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Israel and China’s Silk Road

Chinese and Israeli flags
When China’s president, Xi Jinping, articulated his idea of the Silk Road Economic Belt (SREB) in Astana in September 2013 and again a month later in Jakarta, what emerged was a vision to parlay large-scale economic dynamism into a foreign policy projecting Chinese influence overseas in the name of development. Inclusive and expansive at once, this is an ambitious vision, and one that could seal ours as the Chinese century if it succeeds in weaving the loose ends of China’s overseas interests into a coherent whole.

Three years into SREB, now better known as the Belt and Road Initiative (BRI), a part of the vision is slowly taking on flesh. The volume of media reports attests to this. What remains less clear is the strategic implications and opportunities of BRI for China’s partners. Occupying a slight sliver at the intersection of West Asia and the Middle East, Europe and Africa – regions of intimate relevance to BRI – Israel too has joined the new Silk Road caravan. Where does it fit in, and what difference does BRI make?

The Belt and Road Initiative: the idea and the implementation

China’s current fundamental challenge is to preserve the existing form of government under the Chinese Communist Party by maintaining political and social stability. The latter in turn depends on managing economic expectations and growth, which has slowed down to single-digit rates since the 2007-08 subprime mortgage crisis. With BRI, the means to maintaining and rejuvenating economic output lies in exporting excess manufacturing and industrial capacities, especially those linked to China’s many state-owned companies (SOEs). By transiting Xinjiang province – home to China’s 10 million Uyghur Muslims – into Central Asia and farther westwards, these infrastructural projects could also theoretically diminish the development gaps between the affluent coastal economic regions and China’s backward and restive western regions, improving domestic and border stability.

In geostrategic terms, BRI diversifies and secures both overland and maritime routes for exports and the import of energy and raw materials, putting in motion a veritable global Chinese supply chain. China’s most important export markets lie in the EU and the United States, whereas its energy imports originate heavily from the Middle East, as well as Central Asia and Russia.

BRI does not only promise to leverage Chinese wealth in stimulating economic growth via infrastructural development in BRI partner countries at a time when most economies remain sluggish. It does this in an unspoken way aimed at reinforcing China’s political and cultural influence and image as a benign power keen to share the dividends of its inexorable rise. If successful, BRI will have implanted and perhaps even mainstreamed international financial institutions paralleling the existing Bretton Woods institutions, encouraging greater use of local currencies including the Renminbi. Aimed westwards, BRI is also perceived to meet the United States’ own controversial ‘rebalance’ towards the Asia-Pacific, formally announced in 2011, and sidesteps the once-related Trans-Pacific Partnership (TPP) that conspicuously excludes Beijing. Insofar as a trading bloc, China’s BRI would include over 60 countries, 63% of the world’s population, 29% of world GDP, and roughly a quarter of the world’s turnover in goods and services.

This combines a fundamental, incompressible interest (rejuvenating the economy to maintain political stability) with a seemingly maximal one (projecting China’s influence globally), even if China’s historical attempts at engaging the outside world (the original, overland Silk Road initiative during the Han period and naval expeditions as far as east Africa during the Ming dynasty) never accompanied imperial expansionism. Some domestic voices have argued that BRI constitutes grand strategy at China’s best and most subtle, even as others downplay its significance. Perhaps wary of provoking unnecessary suspicion, even Xi’s administration decided to soften BRI from ‘strategy’ to ‘initiative’, inviting reciprocal engagement as it were. If we define grand strategy as an integrative statement of a country’s desired ends and the spectrum of means subordinated to these ends, then BRI might be argued to fit the definition, notwithstanding the lexical corrective.

With goals and means at hand, how BRI unfolds depends on the technical minutiae. China has brought and sought financing in the form of the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB), and the BRICS-affiliated New Development Bank, among other sources, putting together a seed fund initially capitalised at some $200 billion. Although the Asian Development Bank estimates Asia’s infrastructure needs to amount to a colossal $8 trillion by 2020 – the seed fund makes up a mere 2.5% of this figure – nothing in theory would prevent BRI attracting greater government and private investments moving ahead, including sovereign funds, private equity and pension funds.

Undaunted by BRI’s sheer orders of magnitude and a host of other regulatory and governance obstacles, Chinese contractors have already begun planning, building or linking high-speed rail, roadways, energy pipelines, power transmission grids, communications cables and other infrastructural features along the ‘new Eurasian land bridge’ and its maritime twin, creating terminal city-pairs as disparate as Yiwu-Madrid, Lianyungang-Rotterdam and Beijing-Moscow. This is in addition to the 19,000 km of high-speed rail so far constructed in China alone. Xi’s decision to announce SREB/BRI in Kazakhstan was no accident: railways linking China to Europe almost inevitably traverse the steppe lands of Central Asia’s most stable and affluent economy. Elsewhere in Eurasia, its vigorous commercial presence has won China a dominance that seriously challenges that of Russia.

