China and Israel agreed to start the long-awaited negotiation on the bilateral Free Trade Agreement during talks today between visiting Vice-Premier Liu Yandong and Israeli Prime Minister Benjamin Netanyahu in Jerusalem.

Liu said the two-way innovation cooperation "will develop rapidly" in various fields, such as economy and trade.

When addressing the second meeting of China-Israel Joint Committee on Innovation Cooperation after the two-way talks, Netanyahu said, "This (the consensus on start of FTA talks) is a momentous development and we are ready to do so right away".

Netanyahu noted that China is now Israel's third largest trade partner, with annual trade of over $10 billion. "We have, I believe, the potential for a lot more," he said.

Bilateral trade has increased notably since the two countries established diplomatic ties in 1992.

Ministry of Commerce spokesman Shen Danyang confirmed in March last year that the two sides completed a feasibility study of the FTA.

Last year, the two way trade volume reached $11.4 billion, a year-on-year growth of 5 percent. China’s total investment in Israel is $6 billion.

"In light of the global economy situation in 2015, these achievements are hard-won," said Chinese Ambassador to Israel Zhan Yongxin at a seminar earlier this month.

Liu is on a three-stop visit to Egypt, Israel and Palestine that began Friday and ends Thursday.