Eyal Propper
In recent years, as China has grown stronger, the regime in Beijing has pursued a policy of punitive reprisals against countries that harm Chinese interests, sometimes due to activity related to the close ties of those countries with the United States. The punitive measures are aimed at the "soft underbelly" of trade in order to strike at a central manufacturing sector and delineate China’s red lines. This policy was put into practice against Norway, South Korea, Canada, Australia, and others. Will China take similar action against Israel? Despite its close commercial ties, Israel has not become dependent on China. Israel should continue to diversify its international cooperative efforts in order to avoid a situation in which a foreign country, such as China, can employ coercive diplomacy against leading economic sectors in Israel.
The US State Department reported recently that Israel was joined to the Clean Network initiative as a country that has committed to protect its 5G network from untrusted vendors, such as Huawei's 5G systems. So far there has been no official response from China to this report, but a senior correspondent from one of the Chinese government organs tweeted that this was "a scandal and ingratitude" on the part of Israel, which does not appreciate its many years of friendship with China. Will additional events of this kind lead to a crisis, and perhaps to punitive Chinese diplomacy against Israel?
In recent years, as China has felt stronger, the regime in Beijing has pursued a policy of punitive reprisals against countries that harm Chinese interests, sometimes due to activity related to the close ties of those countries with the United States and their public adherence to American policy. This punitive policy is not restricted to cases of damage to essential Chinese core interests, such as Taiwan, "One China," and aspects pertaining to Chinese sovereignty. It also involves actions that damage other Chinese interests – security and trade issues, and actions classified by China as flagrant interventions in "internal issues" or insults to senior Communist Party leaders.
The punitive measures are often aimed at the "soft underbelly" of trade with a specific country in order to strike at a key manufacturing sector there. Even when the real reason is not openly stated, it is clear that the steps taken are a punitive response ordered by Beijing and executed by Chinese officials. The Chinese employ carrot and stick tactics in the hope that when a leading export sector in the target country suffers economic damage, representatives of the damaged sector will demand that the central government take appropriate steps to reduce the damage. Since democratic countries act according to Western democratic rules and laws, China sometimes finds it difficult to achieve its short-term goals through punitive measures. In the long term, however, the Chinese response delineates China’s red lines and the limits of Chinese patience for the targeted country.
The following are some examples of punitive measures, mostly economic, taken by China in recent years as part of its diplomatic language, which illustrate in which affairs the Chinese are inclined to respond, and how:
Norway: In October 2010, the Norwegian Nobel Committee awarded the Nobel Peace Prize to Chinese human rights activist Liu Xiaobo, who was sentenced to an 11-year prison term in China for his activity against the regime in Beijing. A Chinese Foreign Ministry spokesman called the award "blasphemy." In response, China halted official meetings with Norwegian government officials for six years. China also stopped importing Norwegian salmon, which cost Norway over $1 billion a year, until agreement was reached on renewal of relations in 2016. Inter alia, the agreement stated, "The Norwegian government…attaches high importance to China's core interests and major concerns, will not support actions that undermine them, and will do its best to avoid any future damage to the bilateral relations."
South Korea: In 2016, South Korea announced it had decided to deploy an American Terminal High Altitude Area Defense (THAAD) air defense system in its territory against a possible attack by North Korea. China strongly opposed this, claiming that the system's radar would damage its national security. After the system was deployed in South Korea in February 2017, China commenced economic measures. The Chinese government did not admit that it was imposing sanctions, saying only that the South Korean measure had “triggered strong feelings in the general public in China.” Inter alia, an unofficial boycott of Samsung was launched, and purchases of Samsung telephones by the Chinese public stopped almost completely. Samsung's share of the Chinese market plummeted from 20 percent in 2015 to less than 2 percent in 2017, and Huawei and other Chinese companies gained much ground at Samsung's expense during these years. The Chinese boycotted Lotte, the popular South Korean supermarket chain, which lost $880 million between 2016 and 2018, stopped its activity, and sold its branches to the Chinese Liqun Commercial Group. The economic damage (approximately $15 billion, including a 48 percent drop in Chinese tourism) led to negotiations and a resumption of normal relations, after South Korea agreed not to deploy additional systems in its territory, join the American-sponsored regional defense system, or create a tripartite alliance with Japan and the United States against China.
