A Window of Opportunity for Israel: Attracting Chinese Overseas Foreign Direct Investment

Abstract

Over the past decade, Chinese overseas foreign direct investment (OFDI) has risen dramatically around the world, prompting a range of policy responses by other governments ranging from outright opposition to carte-blanche approval. The United States has taken a more conservative tack, imposing difficult regulations and blocking deals on the grounds of national security interests. However, a close analysis of the makeup and sectoral trends of Chinese investment call into question the logic and legitimacy of US misgivings. Given the investment disincentives posed by the US Congress and Chinese firms’ search for alternate investment markets, Israel is in a key position to offer an attractive investment environment as an alternative to the US and the EU in targeted industries. Israel parallels the US as an OFDI destination for its specialized high-tech innovation, highly skilled workforce, and variety of investment and business incentives. Examining the US and EU responses to Chinese investment patterns provides insight into how Israel might best leverage its position to attract Chinese overseas foreign direct investment.