China’s expanding role in Israeli infrastructure projects raise national security concerns

The United States and other Western nations have in recent years strived to reduce China’s involvement in critically important infrastructure projects. By contrast, Chinese companies continue to win major Israeli infrastructure projects by signing deals with private businesses that are mainly guided by profit margins. At the same time, China’s prominent involvement is raising concerns in Israel as the strategic projects are often critically important to the overall Israeli economy. 

Last week, Energy and Infrastructure Minister Eli Cohen indirectly responded to concerns about China raised by Yesh Atid lawmaker Moshe Tur-Paz.

"The State of Israel is a free market economy that wants there to be competition in all construction of infrastructure facilities. We are of course working with everyone," Cohen said while refraining from explicitly mentioning China. 

"Despite this, and I am not referring to any specific country, there is a body in the National Security Council that is responsible for examining foreign investments, and in any instance where there is concern that that entity has interests that could harm the national security of the State of Israel, then we forward the request, and any request for the construction of a power plant, which is an essential, strategic facility, reaches the National Security Council, is examined there, and without specifying cases of companies or projects or countries, there have been cases where projects have been stopped in the past," Cohen elaborated. 

The private Israeli company Dalia Energy recently signed a strategic cooperation with the Chinese companies THCC, HEI and CHEC concerning building two power plants in Israel. 

Last week, the Israeli Ministry of Transportation and the NTA Metropolitan Mass Transit System announced the first stage of the $17 billion Tel Aviv Metro project. The mega project has faced multiple hurdles and delays. One key issue has been whether to permit Chinese companies to participate in the critically important infrastructure project. While Israel appears divided on the issue, the United States has voiced its opposition to Chinese involvement in a strategic project of its ally Israel. 

In 2022, China accused the United States of meddling in its affairs. At the same time Beijing also sued the Israeli government for prioritizing Western companies over Chinese businesses. While seeking optimal partners for its strategic projects, Israel is at the same time increasingly trying to maintain stable relations with China without angering its main ally, the United States. 

The Rosh Ha’Ayin Municipality in central Israel also raised concerns about Dalia’s business ties with China concerning the building of the local Kesem power plant. However, the concerns were dismissed by the National Public Works Department. 

"The foreign company is not establishing or operating the plant but rather performing contract work for the builder (work estimated to be very small in scope compared with the project)," the department stated.

However, there is a growing awareness in Israel that China’s growing involvement in strategic projects could potentially threaten Israel’s own national security. 

In September 2021, Israel inaugurated a new port terminal in Haifa harbor in cooperation with the Chinese majority state-owned company Shanghai International Port (SIPG), which will run it for 25 years. Washington was angered by the deal and warned that U.S. military vessels might stop docking at Haifa harbor, which has been a in important Mediterranean hub for the U.S. navy. 

In 2022, Nir Ben Moshe, former director of Security of the Defense Establishment in the Israeli Ministry of Defense and researcher at the Israel-China program at the Institute for National Security Studies, warned that China is likely spying on Israel. 

“Israel's advanced capabilities in elite technology, cyber, medicine, agriculture, and more have the potential to contribute technologically to almost every aspect of China's buildup plans. Thus, Israel is an attractive source of technologies needed in China, as explicitly expressed by the Comprehensive Partnership for Innovation signed between the countries in 2017,” Moshe assessed.