G.E. plans this week to sign a joint-venture agreement under which it will share it most sophisticated airplane electronics, including some of technology from Boeing's 787 Dreamliner, with state-owned Chinese company Avic, The New York Times reported Monday.
As China strives for leadership in the world's most advanced industries, it sees commercial jetliners -- planes that may someday challenge the best from Boeing and Airbus -- as a top prize.
And no Western company has been more aggressive in helping China pursue that dream than one of the aviation industry's biggest suppliers of jet engines and airplane technology, General Electric. ...
For G.E., the pact is a chance to build upon an already well-established business in China, where the company has booming sales of jet engines, mainly to Chinese airlines that are now buying Boeing and Airbus planes. But doing business in China often requires Western multinationals like G.E. to share technology and trade secrets that might eventually enable Chinese companies to beat them at their own game -- by making the same products cheaper, if not better.
The joint venture will supply the Chinese Comac C919, which is challenging Boeing and Airbus in the market for single-aisle jets with more than 100 seats. Analysts generally believe the C919 won't find many customers outside of China, but will provide a base on which to build the country's airliner industry.
G.E. will contribute the same avionics system it supplies to the 787, The Times reported.
My take is that businesses simply cannot resist the potential profits in China, even though they know that they are helping future competitors. To allay that concern, they say they'll just have to keep working to build something better.
Kent L. Statler, an executive vice president for commercial aviation at Rockwell Collins, put it best in the story, saying: "I think you're naïve if you don't take into account that you could be standing up a future competitor.
... It comes down to who can innovate faster."
January 20th, 2011, 07:44
vector7
Re: G.E. to transfer Boeing technology to China
Also in the news:
Quote:
Boeing to cut 1100 workers on C-17 program
Reuters - 52 minutes ago
CHICAGO (Reuters) - Boeing Co (BA.N) said on Thursday it would lay off 1100 workers who make the company's C-17 cargo plane, as it scales down assembly ...
LONDON (SHARECAST) - Power systems developer Rolls-Royce has bagged a $250m long term maintenance support contract from Cathay Pacific airline.
Rolls-Royce will provide its TotalCare long-term services support programme for Trent 700 engines that power eight new Airbus A330 aircraft. An enhanced engine refurbishment programme for RB211-524 engines that power existing Boeing 747-400 aircraft will also be delivered up to 2013.
The Chinese government approved $19 billion in contracts for 200 Boeing aircraft Wednesday.
The aircraft, approximately 185 737s and 15 777s, are scheduled for delivery between 2011 and 2013 to Air China, China Southern and Xiamen Airlines and other customers, Boeing said.
Wednesday's government approval was necessary for the customers to complete the purchases. It is the largest announcement ever of Chinese government approval of Boeing airliner orders by Chinese carriers.
"We value China's support for our products and its confidence in Boeing," Jim Albaugh, president and chief executive officer of Boeing Commercial Airplanes, said in a news release. "With the outstanding support provided by the United States Government, this deal is a win-win for the Boeing-China partnership, which is approaching its 40th anniversary."
Boeing projects that China will need 4,330 new airplanes, worth more than $480 billion over the next 20 years, and will be Boeing's largest commercial airplane customer.
January 23rd, 2011, 16:12
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
Remember this? Remember when Bernie Sanders used a chunk of his FiliBernie to note that GE CEO Jeff Immelt, whose company benefited from $16 billion in welfare from the federal government, was a big fan of outsourcing to China?
Gee! When GE had, a couple of years ago, some really difficult economic times, they needed $16 billion to bail them out, I didn’t hear Mr. Immelt going to China, China, China, China, China. I didn’t hear that. I heard Mr. Immelt going to the taxpayers of the United States for his welfare check. So I say to Mr. Immelt, and I say to all these CEOs that have been so quick to run to China, that maybe it’s time to start reinvesting in the United States of the America.
Well, that “Nut on China,” Immelt, will take the opportunity of Hu Jintao’s visit to the US this week to sign a deal that will share GE’s jet technology with a Chinese partner hoping to compete with Boeing and Airbus.
G.E., in the partnership with a state-owned Chinese company, will be sharing its most sophisticated airplane electronics, including some of the same technology used in Boeing’s new state-of-the-art 787 Dreamliner.
