Israel’s tech sector is the envy of the world. But the United States warns it could be compromised if China continues to make inroads into the Israeli economy.

Last week Israel hosted the 7th annual Sino-Israel Global Network & Academic Leadership (SIGNAL) conference in Tel Aviv. The American representative at the event, US Deputy Assistant Secretary for Multilateral Affairs Jung H. Pak, suggested to participants that Israel should see China as a threat to its hi-tech industry and assets.

Pax clarified that the Biden administration is not trying to get Israel to “decouple from China.” But she stressed that Beijing doesn’t play by the same accepted rules as the rest of the world.

Israel tightens investment oversight

Israel’s Security Cabinet last month tightened government oversight of foreign investment. The move presumably came in response to pressure by the Biden White House to reduce Chinese involvement in key sectors of the Israeli economy.

It was noted that the new rule does not apply to foreign investment in private Israeli companies. The government felt that could hinder the growth of the booming hi-tech sector.

China threatens Israel

Back in August, Beijing cautioned Israel against letting the Americans influence its policies.

Liu Jianchao, the head of the Chinese Communist Party’s international affairs department, reportedly conveyed the message during a meeting with the Israeli ambassador to China, Irit Ben-Abba.

“This is a critical test point for the relations between China and Israel,” Liu reportedly said, adding: “The Jewish people have a lot in common with the Chinese people. There is no reason for us to hurt each other. If Israel hurts China because of external pressure, it will be making the wrong policy decision.”

At the start of the year, Israel’s outgoing leadership held sensitive talks with the Biden Administration regarding China. Reports suggested that Israel had agreed to keep the Americans informed of any major pending deals between itself and Beijing, which no doubt ruffled Chinese feathers.

Driving a wedge between Israel and America

It’s by now no secret that relations with China are one of the things that could drive a wedge between Israel and the US. But Jerusalem believes it is worth the risk given America’s wavering approach to the Middle East conflict with each successive presidential administration. China, on the other hand, remains a constant, and fully engaged in the region.