Booming of China-France Economic Relations and Israel’s Key Role

In May 2018, British multinational banking and financial services holding company HSBC, publicized that it has set up a China Desk in Israel, taking the lead as trade and investment flows between China and Israel are booming.

As China seeks to further develop and deploy its multibillion dollar ‘One Belt One Road’ initiative, aimed at driving Chinese investments across the globe, Israel has become a highly attractive destination for Beijing government officials and business leaders. According to HSBC president and CEO China David Liao, leading Chinese technology companies have founded in recent years a number of research and development centers in the country, and invested in Israeli start-ups in order to tap-in to its research talent.

Not only is Israel attractive to Chinese investors due to its world-renowned status as a country overflowing with innovative talent, but also due to its geographic position. Haifa port, Israel’s largest international port, can serve as a much needed bridge for Chinese goods exported to the European continent, and vice versa. The port of Haifa is one of the largest ports in the eastern Mediterranean in terms of freight volume and handles over 29 million tons of cargo per year. In 2015, China-based Shanghai International Port Group won a bid to expand the Port of Haifa, a project which is scheduled to be inaugurated in 2021, with it running the Port of Haifa for 25 years.

Indeed, it seems that bilateral investment and trade is on the rise between the two nations, as according to HSBC data, Chinese investments in Israel reached $6.5 billion at the end of 2017, while investments from Israel in China totaled $380 million at the end of 2016. Bilateral trade rose to $13.1 billion in 2017, up 15.6% from the previous year, making China Israel’s third largest trade partner. Moreover, Israel and China are currently in the midst of negotiating a free trade agreement.

Another country which is now working on enhancing its economic ties with Beijing is France. In January 2018, le président de la République française, Emmanuel Macron, embarked on a visit to the People’s Republic for the first time during his presidency, accompanied by an army of French businesspersons. The French president has since stated that he planned to visit China every year as part of France’s outreach to the Chinese market and wider Asia. While warning against the possible expansion and projection of Chinese power conceivably enabled by the Belt and Road initiative, French President Macron embraced the massive investment and development project. As France has been one of the main European destinations for Chinese investment, which doubled to more than $3 billion between 2013 and 2015 with the acquisition of French assets, China has become France’s number one trading partner in Asia.

As the eighth largest export destination for France and its second largest supplier of computer, electronic, optical and textile products, France’s interest in securing its trade and economic relations with China is apparent. Serving as a key link for the potential expansion and preservation of trade and investment between Beijing and Paris, and a celebrated global hub for research, innovation and talent, Israel might prove vital in securing this soaring economic relationship. Israel has a lot to offer France in cooperative terms when it comes to the tech sector. As startups in France have raised more than 1.95 billion euros during the first half of 2018, the tech sector in France is thriving, a fact which is already leading to greater bilateral interest. Adding France’s interests with China into the mix, and you will get an even stronger French-Israeli economic partnership, based on cooperation and fulfilment of mutual goals.

About the Author
Sharon holds a Master's degree in Political Science from Tel Aviv University and the prestigious Paris Institute of Political Studies, commonly referred as Sciences Po. During her studies in Paris, Sharon had interned at the Permanent Mission of Israel to the OECD, and was selected as spokesperson on behalf of the European Union of Jewish Students at the Human Rights Council at the United Nations in Geneva.
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