For G.E., the pact is a chance to build upon an already well-established business in China, where the company has booming sales of jet engines, mainly to Chinese airlines that are now buying Boeing and Airbus planes. But doing business in China often requires Western multinationals like G.E. to share technology and trade secrets that might eventually enable Chinese companies to beat them at their own game — by making the same products cheaper, if not better.
The other risk is that Western technologies could help China in its quest to play catch-up in military aviation — a concern underscored last week when the Chinese military demonstrated a prototype of its version of the Pentagon’s stealth fighter, even though the plane could be a decade away from production.
The first customer for the G.E. joint venture will be the Chinese company building a new airliner, the C919, that is meant to be China’s first entry in competition with Boeing and Airbus.
Now, I’m not surprised about this–this is what all companies hoping to do business in China do. In fact, GM is surely sharing technology with its Chinese partner at the same rates it was before it got an even bigger bailout from the federal government.
This is just the next phase of it, the next higher level of technology we give away to China, soon to be followed by our jobs.
You’d think we could have gotten more in exchange for that $16 billion we gave GE.
January 23rd, 2011, 16:39
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
By Elizabeth MacDonald
Published January 21, 2011
| FOXBusiness
Having your company’s chief executive get a seat at the table in the most powerful government in the world should thrill any shareholder into sleeplessness.
But it took less than a day for Jeffrey Immelt, chief executive of General Electric (GE), to open himself up to criticism from Congress. This time it comes from Sen. Bernie Sanders (I-Vt.), who put out a statement saying he hopes the administration’s appointment of Immelt to replace former Federal Reserve chairman Paul Volcker as head of an outside White Houseeconomic advisory panel means Immelt “has reformed his thinking.”
Specifically, the Vermont independent says in a statement that the GE chief executive has been outspoken about job growth, “not in the United States but in China.”
The Senator notes in his statement that GE has been steadily moving its manufacturing plants overseas. “I hope he changes his mind and focuses on rebuilding the manufacturing sector here in the United States, not in China, and in the process creates millions of good-paying jobs,” the senator said.
Sen. Sanders issued the statement after making a visit to an industrial community in Vermont’s Connecticut River Valley. GE didn’t return a call or an email asking for comment.
Sen. Sanders says that since 2009, General Electric has shuttered more than 25 manufacturing plants in the United States, cutting thousands of jobs, citing as his source the United Electrical, Radio and Machine Workers of America.
The senator also says in his statement “GE now employs more workers overseas than it does in the United States,” just as IBM purportedly does.
Sen. Sanders adds in his statement that “while GE has laid off at least 10,000 workers in the United States, it has created more than 30,000 jobs in India over the past decade."
And the senator’s statement noted that, during an eight and a half hour speech last month, the senator cited these comments from Immelt made at an investors’ meeting on Dec. 6, 2002:
“When I am talking to GE managers, I talk China, China, China, China, China. You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to $5 billion. We are building a tech center in China. Every discussion today has to center on China. The cost basis is extremely attractive.
January 23rd, 2011, 17:21
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Re: Obama Administration approves G.E. and Boeing to transfer technology to China
Jan. 22 2011 - 8:23 pm | 519 views | 0 recommendations | 1 comment
By WILLIAM PENTLAND
China’s President Hu Jintao promoted the emerging spirit of American-style entrepreneurialism during his visit to Washington D.C. this week for the highly-scripted U.S.-China Summit.
Jintao has not yet commented on the status of Chinese government’s home-grown brand of “shadow innovation,” which began nearly 30 years ago and is evolving today into an insidious and dangerous trend called “entrepreneurial espionage.”
In 1986, Deng Xiao Peng established “Program 863,” a sort of academy of sciences and technologies charged with closing the scientific gap between China and the world’s advanced economies in a very short period of time.
The 863 program and its institutional derivatives not only sponsored actual research, they also promoted the acquisition of advanced technologies from other countries legally or illegally.
Today, counter-intelligence activities in the United States that have a nexus with China typically involve the illegal acquisition of U.S. technologies. Unlike Russian intelligence officers looking to exploit ego, greed, or other personal weaknesses, China has not normally paid agents for classified documents or engaged in clandestine activity like ‘dead drops.’
