Israel turns down Hong Kong investment bid amid US-China trade war

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Israel has turned down a Hong Kong firm’s investment bid worth $1.5 billion to develop a water desalination plant after the United States warned Israel to end Chinese investments in the country.

During a snap visit to Israel on 14 May, US secretary of state Mike Pompeo warned of growing Chinese influence, which “is putting Israeli citizens at risk”. In recent years, Chinese companies have invested billions of dollars in Israeli technologies, which the US warned could be used by Chinese intelligence.

The government on Tuesday chose Israel-based IDE Technologies to develop a desalination plant over Chinese rival Hutchison Water. The project will be financed by Israeli bank Leumi, Germany’s KFW bank group and the European Investment Bank.

“The bid by the Israeli firm was better, by a significant margin, the price was cheaper, by a significant margin, than that of the other bidders, including the Chinese, who did indeed reach the final stage,” Israel’s energy minister Yuval Steinitz said on Tuesday.

Chinese companies have made major investments in Israeli infrastructure projects, such as a new terminal in the Haifa Port, where the US Navy’s sixth fleet docks at least once a year.

The US this month further tightened export controls on the access of the Chinese tech firm Huawei to American equipment and software, amid security concerns. It also said it will impose new restrictions on exports to China to keep certain technology away from Beijing’s military.

Last year, amid US warnings that China uses its investments to “infiltrate” countries, Israel said it would set up a new watchdog to regulate foreign investment in the country.