Recent decisions by China and Israel present a challenge to strengthening economic relations between the two countries. China is disregarding sanctions on Iran following the snapback of UN sanctions and is increasing its economic cooperation with Tehran, including providing materials for producing solid fuel for long-range ballistic missiles. Concurrently, Israel has, for the first time, supported American-promoted resolutions regarding China. On the other hand, China did not veto UN Security Council Resolution 2803, adopting the U.S.-led peace plan for Gaza following the ceasefire. This resolution led to the end of Houthi attempts to prevent shipping in the Bab El Mandab Straits, and it appears that shipping through the Red Sea and the Suez Canal will increase significantly, including to Israel. This, along with other direct and indirect implications of the end of the war, may positively influence trade and economic cooperation between the two countries, while bearing in mind that the ceasefire is fragile and that the future of China-US relations and their effect on China-Israel cooperation remains unclear.
China’s stance on the issue of sanctions against Iran is not simply “not commenting” or “avoiding the issue,” but rather a strategic choice made after comprehensively considering the country’s core interests, the concept of independent diplomacy, and the long-term interest in the peace and stability of the Middle East region.
The Impact of Sanctions on China and the Indirect Influence on Israel-China Trade
China is one of Iran’s major trading partners. Despite sanctions, trade between the two countries has continued. China imports a large amount of crude oil from Iran, which mitigates the impact of sanctions on Iran’s economy. Additionally, China has made significant investments in Iran’s infrastructure and energy sectors.
With the resumption of UN sanctions against Iran, Iran’s reliance on China is likely to deepen further. This reinforces China’s economic interests in Iran and draws Israel’s attention to China’s policies toward Iran. However, it also implies that if China openly supports the sanctions, it may temporarily undermine its own energy security. China imports 11% of its total oil from Iran, a considerable figure.At the same time, it is also believed that while Iran loudly opposes the United States, it expects to be accepted by the West. China is wary of such two-faced allies.
The Indirect Impact on Israel-China Trade
The close economic ties between China and Iran may indirectly impact Israel-China trade. On the one hand, China may prioritize cooperation with Iran in its Middle East economic strategy. This could make Israel reluctant to cooperate with Beijing. On the other hand, China’s economic interests in Iran may also lead it to play a more significant role in Middle Eastern political and economic affairs, which could positively affect Israel’s geopolitical environment.
The Influence of the U.S. Factor
United States sanctions against Iran and its trade policies toward China may create a balancing act for Israel, which has a close alliance with the U.S. but also significant economic ties with China. Therefore, Israel needs to balance its relationships with Beijing and Washington to safeguard its economic and security interests. Furthermore, the geopolitical landscape in the Middle East is changing, with regional countries seeking greater strategic autonomy. Strategically, China may believe that maintaining a relatively detached stance is more conducive to its long-term interests, particularly as a “constructive third party” in Middle Eastern affairs.
The Gaza War has had some negative impacts on certain Chinese media, leading to subtle shifts in the diplomatic and policy approaches of relevant Chinese government departments toward Israel. This might have an uncertain effect on trade between the two countries. From an economic perspective, tariff negotiations between China and the United States in Malaysia, under special circumstances, unexpectedly saw China concede on many principles and meet the U.S. side’s expectations. Both sides considered the results satisfactory. This is believed to further promote the possibility of economic cooperation between China and Israel in various fields, such as technology, services, agriculture, and green energy exports to China, helping Israeli enterprises expand their markets and enhance their competitiveness.
The Impact of the Gaza Ceasefire
Improvement of regional economic environment: The ceasefire in the Gaza Strip helps ease tensions in the Middle East, creating a more stable external environment for the economic development of Israel and neighboring countries. In this environment, Israel can focus more on trade cooperation with China, reducing trade disruptions and uncertainty risks caused by regional conflicts.
China’s Considerations Regarding Economic Interests in the Middle East
China has significant economic interests in the Middle East, including the security of oil transportation routes and the advancement of the “Belt and Road” initiative.
After the ceasefire in Gaza, China will likely be more actively involved in economic cooperation and infrastructure construction in the Middle East. This provides more opportunities for Israel and China to cooperate in related fields, such as combining Israel’s technological and innovative advantages with China’s strength in infrastructure construction to jointly promote economic development in the Middle East.
Israel’s diplomatic and economic balance: Following the ceasefire in Gaza, Israel must strike a balance between maintaining regional peace and stability and safeguarding its economic interests. Regarding trade relations with China, Israel needs to consider the benefits of economic cooperation while remaining cautious about over-reliance, which could affect its relationships with traditional allies like the United States. At the same time, Israel must maintain positive relations with other countries in the complex geopolitical environment of the Middle East to ensure its own security and economic interests.
In conclusion, factors such as the tariff war, Iran sanctions, and the Gaza ceasefire have all had various impacts on trade relations between Israel and China. In its trade cooperation with China, Israel needs to comprehensively consider economic interests, security concerns, and diplomatic relations, seeking the optimal balance in the complex international environment. The current international situation is complex: the Gaza ceasefire has brought temporary stability to the Middle East, while unpredictable changes in the U.S.-China tariff war and U.S. sanctions against Iran persist. These intertwined factors have multi-faceted impacts on trade between China and Israel, presenting both immediate risks and long-term opportunities. The following table summarizes the current impacts of these factors on trade between China and Israel.