While some of the recent espionage cases brought against China have ties to China’s intelligence services, the vast majority are linked to other state organizations, particularly the factories and research institutes of China’s military-industrial complex. Multiple Chinese state entities are engaged in an active effort to acquire restricted U.S. technologies. Unlike other foreign governments, China has a history of encouraging and rewarding private individuals to obtain technology on its behalf.
Chinese intelligence practices rely on nonprofessional collectors motivated by profit, patriotism or other factors and acting either independently or on behalf of the Chinese government to gather science and technology intelligence.
Nonprofessional intelligence collectors—including government and commercial researchers, students, academics, scientists, business people, delegations, and visitors—also provide China with a significant amount of sensitive U.S. technologies and trade secrets,” according to reports by the Office of the Director of National Intelligence. “[i]n many cases, the collection efforts of these private-sector players are driven entirely by the opportunity for commercial or professional gain and have no affiliation with [PRC intelligence].”
This practice has led to a vast amount of ”entrepreneurial” economic and industrial espionage conducted by Chinese students, trade delegations, businessmen and educational and research institutions, according to reports by the U.S.-China Economic And Security Review Commission.
The Chinese government encourages such efforts and has benefited from them. In 2009, the Commission quoted testimony provided by former FBI Special Agent I.C. Smith that:
the Ministry of State Security sometimes places pressure on Chinese citizens going abroad for educational or business purposes and may make pursuit of foreign technology a quid pro quo for permission to travel abroad. However, this phenomenon of ”entrepreneurial espionage” appears to be particularly common among businessmen who have direct commercial ties with Chinese companies and who seek to skirt U.S. export control and economic espionage laws in order to export controlled technologies to the PRC. In such instances, profit appears to be a primary motive, although the desire to ”help China” can intersect in many cases with the expectation of personal financial gain.
”Espionage entrepreneurs” are not focused solely on obtaining state-of-the-art, high-tech data and equipment. In many cases there is no obvious direct state involvement in the theft or illegal export of controlled technology. These entrepreneurial efforts frequently take the form of ”mom-and-pop” companies—many of them nothing more than a titular business registered at a residential address—that legally purchase older military technology from U.S. manufacturers or through a secondary market of defense industrial equipment auctions, or even from the Internet, and then look for customer institutions back in China.
“There are pieces of technology . . . that the Chinese are trying to acquire that are 20, 25 years old, [and] that are mainstays of existing U.S. defense systems but come nowhere close to being considered state-of-the-art, and yet a means-ends test would correctly identify those as critical gaps in the Chinese system,” said Dr. James Mulvenon, a specialist on the Chinese military at the Defense Group, Inc., stated during testimony before the Commission in 2009. http://img.zemanta.com/pixy.gif?x-id...7-ff4da4a12edb
January 23rd, 2011, 17:34
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
WASHINGTON, Jan. 21 (Xinhua) -- U.S. President Barack Obama on Friday named Jeffrey Immelt, chief executive officer of General Electric (GE), to chair a new economic advisory agency named Council on Jobs and Competitiveness, his latest move to throw an olive branch to the U.S. business executives and to bolster the nation's job creation efforts.
"Jeffrey is one of the nation's most respected and admired business leaders, and that's a reputation he earned over ten years at the helm of this company," Obama said at a GE plant in Schenectady, New York state.
The new council would take place of the President's Economic Recovery Advisory Board, an advisory panel composed of economists, corporate executives and among others, chaired by former U.S. Federal Reserve chief Paul Volcker. Immelt was also a member of the Economic Recovery Advisory Board.
Obama noted that Volcker, who offered "unvarnished advice and he wasn't afraid to counter the conventional wisdom," had done a great service to the United States.
"The past two years were about pulling our economy back from the brink. The next two years, our job now, is putting our economy into overdrive.
Our job is to do everything we can to ensure that businesses can take root and folks can find good jobs and America is leading the global competition," Obama added.
July 26th, 2011, 17:40
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
President Obama continued to exhibit a pleading weakness in his prime-time speech Monday night, so it's no wonder Monday was the same day that his "jobs czar," General Electric CEO Jeffrey Immelt, chose to announce the company will be moving the headquarters of its health-care division to China. You want compromise, Mr. President? In your face, sir, with all due respect.
