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Where The U.S. Sees Threats In China, Israel Sees Opportunity


The Trump administration has shown nothing but support for the Israeli government. But it has one major criticism, growing Chinese influence in the Israeli economy. The U.S. has warned countries around the world against accepting Chinese investments. But where the U.S. sees threats, Israel sees opportunity. NPR's Daniel Estrin begins his report on the Mediterranean coast.

DANIEL ESTRIN, BYLINE: We have these beautiful, beautiful hills here, rolling all the way down to this - really, it's a dramatic view of the port.

SHAUL CHOREV: It's a remarkable view of the port. If you look there, and you can see the boats that are anchoring there, you can see this is the naval base there.

ESTRIN: Former Deputy Chief of the Israeli Navy Shaul Chorev.

CHOREV: You can see the entrance of the submarine base.

ESTRIN: That long white building?


ESTRIN: That's the submarine base?


ESTRIN: Israel's entire submarine fleet is there?


ESTRIN: The U.S. Sixth Fleet conducts exercises here. It's where the fleet would be stationed to help Israel during wartime. But now the U.S. is worried because just next door, Israel has invited a Chinese company to build and operate a new container terminal where ships can load and unload goods. You can see a platform jutting out into the water. It's where the Chinese company will build the communications infrastructure for the harbor. The U.S. thinks China could use it to collect intelligence. Former Israeli Navy official Chorev.

CHOREV: First, they can spy. Second, they can limit the activity of the harbor in case of emergency.

ESTRIN: Israel wants this Chinese-operated terminal. It'll expand Israel's shipping capacity. It's the kind of project that concerns U.S. officials, not just in Israel but around the world, as China pursues a plan for a global infrastructure network, the Belt and Road Initiative.


JOHN ROOD: China wants to own the road and wants to control the belt.

ESTRIN: U.S. Under Secretary of Defense for Policy John Rood speaking at a security conference in Israel recently.


ROOD: China has tremendous ambitions and President-for-life Xi ambitions to be a global power and to, over time, replace the United States as the preeminent global power.

ESTRIN: The port in Israel is just one example of Chinese investment in Israeli strategic infrastructure. A Chinese state-owned company now owns a stake in an Israeli power plant. Another Chinese company's building a light rail line in Tel Aviv. U.S. officials think China's investing in Israeli infrastructure as a stepping stone to the Western European markets so China can say to Europe, we've met Israel's high-quality standards, we can meet your standards, too. The other thing the U.S. is worried about is China and its security services getting in on Israel's high tech. Pentagon official Rood again.


ROOD: The Chinese have shown interest in Israeli technology. In some areas where China has made investments or pursued activities around the world, the security services have followed or been a part of those dealings.

ESTRIN: Chinese investments in Israeli tech startups shot up a few years ago, in fields like cybersecurity, digital health and automated car technology. Simon Weintraub, a Tel Aviv lawyer representing Israeli tech firms, has an office full of gifts from Chinese business colleagues, like a cute panda picture.

SIMON WEINTRAUB: We were getting, you know, requests probably a couple times a month of new investment deals, most of which went through.

ESTRIN: But U.S. officials think Chinese access to cutting-edge technologies could help China's economy and military compete directly with the U.S. The U.S. is coming up with rules to block Chinese investment in sensitive U.S. technologies. The U.S. has asked Israel to come up with its own screening system. But U.S. officials accuse Israel of dragging its feet. Assaf Orion of the Israeli Institute for National Security Studies says Israel sees China differently.

ASSAF ORION: Israel and the U.S. have different threat perceptions with China because, well, Israel is well-tuned against its traditional enemies. And China is not one of our enemies.

ESTRIN: The Chinese ambassador wrote in an Israeli paper that China has no ulterior motives and its role in Israel is being blown out of proportion. Israel wants access to the world's second-largest economy. So for now it's not restricting its companies from accepting Chinese investments. But some Israeli companies are deciding on their own to refuse Chinese money, according to Weintraub, the lawyer in Tel Aviv.

WEINTRAUB: I get calls all the time from Israeli companies who have either taken money previously from China or are considering to take new investments from China. They're very nervous about taking money from China and somehow being under scrutiny in the United States for activities vis-a-vis China.

ESTRIN: One Israeli company he represents recently turned down a multi-million-dollar offer from a major Chinese venture capitalist. The company works in sensitive medical records, and it's worried that it could be cut off from business with U.S. hospitals if it has Chinese investors. But Weintraub says this company and others might get creative, setting up new corporate structures to work with China anyway.

WEINTRAUB: I know that China isn't going anywhere. China is a superpower, and a rising superpower. Israel cannot ignore China and has to find a way to be part of that balancing act.

ESTRIN: The balancing act will be tapping into China without upsetting the U.S.

Daniel Estrin, NPR News, Tel Aviv. Transcript provided by NPR, Copyright NPR.

Daniel Estrin is NPR's international correspondent in Jerusalem.
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