Other key BRI node-points include the projected Isthmus of Kra in Thailand and the 3,000 km China-Pakistan Economic Corridor connecting Kashgar to Gwadar port – both crucial alternatives to traversing the US-policed Strait of Malacca; the China-Indochina Peninsula Economic Corridor linking Kunming to Singapore; a Belgrade-Budapest bullet train project; and even a 740 km railway between Addis Ababa and Djibouti, crucial logistics support for China’s foray into Africa’s natural resources and politics. In parallel, China has been negotiating its way into control of a number of ports stretching from Indochina to Western Europe and Africa, including a key regional naval logistics base in Djibouti.

In a military strategy white paper released in 2015, the Chinese government famously stated its intention to shift from offshore defence towards blue-water operations in order to secure its strategic sea lines of communication (SLOCs). As it happens, these SLOCs constitute the same meridians and arteries that power BRI’s maritime route.

Strategic implications and opportunities

China-Israel bilateral trade currently hovers around $12 billion, and bilateral cooperation spans a wide gamut of fields, leveraging heavily on China’s markets, financial capital and manufacturing capacity on the one hand, and Israel’s technological edge in areas, including water treatment, agriculture, cyberspace technologies and medical equipment, on the other. While extensive and promising, bilateral cooperation, already in the making for years, did not require BRI as a necessary precondition. With BRI now at play, three implications and opportunities arise that transcend bilateral economic cooperation: infrastructural and trade interconnectivity, a closely-related ‘information Silk Road’, and Israel’s potential as mediator between the world’s two leading powers.

The nexus of infrastructure, transport and communications transmission routes paves the way for an unprecedented degree of interconnectivity embracing a community already exceeding 60 countries. China’s infrastructural footprint in Israel began with the Carmel Tunnels near Haifa in 2007, six years before BRI’s formal announcement. Yet, it is the projected ‘Med-Red’ railway linking Eilat with Ashdod, reportedly to be constructed by China, that could transform Israel into a land bridge along the Maritime Silk Road. If handled well, this might even very modestly offset the disparity in the volume of Chinese infrastructural projects elsewhere in the Middle East and Africa compared to Israel. While any land bridge would be secondary to the Suez Canal in importance and shipping volume (barring political instability in Egypt), the ‘Red-Med’ could still offer a more cost-effective alternative route, ideally enmeshing Israel and China with Egyptian cooperation. However, a serious challenge is locating adequate space to construct a container port facility at Eilat.

Still another mooted alternative envisages a Persian Gulf-Mediterranean land bridge running through Saudi Arabia (al-Dammam or al-Jubail), Jordan and finally Israel. While much of the infrastructure is already in place in this second scenario, stiff political and legal-jurisdictional challenges remain, compared to the ‘Red-Med’. In either case, while land freight is cheaper than air and faster than sea freight, maritime shipments remain the cheapest existing option. Part of the viability of the historical Silk Road was precisely that it comprised alternative routes, such as those that skirted Western China’s treacherous Taklamakan Desert.

Accompanying Israel’s transit capability is its potential capacity as a major commercial logistics hub similar to historical entrepôt ports astride key trade and shipping routes such as Singapore, Hong Kong and Colombo. China Harbour is building a private port alongside Ashdod’s existing one, and the Shanghai International Port Group has secured a license to operate another deep-sea private port planned in Haifa. Though these ports are likely to improve competition, Chinese involvement has prompted mixed reactions within Israel, as with some of China’s large-scale commercial acquisitions in the country. Furthermore, in view of Israel’s growing gas reserves, some have suggested a potential Israeli role as in-situ industrial-manufacturing base for China (and other countries) – more cost-effective than importing liquefied natural gas shipments to home industries from Israel via its Cyprus terminal – with easy access to energy and export markets such as the EU. An Israeli transit hub for goods, services, capital, energy, and innovation all in carries vast, transformative potential.

Closely connected to Israel’s geographical land bridge is its position as key node along any future information Silk Road. In March 2015, Premier Li Keqiang announced the 10-year ‘Internet Plus’ initiative integrating cyberspace with industry, commerce and banking networks. However farfetched the notion sounds, if China were to extend this to undergird the emerging steel-and-asphalt Silk Road, Israel could play a significant role. At present, submarine fibre optics and several communications satellites connect Israel to Europe and the United States. From there, Israelis can place calls to virtually any other country, including Iran, via satellite link. Communications connectivity does not technically require a geographically contiguous IT infrastructure linking, say, Jordan and Egypt via Israel. However, were China to decide on paving an information Silk Road linking the physical, hardware layer of national IT infrastructures in the Middle East with standardised protocols, this could improve the quality of communications among these countries, as much in the technical sense as in the political. Israel’s leading edge in cyber technology, backed by keen interest and investments from some of China’s largest hi-tech companies, might in this manner transcend bilateral cooperation to BRI’s broader benefit.

China’s BRI infrastructure is a necessary but insufficient condition for deeper integration. Beyond material interconnectivity, Beijing could harness BRI’s colossal development momentum into a stabilising force for cooperation or at least some degree of détente notably within the Middle East, in keeping with Xi’s fifth SREB objective: people-to-people relations.