Immelt replaced Paul Volcker as a top economic adviser. The former Federal Reserve chief, who defeated runaway inflation in the early 1980s, was done in by his resistance to letting the big banks and Wall Street resume the business as usual that led to the financial meltdown. Mr. Obama wanted to project a more business-friendly face for his administration. The results of Immelt's public service have been to barely dent the plight of 24 million Americans who are unemployed or underemployed. I suppose we should be grateful that GE's domestic employment dropped only 1 percent last year even as net income hit $11.6 billion, topping Wall Street expectations.
Would it be impolite at this point to mention that GE paid no federal income taxes in 2010? Or that GE Capital, the disastrous gift left behind by Jack Welch, was one of the biggest beneficiaries of the TARP bailout? The Export-Import Bank, funded by taxpayers, has given GE $2.5 billion in loans and loan guarantees.
Immelt has said GE plans to hire 11,000 American workers this year. As Marketwatch put it, "If the company follows through, it would represent GE's biggest hiring binge in the U.S. in at least a decade -- an 11 percent increase in one year." In 2004, GE employed 165,000 Americans (and this was after the massive layoffs under Neutron Jack). Last year the number was 133,000. During the same period, GE's overseas employment increased from 142,000 to 172,000 in 2007; after the recession, the number was 154,000.
The company claims 53 percent of its sales from outside the U.S. And Monday, Immelt's minions were working damage control, claiming only "a handful" of top managers would move to China. Still, GE, which already operates a global research center in Shanghai, is investing another $2 billion in China, opening "customer innovation" and development centers. As Bloomberg reported, a large number of engineers are in training there. As China switches to digital X-ray and imaging technology, the division expects what a spokeswoman called "double-digit" growth rates there.
The biggest dilemma, which goes far beyond GE, is why much of these offshore sales can't be U.S. exports made by American workers? Some of the answers are obvious: The demands of Chinese industrial policy (GE is working on a partnership there for aircraft engines, too), Wall Street greed and less expensive labor. But this doesn't quite cut it when so many Americans are suffering, and so many fear the living standards of their children will be lower than they enjoyed. And all the while, such companies enjoy corporate welfare and tremendous power over the decisions of government and the Supreme Court.
Tell me again why the federal deficit is our most pressing problem?
July 26th, 2011, 17:41
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
Every summer since 2000, General Electric Co has worked with the world’s largest communist party to pick about 25 Chinese executives for the company’s leadership programme in Crotonville on New York’s Hudson River.
The training creates potential Chinese allies for GE to help ensure its continued expansion in the world’s fastest- growing major economy, company officials say. It is part of an emphasis on government relations that has paid off with contracts to supply jet engines and build wind turbines.
Lobbying China is becoming a growth industry as the country promotes state-owned businesses and limits market-opening moves that followed its 2001 entry into the World Trade Organisation. Programmes like GE’s, along with efforts from firms headed by Washington veterans such as former US National Security Adviser Sandy Berger, help companies convince officials that what’s good for business is good for China.
"We make sure our initiatives are aligned," GE China Chief Executive Officer Mark Norbom told business leaders in Beijing on April 16. "What may have been alignment five years ago is not going to be alignment today; it’s not going to be enough."
The obstacles to doing business coincide with increasing opportunities. China’s economy is poised to pass Japan’s this year as the world’s second biggest. General Motors Co sold more cars in China in the first quarter of this year than in the US.
GE’s programme has trained some 200 Chinese executives in conjunction with the Communist Party’s Central Organisation Department, which names the heads of China’s biggest state-run companies. Alumni include Ning Gaoning, chairman of Beijing-based Cofco Ltd, China’s largest grain trader.
Helped by advice from programme participants, Fairfield, Connecticut-based GE designs its Chinese businesses around the country’s goals. Building more efficient wind turbines is in line with the government’s push to slow carbon-emissions growth.
GE is providing the jet engines through a joint venture with Paris-based Safran SA for China’s new commercial passenger aircraft, which will compete with jets from Chicago-based Boeing Co and Toulouse, France-based Airbus SAS. GE’s sales in China rose 16 per cent last year to $6 billion compared with a global decline of 14 per cent.
GE has a more traditional lobbying effort, with about 30 people in its Chinese government-relations department, almost as many as the 36 people who lobbied the US federal government for GE or its subsidiaries in the first three months of this year, according to Senate records.
