How does U.S. commercial and political engagement in a developing country impact Chinese strategic investment decisions? How does this impact vary across conventional and high- tech sectors? Drawing on previous literature in International Relations and International Political Economy (IPE), I developed and tested three different theories in this essay: 1) great power competition theory and full-out competition; 2) IPE and comparative advantage theory; 3) selective competition theory. Through a gravity model of trade and a novel data set, I find support for the third theory: existing U.S. investments in a conventional sector in a host country diminish Chinese investment incentives. In contrast, U.S. investments in technology-intensive sectors stimulate Chinese investments, resulting in higher congruence in location choices. Geo- strategically, a closer political relationship between the U.S. and a host country decreases Chinese investments, but greater U.S. military involvement in that country stimulates Chinese investment incentives. I argue the higher congruence in U.S.-China foreign investments in a high-tech sector stem from China’s desire to challenge the technological dominance of the United States and its leadership role in the global industrial standards-setting regime. This study contributes to the current literature in international political economy on the determinants of Chinese outward foreign direct investment (OFDI).