Is Israel’s Haifa port deal with China a trade boost or a security nightmare? Here's what to know

Recently, Israeli Prime Minister Benjamin Netanyahu stood before cameras, flanked by cabinet members, to unveil what he called "the port regulation revolution." Aimed at streamlining Israel’s trade arteries, the new policy promised faster cargo handling and less congestion across its docks.

Buried in the fine print, however, was a decision that has largely been ignored, but that should have ignited a firestorm: expanding the operational scope of Haifa’s Bayport, run by China’s state-owned Shanghai International Port Group (SIPG), just 1.8 kilometers from Israel’s main naval base. For the United States and Israeli security hawks, it’s a move that risks more than efficiency. It threatens a linchpin of Western defense in an already volatile region.

The Haifa Bayport, often dubbed the "Chinese Haifa Bayport" in Israel, isn’t new. SIPG took over in September 2021, managing two quays under a 25-year lease, despite protests from Washington and Jerusalem’s own security establishment. The latest regulation, signed by Netanyahu, authorizes quays 7 and 8 for general and bulk cargo, ostensibly to meet Israel’s infrastructure demands. Yet unnamed sources told Breitbart that Netanyahu didn’t spearhead this expansion. This raises questions about who did, even as his signature sealed the deal.

A Port Too Close for Comfort

The Bayport sits on an artificial peninsula in Haifa Bay, a stone’s throw from the Haifa Naval Base. That base is home to Israel’s submarine fleet, missile boats, and elite underwater units. At coordinates 32°49′21.83″N 35°1′24.19″E, it’s just over a mile from the base at 32°49′49″N 34°59′36″E. U.S. warships, like the USS O’Kane spotted in 2021 with SIPG cranes looming in the background, dock here regularly as part of Sixth Fleet operations. That proximity has long fueled fears of espionage, with critics pointing to China’s global track record of embedding surveillance tech in infrastructure.

Efraim Halevy, former Mossad chief, warned in 2018 that Chinese control of strategic sites like Haifa could jeopardize Israel’s security, especially given Beijing’s military ties to Iran. “China supplies Iran with equipment that complicates our strategic options,” he told Maariv. Dr. Harel Menashri, a Shin Bet cyber veteran, echoed this in a recent letter to the Knesset, cautioning that China could paralyze Israel’s ports in a crisis. “This isn’t just about trade. It’s about leverage,” he wrote.

The U.S. has been vocal since the Trump era. CIA briefings in 2019 flagged risks of Chinese cranes, made by Shanghai Zhenhua Heavy Industries (ZPMC), harboring hidden modems for remote access. By 2025, with 80% of U.S. port cranes Chinese-made, the Biden administration launched a $20 billion plan to replace them, spurred by FBI findings of intelligence gear in ZPMC equipment. Israel’s deal, critics argue, hands China a front-row seat to monitor both Israeli and U.S. naval moves.

Economic Gain vs. Security Pain

Israel’s calculus is tangled in economics. Ports handle 99% of its trade, and Haifa’s congestion has long frustrated importers. The Bayport, with its modern cranes and Miao Qiang, a former SIPG official, as CEO, promised relief. “Economic logic was strong,” says Rear Adm. Oded Gour-Lavie, a former Israeli Navy strategist, speaking to JNS. But he faults the process: “Security and economics clashed, and the decision wasn’t vetted properly. The National Security Council should’ve stepped in.”

Netanyahu’s government insists it’s a pragmatic move, not a strategic pivot. (!)Yet Brig. Gen. Assaf Orion of the Institute for National Security Studies sees a deeper rift. In 2020, he told Time that the U.S. viewed Israel’s China ties as a “betrayal” of their alliance, especially as Beijing’s rivalry with Washington intensifies. “Israel’s chasing short-term gains while risking its biggest ally,” he says now.

The Gaza war has sharpened these tensions. In January 2024, Chinese shipping giant COSCO halted operations with Israel, a move Ashdod port officials linked to China’s alignment with Iran and Russia, nations dubbed an “axis of evil” by Western leaders. That same month, a Reuters-seen letter from Ashdod’s chairman warned of strategic risks from SIPG’s Haifa foothold. “China could weaponize this in a conflict,” says Dr. Ofer Israeli of Reichman University, who in 2018 called the deal a sovereignty threat. “They’ve used ports globally for intelligence. Haifa’s no exception.”

A Triad at Risk

Haifa isn’t an isolated concern: It’s part of a triad of Western security nodes, alongside the Panama Canal and Greenland, that China’s Belt and Road Initiative (BRI) targets. Panama handles 40% of U.S. container traffic; Greenland offers Arctic resources and transit routes; Haifa anchors Mediterranean access near NATO’s sphere. China operates Panama’s terminals, mines Greenland’s rare earths, and now deepens its grip on Haifa. “Lose one, and the whole system wobbles,” Orion warns. “It’s a web around Western interests.”

The Trump administration, poised for a potential 2025 return, saw this triad as a priority, with earlier bids to secure Greenland and Panama signaling intent. Netanyahu’s move risks alienating a White House that views Haifa as vital, not just to Israel, but to a broader defense architecture.

Why It’s a Terrible Idea for Israel

For Israel, expanding China’s role at Haifa is a strategic misstep with dire implications. The port’s proximity to the naval base invites espionage risks that could expose submarine movements and missile boat operations, critical to countering Iran and Hezbollah. China’s ties to Iran, cemented by a $400 billion pact and joint naval drills in 2025, amplify this threat; SIPG could relay intelligence to Tehran, undermining Israel’s edge in a region where it faces constant existential risks.

Economically, reliance on a Chinese firm that cut ties in 2024 during the Gaza war shows vulnerability—Beijing could halt Haifa’s operations again, crippling Israel’s trade lifeline. Politically, it strains the U.S. alliance, a cornerstone of Israel’s defense, just as Washington pushes back on Chinese influence globally. This deal trades fleeting efficiency for long-term peril, leaving Israel exposed militarily, economically, and diplomatically.

Geopolitical Fallout

The deal also undercuts the India-Middle East Economic Corridor (IMEC), a U.S.-backed trade route championed by India’s Narendra Modi in 2024. Modi highlighted Haifa’s role at a Delhi summit, envisioning it as a linchpin linking Asia to Europe via the Middle East. “This jeopardizes IMEC’s promise,” says an Indian diplomat anonymously. “China’s presence here complicates trust.”

Iran also looms large. Its 2021 strategic pact with China, $400 billion over 25 years, includes military cooperation, like the March 2025 “Security Belt” naval drills with Russia near Chabahar. U.S. intelligence also ties Chinese missile parts to Yemen’s Houthis, who spare Beijing-linked ships in the Red Sea. “China’s not neutral,” Israeli notes. “Haifa could become a pressure point.”

Israel’s Dilemma

Netanyahu’s signature on the regulation has left Israel at a crossroads. Gour-Lavie calls for a stronger NSC to balance economics and security, while Chorev, a former navy deputy, laments the lack of oversight. “China controls communications when it runs a port,” he told Israel National News in 2019, a warning still resonant. The Knesset faces growing calls to revisit the deal, with Menashri’s plea for a cyber review gaining traction.

For now, SIPG’s cranes tower over Haifa Bay, a symbol of efficiency and unease. As U.S. lawmakers push HR 2390 to purge Chinese cranes from American ports, Israel’s choice reverberates. “We’re not just trading goods,” Halevy cautions. “We’re trading control.” In a region where every mile matters, Haifa’s future may test how far Israel can stretch its alliances before they snap.