Washington-based consulting companies are expanding in China, hiring former Chinese officials to help clients navigate the country’s bureaucracy. The Albright Stonebridge Group, headed by former US Secretary of State Madeleine Albright and Berger, plans to add at least two people to its staff of eight in Beijing this year, Berger said in an interview.
Led by former Chinese trade negotiator Jin Ligang, the China practice is the group’s largest outside the US capital, Berger said. Last year it helped Tempe, Arizona-based First Solar Inc negotiate with national and local governments to start work on the world’s biggest photovoltaic solar-power plant, in Inner Mongolia.
"It is very important for foreign companies to make their case, make their argument to the Chinese officials in ways in which there is a win-win, where the Chinese can achieve their objective and the company can achieve their objective," Berger said.
Washington-based law firms have also been adding staff in China’s capital, hiring Mandarin-speaking officials. Timothy Stratford, until February the assistant US trade representative for China, is now a partner for Covington & Burling LLP in Beijing, which opened its office there in 2008.
Stratford was involved in a recent effort to change a Chinese policy that encouraged domestic innovation and could have shut foreign companies — including Redmond, Washington- based Microsoft Corp and Intel Corp in Santa Clara, California — out of a sizeable portion of China’s $88 billion annual government-procurement market, he said.
While still a US official, Stratford met with representatives of the Science and Technology, Finance and Commerce ministries to explain the concerns of the US government and foreign-trade groups. Thirty-four of the groups, including the Washington-based US Chamber of Commerce and Beijing-based American Chamber of Commerce in China, wrote to the Chinese government in December complaining about the rules.
Christian Murck, president of the Beijing chamber, met Vice Commerce Minister Ma Xiuhong on March 18. The next week Myron Brilliant, the US chamber’s vice-president for Asia, took his case to Ma.
On April 10 China said it would revise the draft rules, taking out some potentially discriminatory provisions on trademarks. The move came after "industry representatives raised opinions," Ma told reporters.
"They changed a number, though not all, of the provisions that were concerns to us," Stratford said. "In many cases they are willing to be persuaded, if we can provide compelling reasons why specific policies should be modified."
July 26th, 2011, 17:43
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
SHANGHAI – GE Capital Aviation Services Ltd. (GECAS), the commercial aircraft leasing and financing arm of GE, announced delivery of a new Boeing 777F freighter aircraft to China Cargo Airlines. The aircraft comes from GECAS’ existing order book with Boeing.
GECAS leased another new Boeing 777F to China Cargo Airlines in late 2010. China Cargo Airlines, majority owned by China Eastern Airlines, currently operates a fleet of 18 freighters.
GECAS has more than 100 freighter aircraft in its portfolio, including 737Fs and 737QCs, 747Fs, 767Fs, 777Fs and MD-11Fs. GECAS freighter aircraft are leased to 31 different operators worldwide.
About GE Capital Aviation Services (GECAS)
GECAS, the U.S. and Irish commercial aircraft financing and leasing business of GE, has a fleet of over 1,800 owned and managed aircraft with approximately 245 airlines in 75 countries. GECAS offers a wide range of aircraft types and financing options, including operating leases and secured debt financing, and also provides productivity solutions including spare engine leasing, spare parts financing and management. GECAS, a unit of GE Capital, has offices in 24 cities around the world.
GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company’s Web site at www.ge.com. GE is Imagination at Work.
Please sign up to follow us on Facebook (GE Capital Aviation Services) and on Twitter (GECASNews).
This is from Phil's Stock World which is a very good blog:
"Our friends at GE/CNBC can’t sell our country out fast enough as they finalize plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market."
"This is 100 years of US R&D into aviation research that helped build one of the World’s greatest companies (BA) and now we are handing over, not just our jobs, but our hard-fought technology over to the Chinese because GE thinks it can squeeze a few more dollars of profit over there."
GRAND RAPIDS, Mich. — At a General Electric flight simulator here, the visibility has been set at near zero to mimic thick rain and clouds. But a video console near the pilot shows a vivid picture of nearby mountains precise enough to allow a plane to take off or land despite the conditions.
The system is one of several highly valuable next-generation technologies that GE has developed — and that the company has passed along to China as part of a joint venture with the state-owned Aviation Industry Corporation of China (AVIC).