Outside of the South and East China Seas, Beijing has remained a paragon of caution in terms of foreign and security policy. However, in recent years, it has been gradually breaking with precedent through greater involvement in the Middle East’s various conflict theatres. Following on from the 2008 deployment of naval escorts for commercial convoys around the Horn of Africa’s pirate-infested waters, in 2013, Chinese troops joined UN peacekeeping missions for the first time, in Mali, and then later in South Sudan. Right after the removal of nuclear-related sanctions resulting from the Joint Comprehensive Plan of Action (JCPOA), Xi became the first of the P5+1 leaders to visit Tehran, following same-trip meetings in Saudi Arabia and Egypt. In December 2015, the National People’s Congress passed a law permitting the People’s Liberation Army and People’s Armed Police Forces, among other security agencies, to conduct counter-terrorism operations abroad, which could go beyond targeting Chinese Uyghur insurgents fighting in the ranks of the Islamic State, for instance. More recently in August 2016, a top-ranking Chinese admiral called on Damascus to offer personnel training and humanitarian assistance. Throughout this time, Chinese leaders including Xi and the foreign minister, Wang Yi, have unsurprisingly put forward their own tentative ideas for peace between the Israelis and Palestinians.

If BRI’s promise of mutual prosperity and development is to be more than the sum of its parts, its stabilising effect on the Middle East would be a major litmus test. This is no new idea, but it is an important one. China’s growing diplomatic muscle and its economic leverage in countries like Iran and Pakistan, which are particularly dependent on Chinese economic patronage, investments and willingness to undertake risk, allows it to make greater demands of its allies. China is unique in being the only major power and permanent Security Council member capable of simultaneously parleying with Israel, Iran and the Middle East’s Sunni powers without necessarily being perceived as partisan, while maintaining long-term economic leverage over them. This could take the form of practical but daring initiatives managed by China bringing, for instance, Israeli agricultural and water management technologies to Iran, a country with a water crisis at levels that could scuttle political stability. While still stubbornly in the realm of the improbable, Beijing could attempt to leave an even more important legacy in Jerusalem where a trail of US administrations and the Quartet have endeavoured and failed to resolve the conflict between Israel and the Palestinians. In addition, Israel’s membership in the AIIB, like its involvement in the Conference on Interaction and Confidence-Building Measures in Asia (CICA) established by Kazakhstan’s president, Nursultan Nazarbayev, places it squarely in the same diplomatic space as a number of countries with which it has no formal diplomatic relations. Unlike before, Israel’s AIIB application under Chinese auspices met with considerably less opposition from its regional neighbours, including Iran; in fact, opposition, if any, came mainly from the United States.

Third, given BRI is in some ways perceived to be China’s response to a number of Obama-era US foreign policy measures, Israel occupies an awkward but potentially constructive position in between. Washington has opposed Israel’s transfer of specific military technologies to China, and maintains concerns over aspects of both countries’ cyber cooperation. However, this is also an opportunity for Israel to mediate, buffer and ease frictions between an established superpower on the one hand, and a steadily rising contender on the other. China’s overland connection with the EU runs through countries that have lukewarm, outright hostile, or formally friendly but often tense relations with the United States, including Turkey, Azerbaijan and the Gulf monarchies (which is also why overland Eurasian energy routes into China are preferable to sea routes under control of the US Navy). Israel is the single exception, and therefore a credible intermediary. Indeed, this role might be all the more crucial now that Barack Obama has handed over the US presidency to Donald Trump.


China’s Silk Road Economic Belt makes for arresting headlines because it evokes romanticised imagery of peripatetic merchants, easy wealth and opulence, and exotic bazaar cities. Yet, a 2012 study painstakingly pieced together evidence that trade on the original Silk Road was much more localised, piecemeal and slow-moving than commonly thought. Trade was at its most expansive only at the peak of the Tang Dynasty precisely because China’s emperors injected large quantities of resources, notably bolts of silk, grain and coinage, to finance soldiers garrisoned in the far-flung western provinces (today’s Xinjiang). And even when they traded, Chinese officials had their eyes set, more than anything else, on acquiring free-riding Central Asian and especially Uzbek horses so indispensable to China’s military expeditions and postal relay networks.

In the 21st century Silk Road, China is again the prime mover and centre of gravity, given the slower economies lying between East Asia and Europe. In the context of China-Israel relations, the material and metaphorical interconnectivity embodied in BRI does not only offer the tantalising promise of economic prosperity. Like before, the greater distinction of the Silk Road lies in its explosive ferment of ideas, technology transfers, freedom of movement, and perhaps more than anything else, tolerance and understanding among peoples. Notwithstanding reservations and scepticism, if China succeeds in parlaying its economic clout into a diplomatic coup, BRI could be the legacy that the next generation of Chinese leaders in Zhongnanhai leaves behind. The momentum may come from Beijing, but smaller countries like Israel can and must shape it.

This article by Open Briefing senior analyst Kevjn Lim was originally published by Signal on 17 January 2017.