There is no alliance yet, no. There have been a number of articles in the Israeli press suggesting that China would like such an alliance and that the current Sharon government has laid some groundwork.
Again, such an alliance would only come about if something drastic happened to the U.S.-Israeli alliance. Considering Secretary Rice's recent statements I can now actually see that as a possibility.
Got that right in a nutshell.
I'd hope, however, that Israel would consider India as well.
Another democracy under assault by Islam would make a wonderfully understand ally.
And their military R&D appears to be better off than China's. At least, on the naval side of things. Everything China has seems to be either bought by the Russian's or reverse-engineered from Russian equipment.