Access to the world’s second-largest economy is critical for nearly any global company. Yet this often comes at a cost: the transfer of the very technologies that leading business officials — including GE chief executive Jeffrey Immelt, who heads an Obama administration panel on U.S. jobs and competitiveness — cite as essential to the United States’ economic future.
The “synthetic vision” system, for example, could be worth millions of dollars to airlines, which could significantly reduce costs from weather-related delays.
GE, like other companies, must weigh which technologies should be brought to joint ventures with China and how to protect them from being stolen or misused. These decisions face virtually any executive trying to develop a presence in the country — from the most sophisticated technology firms, which worry about software piracy, to old-line industrial equipment makers, which have seen knockoffs of their products pop up soon after making deals with Chinese partners.
Under the agreement with AVIC, GE avionics will be on board a new Chinese commercial airliner that is likely to become a rival to aircraft produced by U.S.-based Boeing and Europe’s Airbus. The potential competition with Boeing, coming at a time when the United States is fighting to maintain its own manufacturing base, has stirred some American criticism.
But GE executives say they have had no second thoughts. China’s airplane market is booming, and the deal was too important to pass up, they said, even at the cost of sharing the avionics technology.
“We are all in and we don’t want it back,” said Lorraine Bolsinger, chief executive of GE Aviation Systems. She said new airplanes don’t come along that often, and that the chance to be part of developing a major new aircraft is not to be missed — even if most of the jobs will be in Shanghai or elsewhere in China.
“We don’t sell bananas,” she said in an interview here. “We can’t afford to take a decade off.”
But American business leaders wonder privately whether companies such as GE are at risk of giving up long-term strategic advantages when they agree to technology-transfer deals for shorter-term gain.
GE executives maintain that is not the case. They say that they negotiated robust protections in their contract with AVIC. The 50-50 joint venture, for example, has strict limits on employing Chinese nationals who have a military or intelligence background. A board committee that monitors compliance with the joint venture agreement is effectively under GE’s control and can, in a dispute, overrule the full board, Bolsinger said.
Said John Rice, GE’s Hong Kong-based vice president: “We are not naïve about it. Is there risk? Sure. But there is risk in any country.”
Studies by the U.S. Chamber of Commerce have criticized what the organization calls an intricate network of Chinese state policies meant to acquire as much technical capacity as possible from abroad in hopes of advancing China beyond being a source of cheap labor.
Demographics are making it urgent for authorities to develop their own higher-value products and technologies. China’s population is peaking, wages are rising and the pool of younger workers is in decline.
At the same time, China is hard to ignore. Hundreds of new planes are expected to be purchased in coming years by Chinese airlines and foreign firms operating in the country, and the Chinese government has put the power of its state-owned enterprises behind developing commercial aircraft to compete for that business.
GE’s joint venture with AVIC will employ about 300 engineers, software designers and others in the United States. If all goes as planned, it could boost GE’s fortunes in the avionics field, where it now ranks fourth behind market leaders such as Honeywell.
The number of jobs to be created in China would be much higher. GE executives say it is difficult to imagine otherwise. The “colonial” model — of multinationals making products in the developed world and selling them to the developing world — is long outdated, they argue.
The Obama administration, seeking to create jobs at home, has put a priority on boosting U.S. exports. The White House has tapped corporate leaders such as Immelt and Boeing chief executive James McNerney to help develop a strategy.
According to a statistical model used by the Commerce Department, U.S. exports to China last year supported more than half a million jobs. But that was dwarfed by imports from China, and the resulting $273 billion trade deficit represented a significant drain on U.S. employment.
American critics of China argue that it remains a state-controlled economy that takes advantage of its trading partners. These critics cite China’s managed exchange rate, which they say keeps Chinese exports artificially cheap in dollars and American goods expensive, as well as the use of government power and subsidies to support Chinese industries.
Immelt himself, in private comments in Rome that famously became public, questioned China’s sincerity in developing a truly open economy.
GE has been doing business in China for decades and the experience has been as varied as the kind of products involved. On some fronts, the company is fighting to protect its technology, while on others it is battling to get its American-made goods past Chinese import restrictions. Yet there are also what the firm considers unqualified successes, such as joint ventures with the Chinese in medical equipment. And the company is even looking to transfer some Chinese technology — involving high-speed rail — back to the United States.
