January 18, 2019 / 10:48 AM / a month ago

Israeli minister reassures U.S. over Chinese telecoms investment

JERUSALEM (Reuters) - Israel is taking U.S. concerns about possible cyber-security risks posed by Chinese investments into account and is in any case skilled at protecting itself from information theft, a senior Israeli official said on Friday.

People walk past the stall of the telecommunications equipment maker Huawei Technologies at the Security China 2018 exhibition on public safety and security in Beijing, China October 23, 2018. REUTERS/Thomas Peter

Earlier this week, visiting U.S. Deputy Secretary of Energy Dan Brouillette cautioned Israel over Chinese investment in the country, suggesting Israel’s allies could limit intelligence-sharing with it as a result.

This echoed concerns conveyed by U.S. President Donald Trump’s national security adviser John Bolton to Israeli Prime Minister Benjamin Netanyahu over the use of Chinese telecommunications equipment in sensitive sectors.

“We are of course sensitive to the U.S. sensitivities. And we are taking them into account,” Israeli Energy Minister Yuval Steinitz said when asked about the U.S. remarks on 102 FM Tel Aviv Radio. He had spoken with Brouillette about the issue.

“It’s clear we have good relations with China and that’s very important, and with Russia and almost the whole world, but the United States is our number one ally. That’s how it has been and how it will be,” said Steinitz.

Asked about concerns over any potential information theft, he said: “We are good at protecting ourselves.”

The Trump administration, seeing a risk of Chinese telecoms being used for espionage, has taken steps meant to curb market penetration by Huawei Technologies Cos Ltd and ZTE Corp (000063.SZ), two of China’s biggest network equipment makers.

Both firms have denied that their products are used to spy.

In December 2016 Huawei acquired Israel’s HexaTier, whose technology secures databases in the cloud, for $42 million. This followed a visit to Israel by the Chinese technology giant’s CEO. That same month Huawei also acquired IT research firm Toga Networks for an undisclosed amount.

Israeli media have reported that ZTE has shown interest in Israel’s tech sector as well since it sent a senior delegation to the country in 2013.

Israel and China do more than $10 billion a year in trade.

Chinese investment in Israeli technology has been on the rise for years. Israeli tech startups raised $325 million from Chinese investors in the first three quarters of 2018, up 37 percent from a year earlier, according to the Israel Venture Capital Research Center. The third quarter was the strongest for Chinese investment in the past five years.

Reporting by Ari Rabinovitch; Editing by Mark Heinrich

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