A China-Israel free trade agreement (FTA) makes a lot of economic sense. China is one of the world's leading manufacturing markets, while Israel is among the leaders in research and development (R&D). The Chinese want Israeli technology, and the Israelis want the cheaper consumer goods that the Chinese can make. The countries' economic relationship has expanded, with bilateral trade climbing to nearly $11 billion in 2015 from $50 million in 1992, and an FTA would accelerate the process. It is no surprise, then, that the two recently launched formal negotiations on such a deal. Fewer trade barriers would be good for both sides, but there are also political and supply chain concerns pushing them together.
Besides the economic benefits of an FTA, for Israel the deal is also about diversifying its political relationships. The West is becoming more politically distant from Israel, and the Boycott, Divestment and Sanctions movement, which calls for economic actions in what it says is a nonviolent struggle against Israeli occupation, is gaining prominence in Europe. Israel is looking to work more closely with other partners and move away from its reliance on the United States. The process is already underway: Last year, two Chinese companies won tenders to build a port in Ashdod and operate another port in Haifa.
A similar urge is motivating China. Looking out into the South China Sea, Beijing sees a U.S. effort to physically contain China's expansion. China is also worried about the extent to which Taiwan, South Korea and other U.S. allies in Asia dominate its supply chain for electronics and high-tech goods. Removing trade barriers and increasing its imports of Israeli high-tech products would gradually lessen those countries' influence on China.
