When the head of the Mossad talks, people listen, to paraphrase the old E.F. Hutton commercials. So when the former chief of Israel’s vaunted spy agency, Ephraim Halevy, said recently that “the country has been slow to recognize the security threat that Chinese investment represents,” he sent shockwaves across Asia.

Irritated by such criticism, China’s foreign ministry asked for clarification following a statement by Israel’s chief of internal security service Shin Bet, Nadav Argaman, in January that “Chinese influence is risky, especially regarding strategic infrastructure assets.” Israeli officials eager to avoid a diplomatic crisis scuttled to calm fears and return Chinese-Israeli relations to normal.

China is Israel’s second largest trading partner after the US and, according to Tel Aviv-based research firm IVC, Chinese investment in the Israeli tech sector grew in 2017 and 2018 to $308 million and $325 million (through Q3), up from $274 million in 2016. But Israel finds itself between a rock and a hard place. As a close ally of the United States at a time of deepening rivalry, Israeli policymakers are under pressure to vet Chinese holdings in what the country considers to be national security assets.

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Rami Blachman

Rami Blachman is a tech entrepreneur and venture capitalist based in Shanghai and Tel Aviv. He is a frequent speaker and writer on China cross-border tech investing and how it relates to Israeli startups.