| Influence factor | Potential impact on trade between China and Israel | Remarks/Status quo |
| Ceasefire in Gaza and Regional Reconciliation | Positive: Reducing regional security risks is expected to promote investment and supply chain stability, creating an opportunity for China and Israel to deepen cooperation in areas such as infrastructure, agriculture, and technology. | The ceasefire agreement has come into effect, but its implementation remains fragile. |
| China – U.S. tariff war | Complex/Indirect: China’s export restrictions on key materials such as rare earths have directly affected the supply chain of Israel’s defense industry, potentially increasing costs. Talks between the leaders of China and the United States in South Korea are expected to lead to more consensus and expectations. | Israel is seeking to diversify its supply chain through channels such as Australia and Vietnam, but replacing China in the short term will be difficult. The easing of Sino-U.S. relations is expected to lead to a recovery in trade. |
| U.S. sanctions against Iran and the tension between the U.S. and Iran | Risks: May exacerbate shipping insurance and logistics costs across the entire Middle East region. If passage through the Strait of Hormuz is blocked, it will significantly affect global energy transportation, but the direct impact on bilateral trade between China and Israel is still unclear. | In 2024, the trade volume between China and Israel was approximately $24 billion. Israel’s exports to China showed a significant increase (a year-on-year growth of 53% in March 2025), indicating strong resilience in basic trade. |
Opportunities and Challenges in Future Trade
The ceasefire in Gaza has several implications for trade between China and Israel.
Logistics Transportation
With the return to normal, logistics transportation has improved. During the Gaza conflict, the Ashdod Port in Israel experienced a significant decline in throughput due to security issues, causing the transportation costs of Chinese goods exported to Israel to rise. Following the ceasefire, the port’s operation has resumed, and logistics transportation has become smoother, with transportation costs expected to decrease. Consequently, Chinese export goods, such as mechanical and electrical products, can reach their destinations more efficiently.
Positive Impacts
The trade volume is expected to increase. The conflict had a negative effect on trade volume between China and Israel. From January to May 2025, the trade volume was 12% lower than that of the same period in the previous year. However, with the ceasefire and the improved trade environment, the willingness and confidence of both countries’ enterprises will increase, and the trade volume is expected to gradually recover and expand.
The ceasefire in Gaza helps alleviate geopolitical tensions in the Middle East and reduces market uncertainties. This gives both China and Israel more confidence in investment and cooperation projects, promoting further deepening of collaboration in fields such as technology, agriculture, and healthcare, and creating more opportunities for trade growth.
Challenges and Uncertainties
The potential impact of political factors remains a concern. Despite the ceasefire in Gaza, the political situation in the Middle East remains uncertain. The domestic political dynamics in Israel and its relations with neighboring countries may affect the stable development of China-Israel trade relations. Policy adjustments by major powers such as the United States in the region may also have an indirect impact on China-Israel trade.
Pressure on trade structure adjustment may also pose a challenge. As the regional economy recovers after the Gaza ceasefire, the demand structure in the Israeli market may change. China needs to promptly adjust its export product structure based on the new demands of the Israeli market and enhance product quality and technological content to better meet those demands. This adjustment presents a challenge for Chinese enterprises.
The sustainability of long-term peace is uncertain. The continuity and stability of the Gaza ceasefire remain uncertain. If the ceasefire agreement is not effectively implemented and the conflict flares up again, it will once more have an impact on trade between China and Israel, and enterprises need to be prepared to deal with these risks.
Improvement in the Global Trade Environment
Following the ceasefire in Gaza, the global trade environment is expected to improve, particularly with the reopening of the Red Sea shipping route, which will reduce global freight costs. This is beneficial to trade between China and Israel and provides a more stable external environment for China’s trade with other countries.
Improvement in the trade environment: The ceasefire in Gaza has created favorable conditions for Israel’s economy and social stability, which is conducive to Israeli enterprises better conducting foreign trade, including cooperation with Chinese enterprises. The stable domestic environment can reduce trade risks and enhance the confidence and investment intention of enterprises.
Increased investment opportunities: After the ceasefire, Israel may increase its investment in infrastructure construction and economic recovery, providing more investment opportunities for Chinese enterprises. For instance, China and Israel can carry out broader cooperation in the fields of energy, technology, and agriculture to jointly promote the development of related industries.
Future Expectations
Deepening areas of cooperation: Despite some challenges, Israel and China have extensive potential for cooperation in fields such as technology, agriculture, and water resource management. Both sides can further deepen collaboration in these areas through joint research and development projects, technology transfer, and innovationpartnerships, thereby enhancing their competitiveness in global markets.
Strengthen policy communication: To cope with uncertainties stemming from factors such as tariff wars and sanctions, Israel and China should enhance policy communication and coordination. Inter-governmental dialogues, people-to-people exchanges, and trade negotiationscan help both sides jointly address trade frictions and promote the stable development of bilateraleconomic ties. As Confucius observed, “A gentleman gets along with others, but does not necessarily agree with them.”
Expanding cooperation in third-party markets: Israel and China can engage in cooperation in third-party markets to jointly explore internationalopportunities. For instance, under the framework of China’s “Belt and Road Initiative”, the two sides could collaborate on infrastructure construction, energy development and related ventures to achieve mutual benefit and win-win results. After all, Israel possesses advanced technologies, which serve as the cornerstone for cooperation: Israel has globally leading technologies in digital technology, agricultural science and technology, and seawater desalination, which are highly complementary to China’s market size, manufacturing capabilities and infrastructure advantages. As long as political relations between the two sides remain stable, trade and investment in high-tech can serve as an anchor against geopolitical risks.
Supply chain resilience under pressure: The Sino-U.S. tariff war and associated supply chain security concerns are likely to push Israel to accelerate diversification of its supply chains for critical materials (such as rare earths essential to the defense industry).
“Regional cooperation” brings new opportunities: The easing of regional tensions may usher in a new model of “triangular cooperation” between China, Israel, and neighboring Arab countries.
Wang Shuangcheng has worked for decades at a foreign investment firm in Beijing, with experience across multiple industrial sectors, and has also been involved in promoting and facilitating Israel–China business cooperation.
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