US-China trade war: Israel has turned down a Hong Kong firm’s $1bn investment bid for the development of a water desalination plant close to its Intelligence-sensitive Soreq Nuclear Research Center after Tel Aviv gave in to intense pressure from the United States to put an end to Chinese investments and partnerships in the country.
The Hong Kong-based Hutchison Water (whose main investor is billionaire Li Ka-shin) was shortlisted to build the giant Soreq B plant, but yesterday it was made known that the tender had been awarded to Israel’s IDE Technologies instead. The pressure from Washington on Tel Aviv has been ramping up for months, exacerbated by the outbreak of the coronavirus pandemic and fears that Israel may become over-dependent on President Donald Trump’s current Public Enemy Number One. Last month, 60 tons of medical gear, including 12 million masks, were flown in from China in five cargo planes hired by the Israeli government.
Most of the equipment on board had been manufactured at a plant owned and run by Sion Medical, one of several Israeli healthcare companies to have established a base in China and this will have been a further source of displeasure to the US President. During his visit to Israel on May 13, the US Secretary of State Mike Pompeo made Washington’s feelings plain and urged Tel Aviv to reconsider some of its joint ventures in China. “We don’t want the Chinese Communist Party to have access to Israeli infrastructure and to Israeli communication systems – all of the things that put Israeli citizens at risk – and in turn put the capacity for America to work alongside Israel on important projects at risk as well,” he told the Israelis broadcaster KAN,
The issue has been rumbling for some time. Last June, the Israeli city of Haifa defied US pressure and signed a 25-year contract with China’s SIPG to build and operate a large shipping seaport on the Mediterranean. At the time, US authorities expressed concern that the Chinese company would be operating close to where US Sixth Fleet ships dock in Haifa, but the contract moved forward anyway.
Plan B: India
As the US-China trade escalates fuelled by accusations about Beijing’s culpability for the coronavirus pandemic, many members of the American business are now scouting around for alternative sources of goods and components to feed their supply chains and meet domestic consumer demand. Many of them are sizing India up as a logical option. “While US companies are looking for alternatives to China, India becomes a natural destination,” says Dr. Mukesh Aghi, CEO of the trade group, US-India Strategic Partnership Forum. “You have an English-speaking and highly skilled workforce, the cost of labor is cheap and it is a growing market of 1.3 billion people whose disposable income is steadily increasing.”
And it already has a track record. According to a report published by the Harvard Business Review (HBR), India provides almost 40 % of the generic drugs sold in the US, which are produced at factories inspected and approved by the US Food and Drug Administration, and which means it is already woven into the fabric of the US economy.
While India has traditionally been perceived as a source of spices, textiles, apparel, jewellery and handicraft, in recent years it has moved considerably further up the value chain. The cabin of the presidential helicopter Marine One, for instance, is fabricated for Lockheed Martin’s Sikorsky unit in India, while NASA’s Jet Propulsion Laboratory in Pasadena, California is collaborating with the Indian Space Research Organization on NISAR,
The HBR report also observes that, unlike China whose output has always been export-oriented, India’s largest and most successful manufacturers cut their teeth meeting the pent-up domestic demand that was unleashed when the country’s economy was liberalised in 1991. In the process, Indian managers and entrepreneurs acquired the management skills and quality standards to enable them to expand globally. Facebook founder Marc Zukerberg for one is already convinced; this April he invested $5.7 billion into India’s largest telecom company, Reliance Jio.