Short answer: Israel has already chosen in practice, without declaring it. Joining the US-led Pax Silica alliance in December 2025, alongside a strategic AI cooperation agreement, took it off the "yellow list" of chip procurement restrictions, while Chinese investment in Israel fell to just five deals in 2025. For a manager this means: a Chinese investor in a sensitive company is now a risk to the deal itself, not only a regulatory risk.
The longer view
Israel's foreign investment screening mechanism is an advisory committee established by a cabinet decision of 30 Oct 2019 and updated in 2022 (the "foreign entity" threshold was lowered from 25% to 20%). It operates under a government resolution rather than a law, and works through the approving regulators. In practice the effect is visible: Chinese state-owned companies have almost vanished from the market, and infrastructure tenders (light rail) ran into undeclared obstacles. On the other hand, goods trade with China reached a record 21.7 billion dollars in 2025, mostly imports, and in 2025 Chinese companies signed EPC contracts for Dalia Energy power plants worth about 7 billion shekels. Haifa's Bayport terminal has operated under SIPG since September 2021, under security oversight per the license terms, and the older Port of Haifa was sold to the Adani-Gadot group.
In the seven-layer reading, this is a friction between the technology layer (fast: chips, data centers, Nvidia in Kiryat Tivon) and the geopolitical layer (slow: the alliance with the United States). The practical result: in technology deals, Chinese capital is out of the equation; in civilian infrastructure (energy, construction, vehicles) it remains, but at rising regulatory risk.
This is a reading through the seven layers of The Blue Pumpkin, the method of Dr. Bella Barda-Bareket.
What to do tomorrow morning
Go through your shareholder and strategic customer tables and flag every Chinese entity above 5%. Before a funding round or an exit, check in advance with an advisor whether the deal could reach the advisory committee, and build a scenario of an American acquirer demanding a cleanup of the ownership structure.
Sources: INSS, 3 May 2026 · Calcalist, 18 Dec 2025 · INSS, 10 Sep 2024 · Wikipedia, the Advisory Committee