Iran and the Arab world. Even more sobering, many analysts believe, is that as time passes Israel may lose its competitive advantage when it comes to technological innovations.

Interestingly, Israel was the first Middle Eastern country to recognise the People’s Republic of China back in January 1950. But that didn’t stop the then Chinese Communist Party leader Mao Zedong from placing China firmly in the anti-Israel camp.

India, as a co-founder of the Nonaligned Bloc, backed the Arab world against Israel; and Japan, although that country established diplomatic ties with Israel in 1952, was part of the Arab boycott because of her dependence on Arab oil. Israel only established diplomatic relations with China and India in 1992.

The love affair Netanyahu refers to, like all romances, has more than a little baggage in the closet.

Beijing has expressed concern that Israeli policies towards the Palestinians could destabilise an already unstable region. It also recognised the Palestinian state in the United Nations, opposed any military attack against Iran, and does not consider movements such as Hamas and Hezbollah as terrorist organisations.   

Almost 60 years ago, Israel’s first prime minister, David Ben-Gurion, warned the Knesset that US/USSR dominance was “transient” and would in the future be replaced by China and India. The Israeli premier seems to be heeding that call, but he would be wise to do so with his eyes wide open.

Paula Slier is the Middle East Bureau Chief of RT, the founder and CEO of NewshoundMedia and the inaugural winner of the Europcar Woman in Leadership Award of the South African Absa Jewish Achievers.