Israeli private companies are beginning to reject Chinese investments amid tensions between the United States and the Asian giant, an expert revealed.
Simon Weintraub, a Tel Aviv lawyer who represents Israeli technology companies in negotiations with Chinese investors, told NPR that Chinese investments in Israeli tech startups that shot up a few years ago in fields like cybersecurity, digital health, and automated car technology are falling.
“We were getting requests probably a couple of times a month of new investment deals, most of which went through,” Weintraub said.
However, Israeli companies are now beginning to reject investment offers from China for fear of being isolated from business with U.S. companies that, for security reasons, would not share confidential or sensitive information if there are Chinese investors involved.
U.S. officials have warned that China’s access to Israeli cutting-edge technology in the private sector could be taken advantage of by the Chinese army allowing them to compete directly with the United States.
U.S. Under Secretary of Defense for Policy John Rood told a security conference in Herzliya, Israel, this summer, “The Chinese have shown interest in Israeli technology.”
“In some areas where China has made investments or pursued activities around the world, the security services have followed or been a part of those dealings,” Rood said.
The United States tightened restrictions on Chinese investments in sensitive U.S. technologies, such as quantum computing and artificial intelligence, and has been urging allies to do the same, according to Axios.
“In our view, foreign investment in Israel—like foreign investment in the United States—should take place within the confines of strong regulatory structures that ensure all companies investing in Israel do so in a responsible manner, consistent with international practices,” State Department spokeswoman Morgan Ortagus told NPR.
“Foreign investment should benefit the people of Israel, not undermine Israeli national security,” she added, referring to the Trump administration’s deep concern about the links between Chinese technology companies and the Chinese Communist Party (CCP).
The threat of the Chinese communist regime
President Donald Trump warned Israeli Prime Minister Benjamin Netanyahu in March that defense and intelligence cooperation between the two states could be harmed if Israel does not act tough on China, according to Axios.
Economic relations between Israel and China date back to 1979, although official diplomatic ties were not formalized until 1992. In the 2000s, Israel sold armed drones and radar systems to China, Bloomberg explains.
Chinese investment in the technology sector in Israel has increased sharply, reaching about a quarter of all funds raised by Israeli tech companies in the third quarter of last year.
In addition, the construction of the port of Haifa that Benjamin Netanyahu’s executive granted to a Chinese state-owned company with a 25-year exploitation right is a point of tension between Israel and the United States because of its proximity to a harbor used occasionally by the U.S. Navy’s Sixth Fleet, according to Bloomberg.
China expert Michael Pillsbury assured in his book “The Hundred-Year Marathon” that the strategy of the Beijing regime with the macro project of the Strip and the Route, where the construction of the port of Haifa is framed, has a double purpose.
On the one hand, it ensures control over strategic transport infrastructures throughout the world, ensuring not only that their communications and transit of people and goods will not be hindered, but also that they will be able to control who can access these geostrategic points and who cannot.
On the other hand, inspired by old military strategies from the period of the Combatant States of ancient China, the CCP is causing the United States to grow apart from its historical allies, such as the state of Israel or the European Union, in an attempt to isolate it and weaken it in order to eventually take its place.
The Trump administration, aware of this strategy, exerts pressure and warns its allies: “If certain systems go in certain places then America’s efforts to work alongside you will be more difficult, and in some places we won’t be able to do so,” Secretary of State Mike Pompeo said in an interview with Israeli television, according to Axios.
“Intelligence sharing might have to be reduced, co-location of security facilities might have to be reduced, we want to make that sure countries understand this and know the risks,” he added.