Canada: In December 2018, Meng Wanzhou, the oldest daughter and designated heiress of the founder of Huawei and the company's deputy chairwoman and CFO, was arrested in Canada. Her arrest, which resulted from an American request for her extradition on charges of violating sanctions against Iran, constituted a personal insult to the leadership in Beijing, in part because of the importance of Huawei and Meng's family status among China's economic and Communist Party elite. After a number of days of unsuccessful efforts to secure her release through diplomatic means, China arrested two Canadians, former diplomat Michael Kovrig and businessman Michael Spavor, who were subsequently charged with espionage. Four Canadian citizens living in China were accused of drug smuggling, and in recent months were sentenced to death.
In addition to these arrests, China also cracked the economic whip. Inter alia, imports of meat and canola oil, two important items amon Canadian exports, were halted. In January 2019, the Chinese authorities announced that pests had been discovered in canola oil shipments, and suspended these imports from Canada; the ensuing economic damage was estimated at $2 billion a year. In June 2019, on the eve of Canadian Prime Minister Justin Trudeau's arrival at the G20 summit, China announced that it had found forbidden food additives in pork shipments, and that the export records showed failures. China subsequently discontinued meat imports from Canada.
Despite official denials, there is no doubt that the arrest of the Canadians and the economic measures were a bargaining chip designed to secure Meng's release. Her possible extradition to the United States will almost certainly lead to harsh sentences against the arrested Canadians, as well as possible further damage to the Canadian business sector.
Australia: Following Australia's support for United States policy against China, including a statement by Australian Prime Minister Scott Morrison in April 2020 calling for an international investigation into the sources of the Covid-19 pandemic, China commenced punitive measures without any official statement. The Australian economy is very dependent on trade with China; in 2019, 38 percent of Australian exports were to China. In May 2020, China announced a ban on imports of beef from four Australian suppliers, which account for 35 percent of all of the meat exports, amounting to over $1 billion a year. China later announced that it planned to impose an 80.5 percent import tariff on barley imports from Australia, following allegations of dumping and subsidies with a resulting negative impact on the real price of barley. Australia estimated the damage to its exports in 2020 at $750 million. On August 18, 2020, the South China Morning Post (SCMP) daily reported that the Chinese Ministry of Commerce had launched an investigation into imports of Australian wine to China, following a complaint by the China Association for Imports and Exports of Wine and Spirits about dumping, damaging the local market. According to Australian reports, exports of Australian wine to China totaled $1.3 billion in 2019, making China the main export market for this wine. One of the Australian wine manufacturers responded that it was surprised by the China’s decision, which stemmed from political motives, and "was not directed against the right country." Following the Chinese measures, discussions are underway in Australia about its political and economic relations with the major powers, especially the country's economic dependence on China.
Lessons and Significance for Israel
In June 2000, Israel’s sale of the advanced Phalcon early warning air system to China was canceled, due to American pressure. Following the cancellation, China suspended its official relations with Israel for two years, until Israel agreed to pay hundreds of millions of dollars in compensation. Years passed before a new basis for relations was built, based on civilian trade.
The growing tension between the United States and China and the pressure on Israel to take sides is liable to lead to new crises with China. One example of a measure against Israel intended as a political sign was a travel warning for Israel issued by China, following President Trump's announcement that the American embassy would move to Jerusalem. The number of tourists from China plunged by about 30 percent in early 2018, damaging the Israeli tourism sector.
Israel must act according to its security and strategic interests, and preserve the special relationship it has built with the United States over the years. At the same time, it is recommended to learn from past experience, maintain channels for dialogue with the Chinese government, refrain from unnecessary statements, and avoid inflicting needless damage on China. Finally, even though China is Israel's second most important trade partner and trade with China totaled $13 billion in 2019, no sector in Israel is dependent on the Chinese market or Chinese investments. Israel should continue to diversify its economic cooperation efforts in order to avoid a situation in which a foreign country, such as China, can employ coercive diplomacy against leading economic sectors in Israel.
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