That landscape is far more complex than when Rice first visited China in the late 1980s looking for local production of mechanical timers and other simple components used in home appliances being assembled in the United States. Since then, countries such as China, India and Brazil have pushed to develop their capacity for the making advanced equipment.
“Thirty years ago, it was easy for global companies to fly into some place and sell a jet engine or a gas turbine, leave, ship in the product, get paid and export the profits to shareholders in some other place,” Rice said. “What China and many countries figured out is that is not a path to long-term prosperity. . . . The old days are not working anymore in any country.”
January 4th, 2014, 21:14
vector7
Re: Obama Administration approves G.E. and Boeing to transfer technology to China
General Electric (GE) plans to sell its aircraft electronics to Chinese companies, and if you don't have a problem with that, maybe you should. After all, China just flight-tested a prototype stealth fighter (pictured), it continues to build up its military -- and we can only hope it's not planning to expand its territory in ways that threaten the U.S.
But if China does decide to get aggressive with the U.S., GE will have provided it with the aircraft technology it will be using.
According to The New York Times, GE is signing a deal to sell avionics technology -- electronics that control an aircraft's basic in-flight operations -- to Commercial Aircraft Corp. of China (CACC), which aspires to build commercial and military aircraft. GE will do this through a joint venture with a Chinese company, Aviation Industry Corp. of China (Avic). Avic makes avionics for CACC and for China's military -- including its stealth fighter.
Sure, GE is based in the U.S., but that doesn't mean its shareholders expect it to be loyal to U.S. interests. Still, selling technology it developed for U.S. companies like Boeing (BA) to Boeing's Chinese competitors -- which are trying to build a competing aircraft company -- may be going too far. The question facing American policymakers is how to keep GE from crossing the line before it's too late.
A $400 Billion Market for Aircraft Products
Officially, this GE/Avic venture will be making a commercial aircraft for CACC. The Times reports that together, they'll build CACC's C919 -- a single-aisle plane capable of carrying up to 200 passengers and designed to compete with the Boeing 737 and Airbus 320 -- to be delivered in 2016. The avionics technology that GE/Avic will supply is the same as GE is providing to Boeing for its 787 Dreamliner, an industry-leading concept vehicle that is proving awfully hard for Boeing to deliver.
Is GE betraying its customers and its country? I think so. And the reason it's doing so is simple: GE believes that China will be a $400 billion market for its aircraft products over the next two decades. To be fair, GE is making all sorts of noises about how China's aircraft industry isn't sophisticated, so it won't be able to make use of all GE's advanced technology against Boeing or the American military. GE also claims it briefed the U.S. government before selling this technology to China, and that its joint venture will keep a Chinese Wall (pun intended) between its commercial and defense units.
I don't find that at all comforting. Here's one reason why.
In my Babson College classes, I've taught a Harvard Business School case titled Taiwan: Only The Paranoid Survive, which demonstrates how Taiwan famously built up its semiconductor industry from scratch in the 1970s: The country bought obsolete technology from RCA and paid Taiwanese nationals working in Silicon Valley to share their technical knowledge with the island nation's government-owned companies. Sure, Taiwan was dealing with old technology at first, but it had skilled people who quickly helped it climb up the ladder and build a world-leading semiconductor industry.
Are CEOs Selling Out America?
If China follows Taiwan's footsteps, its aircraft industry should surpass the U.S. in a much shorter time. Unlike Taiwan, China is starting out with state-of-the-art technology from GE, which will save it decades of development time as it seeks to build its own industry to compete in both commercial and military markets.
All this corporate maneuvering raises an important question: Who's in charge? To me, it looks like big-company CEOs are making the decisions that will determine America's fate. These execs may live in the U.S., but they're making big money by selling our best technology to China. And since China is lending America $907 billion through its government bond holdings, our nation's financial system is also under China's thumb.
Just as the gun lobby that has the economic and political power to make it easy for mentally unstable people to buy semi-automatic weapons -- even after the Tucson tragedy -- so does America's military industrial complex have the power to put its economic interests above those of its home country.
But just because one has the ability to do something doesn't make it a good idea. Let's hope someone can make GE realize that while there's still time.
