Is GE Arming China to Compete With America?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.

Meanwhile, let's not feel sorry for Boeing. After all, a source who spent 20 years inside Boeing told me in 2009 that CEO Jim McNerney was musing about moving Boeing to China.

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.


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Randy Fox

Thank you Jeffery Immelt, Obama right hand man and job czar for sending so many jobs to China, it is your future and with Obama wrecking the US enonmy beyond repair I understand why you would have to give our technology to our enemies. Airlines have been lacking in the Obama administration I am so glad that now he & GE can turn their attention to destroying that scetion of our economy. Are the Chinese Union workers cause we see what you doing to Boeing for wanting to build a plant in South Carolina, that will teach them Good job Immelt if you can't grab American business and make them play ball then drive them out of business. Immelt & Obama here to rape America over & over.

August 23 2011 at 8:36 PM Report abuse rate up rate down Reply
mirror2way

we feel that this is a great way to be friends an grow american jobs we appaud GE for there best efforts to grow american jobs through deals with china and all area
europen nations. We help them they help us were all happy ;we get there products and they get our international trade is good for all including the workers of both countries," Thank GE your on our side,we need all jobs we can get.

January 20 2011 at 9:21 AM Report abuse -2 rate up rate down Reply
amethystdeceiver

ecoimagine that. they brought bad things to life. maybe NBC News will become Pravda II after China annexes us. Was GE not doing business in IRAN not too long ago? yeah, let me get green light bulb that casts a chairman mao shadow when you tun it on please. which, by the way, has a 15 step MSDS clean up check list should breakage occur.. because of mercury. no, they are not fluorodating water or anything, but if they would not mind cleaning the PCB out of the hudson, that would be swell.

January 20 2011 at 3:35 AM Report abuse +1 rate up rate down Reply
adolphrobert

My grandfather always said to me: "We all, yes all, have a price" and China today has the money.

January 19 2011 at 10:44 PM Report abuse +2 rate up rate down Reply
jgw6494

THANKS GE!
IN THE NEXT FEW YEARS THEY WILL BE MAKING AND SELLING THESE SAME SPARE PARTS CHEAPER! THEN GE WILL MOVE ITS OPERATIONS TO CHINA AND THERE GOES WHAT'S LEFT OF OUR COMPETITIVE EDGE AND JOBS....

January 19 2011 at 7:04 PM Report abuse +2 rate up rate down Reply
tcheckster

Sir, the gun lobby did not make it easy for the Tucson shooter to get a gun. It was liberal political correctness that prevented names of mentally unstable persons to be added to the FBI database which would have prevented a purchase of a weapon.

January 19 2011 at 6:17 PM Report abuse +4 rate up rate down Reply
ROBERT CAMPAIN

History is due to repete it's self we never learn. we put sadam in power only to have to go in years later and have the brave men and women of the U.S. military to oust him from power. We helped the Afgans fight the Soviets in the 80's armed them well especially stinger missels. Now where are we fighting the talaban that we helped develop.There are hundreds of other examples of history repeting it's self and when we learn nothing from it(or conviently foget it) it comes back to bite us in the butt. Better idea how about G.E. develop new jobs in this country with all their avionic hardware and knodledge instead of betraying the U.S. and setting us up for a horrific fall. They may be accountable to their stock holders but there also accountable to the American public. In the last election the people voted for change. Well then you better start the process now. Look how long it took for the Cold War to end and the Soviets were our allies in WWII. China has a wall we don't need to build another one.

January 19 2011 at 6:07 PM Report abuse +3 rate up rate down Reply
Ray Scarth

It's fine if GE wants to finally get paid for the technology they provide China.
The Chinese have long been reverse engineering GE parts for their own designs and our government hasn't had the Balls to call them out on it.
Just as long as GE does some crafty engineering of their own, so when the Chinese try to use them against us, the Pentagon can throw a switch and watch them drop out of the sky. Oh by the way, did I mention, GE can sell the Pentagon the switch!
That's where the real money is !!!!

January 19 2011 at 3:32 PM Report abuse +3 rate up rate down Reply
dobravery

Don't all military related sales have to be approved by the federal government? CEO's answer to the shareholders only. As a citizen we should be voicing our concern to the CEO in the white house.

January 19 2011 at 2:09 PM Report abuse +3 rate up rate down Reply
mtpipeliner

Its just plane greed on GEs part (pun intended)

January 19 2011 at 1:37 PM Report abuse +2 rate up rate down Reply