Forget about filthy sweatshops in the outskirts of Tel Aviv. From now on, Chinese companies are penetrating Israel and constructing from tunnels to railways
china-israel-economy

Mao by Andy Warhol (photo: Warhol museum, Pittsburgh)

‘Israeli Miracle’ developing strong ties with China

PUBLISHED IN |  Aug 8, 08

Starting this afternoon and for the next 17 days, the gaze of the entire world will be set on the vast stadiums built by China during the past few years. Every TV screen will show the same image: The China of 2008 is a superpower, whose engineering projects and infrastructure are on a scale difficult for the modern world to grasp.

China has also managed to penetrate the Israeli market. The China Civil Engineering Construction Corporation (CCECC) is tasked with digging the Carmel Tunnel. It will also be responsible for the civil engineering aspect of the Red Line of Tel Aviv’s light-rail project, which will connect Petah Tikva in the east with Bat Yam in the south. ZPMC, the Chinese manufacturer of cranes and metal equipment, this week won the tender to supply seven bridge cranes to the Haifa port.

The huge Chinese construction corporations are state-owned. This means that anyone who does business with them is in effect doing business with the state and with the Chinese Communist Party.

Prof. Marvin Samuels, who divides his time between Israel and China, and has been following relations between the two countries for many years, says that, “In the past year, Israel has received amazing positive spin in China.” Samuels, an adviser to the Chinese Ministry of Communications and a lecturer at the Hebrew University in Jerusalem, points out that this trend is reflected in news reports in both the governmental and semi-independent media, “and in tremendous interest on the part of senior politicians as well as corporate executives. If Chinese companies have begun to do business in Israel, it is very probable that senior officials in the Chinese politburo gave them the green light to do so.”

First-world standards

Beijing during the olympic games (photo: andymiah)

Beijing during the olympic games (photo: andymiah)

Zhou Hui, the commercial attache at China’s Embassy in Tel Aviv, confirms that his government encourages Chinese firms to come to Israel. He says that the amount of trade between the two countries has increased dramatically since diplomatic relations were established – from $50 million in 1992 to about $4.5 billion in 2007. The balance of trade remains highly uneven: China exports goods and services amounting to some $3.5 billion to Israel, whereas it imports only about $1 billion-worth from Israel.

“China’s presence in Israel as an infrastructure builder is new,” says Samuels. “In the past, China used to export mainly cheap labor to Israel. But in recent years Chinese companies have been realizing huge projects, including power stations, airports and railroads. A Chinese company built the subway in Tehran in the past decade. The CCECC is now building a 1,300-kilometer railroad along the entire length of Nigeria. Previously it won an $8-billion infrastructure tender in Algeria.”

Zhou says that Chinese entry into the Israeli market has been relatively slow, since it requires adapting to a business environment that differs from that in the Third World. “We have very skilled workers,” he says. “They can dig tunnels at a rate of 700 meters a month, as they are doing with the Carmel Tunnel. But Israel is the first developed country China is entering for infrastructure projects. For now this activity is limited to that of a subcontractor – but it is nevertheless a big challenge for Chinese firms, which are not accustomed to Western standards of regulation, for example, or workers’ protection.”

The Carmel Tunnel will connect the Check Post junction, at the city’s northeastern entrance, with the fairgrounds area in the southwest. The tunnel, some 4.7 kilometers long, is scheduled to open in 2011, and will be the longest of its kind in Israel. The tender for the entire project was won by Carmelton, and it in turn chose the Chinese company as a subcontractor for the excavation work. The cost of digging the tunnel is estimated at $90 million. Ami Morag, the project’s administrative director, says some 550 Chinese are currently residing in Haifa while they work on the project, including about 50 managers and 500 workers (both engineers and laborers).

“The Chinese company has rented buildings in the city to house the workers,” Morag says. “These are pleasant residences, with a washing machine and electrical appliances. It’s a far cry from Levinsky Street in Tel Aviv [where many foreign workers live in often rundown housing].”

In Tel Aviv’s light-rail project, CCECC holds 25 percent of the shares in the consortium undertaking the work. Other members include the Lev Leviev’s Africa-Israel Investments and the German company Siemens, which will be in charge of the electro-mechanical work and will supply the trains. (The Chinese company will be in charge of the project’s civil engineering work.) The contract for the franchise, which was signed in May 2007, is for 32 years, including five years of construction and 27 years of operation.

Commercial attache Zhou notes that there are many more projects in the pipeline. One of them, for example, is a future tender for renovating existing rail lines. In addition, a huge Chinese home-appliance manufacturer is considering opening a research and development center in Israel, and representatives of the Chinese car manufacturer BYD visited Israel just this week in order to examine the possibility of cooperating in the field of electric vehicles and hybrids. “The present situation still does not reflect the full potential between the two countries,” says Zhou.

To make money

Albert Einstein. Jewish genes

Albert Einstein. Jewish genes

China has very good relations with the Arab world and with Iran. However, Samuels says, Beijing wants to maintain good relations with the West, too. The investment in Israel is a clear signal that China does not lean in one direction only.

Amos Nadai, Israel’s ambassador to China, has a somewhat different opinion. He attributes the Chinese interest in working in Israel to purely economic motives. Nadai says most of the investments and projects China is involved in in the developing world were designed to guarantee it a supply of minerals and energy sources. The country’s annual growth rate of 10 percent in the past three decades has prompted a tremendous expansion of its middle class. Some 150 million people have abandoned the village for the city in the past decade, and estimates predict that at least another 50 million will join them by 2010. The energy consumption of a Chinese metropolis is on average 2.5 times higher than that of a village, meaning the Chinese economy needs whatever it can get: cement for building, oil, soybeans, wheat and many other basic commodities.

These goods can be found aplenty in African and Arab countries, says Nadai, and it is there that China is trying to establish its political status, with the hope of guaranteeing a regular flow of raw materials and quarries. Israel, however, has other attractions for the Chinese.

“I keep hearing compliments about the ancient culture of the Jewish people and the old tradition,” says Nadai, who took up his post in China about a year ago, “and about the ability to build a modern country out of them in a span of 60 years. These comparisons make the Chinese feel close to us: They, too, have a glorious tradition and they, too, are trying to develop a modern country quickly. They feel that they have something to learn from us.

“Only recently a large team of Chinese state television employees visited Israel for a period of three weeks, to research the ‘Israeli miracle.’ Now they are visiting several places in the world that used to have large Jewish communities, in order to examine the Jewish community’s influence on its surroundings. Their idea is to try to decipher the secret of the Jews’ success.”

Nadai says that, “as a diplomat who has served in other countries in the past, I can say that there are no parallels today to such an attitude toward Israel and the Jews.”