Chinese foreign minister's visit to Israel clouded by terrorism case against Bank of China

China's foreign minister paid a rare visit to Israel on Wednesday, reflecting the burgeoning trade ties between the two countries. But the trip was clouded by fresh accusations that Israel's prime minister had compromised the global war on terrorism under heavy Chinese pressure.

Wang Yi's visit came as the family of a Jewish-American teenager killed in a suicide bombing accused Israel of caving in to Chinese pressure by blocking the testimony of a key witness in a terrorism case against the Bank of China. In an awkward welcome for the Chinese official, details of the case splashed across the front pages of Israeli newspapers.

Israeli Prime Minister Benjamin Netanyahu has made relations with China a priority. Last May, he led a large delegation to China, meeting with top political and business officials and agreeing with his counterparts to establish a "task force" to improve trade ties.

In broad terms, Israel is a tiny trade partner for China. Bilateral trade is expected to be about $8 billion this year, compared to $6.7 billion in 2010, according to the Israeli Foreign Ministry.

But China is interested in many technologies where Israel is considered a world leader, such as water recycling, desalination, agriculture and health and medicine, providing great potential for Israeli companies.

"Our strengths I believe complement one another," Netanyahu said at a joint press conference. "China has massive industrial and global reach. Israel has expertise in every area of high technology. And I think the combination could be very very beneficial to China and of course to Israel."

"Our two economies are highly complementary, and the mutually beneficial cooperation between us enjoys a very bright future," Wang added.

Neither man mentioned the Bank of China case, which has emerged as a sticky issue in relations. The bank denies any wrongdoing and is fighting the case.

The families of some two dozen people killed in Palestinian suicide bombings are suing the state-owned Chinese bank in a U.S. federal court, saying it facilitated the transfers of millions of dollars by Palestinian militant groups to fund deadly attacks. They claim these transactions took place even after Israeli officials asked China to halt the transfers.

The family of Daniel Wultz, a 16-year-old Jewish American killed in a 2006 suicide bombing in Tel Aviv, accused Israel on Tuesday of blocking the key witness from testifying under heavy Chinese pressure.

In a court filing Tuesday, Wultz's family claimed that Israel had set up a secret intelligence unit to monitor the financial dealings of militant groups. It said Israel had encouraged them to file the lawsuit, provided them bank account numbers and promised assistance from a former counterterrorism official named Uzi Shaya.

Last month, Israel said Shaya, who participated in meetings with the Chinese, would not be allowed to testify, citing unspecified security concerns.

In a statement, Wultz's mother, Sheryl Cantor Wultz, said Shaya had informed her that Netanyahu backed down ahead of his state visit to China last May. "The trip was conditioned on Mr. Shaya not testifying," she quoted Shaya as saying.

The case could embarrass Netanyahu, who has long portrayed himself as a leading voice in the global war on terrorism. His office declined comment on the case.

Yitzhak Shichor, a China specialist at the University of Haifa, said the apparent about-face highlights the importance that Israel places on ties with China.

"China is no regular country," he said. "Netanyahu is no different from anyone else — no one wants to annoy the Chinese."

China has a history of using its considerable economic might to voice displeasure with other countries. For three years, Beijing has frozen relations with Norway since a committee appointed by the Norwegian parliament awarded the 2010 Nobel Peace Prize to an imprisoned Chinese dissident. Diplomatic ties have been gutted, meetings canceled and economic ties hamstrung.

Shichor said the case should have been settled quietly behind the scenes, but once it became public the Chinese felt a "loss of face" and insisted they not be embarrassed further. He said that in recent months, particularly since Netanyahu's May visit, there has been an improvement in relations.

Israel is set to open a new consulate next year in the Chinese city of Chengdu. It will be Israel's third consulate in mainland China, along with an embassy in Beijing, to be opened since diplomatic ties were established in 1992. A number of senior Chinese officials have also visited Israel recently.

"There has been a serious upgrade of relations in recent years," said Hagai Shagrir, director of the northeast Asia department at Israel's Foreign Ministry.

The one area where ties remain limited is military cooperation, largely because of American pressure. Israel infuriated China in 2000 when U.S. pressure forced it to cancel the sale of sophisticated reconnaissance aircraft to Beijing.

Wang's visit to Israel, the first by a Chinese foreign minister since 2009, is also his first stop on a regional tour. He said his government, as a permanent member of the Security Council, is prepared to play a "positive role" in peace efforts between Israel and the Palestinians.

Yoram Evron, a China expert at Israel's Institute for National Security Studies, said the visit reflected the China's interest in expanding its influence in the region.

"Israel realizes that it cannot ignore China and China understands that Israel is a major player in the region," he said. "They are not going to let this problem (the Bank of China case) get in the way."