Feb. 29 (Bloomberg) -- Israeli Finance Minister Yuval Steinitz said deepening trade ties with China could pay off by helping leaders of the world’s second-biggest economy better understand the Jewish state’s policies toward Iran and Syria.
“China is a growing economic power,” Steinitz said today in an interview in Beijing, where he traveled to sign a $300 million financial protocol aimed at boosting trade. “We do hope that if we are able to improve economic ties and connections between Israel and China, it will help us also to explain our positions with regard to the Iranian nuclear threat, with regard to the events in Syria.”
While Israeli exports to China have more than doubled during the last two years, the level is “not enough yet,” said Steinitz, 53. “It’s far from being enough.”
His push for greater economic ties comes as China, the biggest buyer of Iranian oil, refuses to support international sanctions over the Islamic republic’s nuclear program. Israel says Iran intends to build atomic weapons and hasn’t ruled out military strikes to prevent it, escalating tensions in a region that holds 54 percent of global oil reserves.
Iran, which says its enrichment of uranium is only for civilian energy purposes, refused last week to let United Nations experts investigate a suspected nuclear-related military base. The risk of a military conflict was highlighted the same day when an Iranian general said his nation would consider pre-emptive action if it is threatened.
“Increasing trade and deepening economic ties with Israel won’t have an immediate impact on China’s views toward issues like Iran and Syria,” Ilan Maor, former Israeli consul to Shanghai and vice president of the Israel-Asia Chamber of Commerce, said in a phone interview from Tel Aviv. “However, it is an important part of building a relationship that will eventually affect the way China listens to Israel on these matters, maybe not tomorrow, but it won’t take 20 years.”
Steinitz, a member of the Likud Party, said he leaves diplomatic discussions mainly to Prime Minister Benjamin Netanyahu or Foreign Minister Avigdor Liberman.
The Chinese government joined Russia this month in vetoing a UN Security Council resolution supported by the U.S. and Israel calling on Syrian President Bashar Al-Assad to cede power over his crackdown on protests that have killed thousands. China opposes trade restrictions against Iran and said sanctions on its oil exports aren’t “constructive,” state-run Xinhua News Agency reported Jan. 26, citing comments from the Ministry of Foreign Affairs.
Israel and China established full diplomatic relations in 1992. Israel is seeking to boost sales to fast-growing economies such as China and India as Europe struggles with a debt crisis and global trade slows. Exports account for about 40 percent of Israel’s gross domestic product.
Bank of Israel Governor Stanley Fischer in October 2010 said the global economy’s “center of gravity” is moving to Asia and that the region will dominate growth in the future. In an interview last week, Fischer said “it’s too early to tell” if the worst of the international economic crisis is over.
Israeli exports to China include electrical equipment, precious stones, fertilizers and medical equipment. Chinese exports to Israel include machinery, chemicals, apparel and furniture.
The protocol Steinitz is signing will help exporters of Israeli water technology for agriculture, Israel’s Finance Ministry said in an e-mailed statement on Feb. 27. Israel will provide $300 million in preferential government loans to China for high-technology agricultural water conservation projects in the provinces of Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang, according to a statement posted on the Chinese Finance Ministry’s website today.
Steinitz said he’s “quite comfortable” with his ministry’s forecast that the Israeli economy will expand 3.2 percent this year. At the same time, Europe’s debt crisis makes it “very difficult to predict” how events will unfold, especially with the risk of a partial or full collapse of the euro zone, which would make it a “completely different game,” he said.
Israel deserves a higher credit rating from Moody’s Investors Service because its economy has recovered faster than most developed nations since 2008 and the government has reduced the proportion of debt to gross domestic product, Steinitz said, recounting a meeting in Jerusalem with Moody’s economists earlier this month. In addition, the discovery of natural gas off the country’s coast will give the government “significant” funds, he said. The company rates Israel at A1, the fifth-highest investment grade, the same level as South Korea and the Czech Republic.
Steinitz visited China in May 2010 with Environmental Protection Minister Gilad Erdan to help promote economic ties. Erdan said at the time that Israeli companies have “endless” possibilities to sell technology to China, specifically in the areas of water recycling, desalination and solar power.
To contact Bloomberg News staff for this story: Scott Lanman in Beijing at firstname.lastname@example.org