G.E. to Share Jet Technology With China in New Joint Venture
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.
On Friday, during the visit of the Chinese president, Hu Jintao, to the United States, G.E. plans to sign a joint-venture agreement in commercial aviation that shows the tricky risk-and-reward calculations American corporations must increasingly make in their pursuit of lucrative markets in China.
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.Chinese follow same old script (and they get the punch line)
Then this week, my colleague Howard Schneider weighed in with an equally telling story from Wisconsin, where Manitowoc Co. has for years exported giant cranes to China for use in giant construction projects such as the Three Gorges Dam. But now that Chinese firms are ready to enter the market, Beijing has slapped a 30 percent tariff on Manitowoc's exports under a provision of global trade rules that allow "developing" countries to protect "emerging" industries. To stay in the game, Manitowoc has had to enter a joint venture with one of its Chinese competitors, which means much of the work will be done there.
The right response to these challenges would be for the president this week to laud China for the success of its economic policies and announce that the administration will begin forthwith to apply each and every one of them to Chinese exports into the United States. Subsidies and directed credit for local companies, buy-American provisions for government agencies and government contractors, currency manipulation, the rules on "conditional market access" and "indigenous innovation" - surely China could hardly complain if we were to pay them the highest compliment by embracing their economic model.
To start things off, the administration might announce its intention to block the joint venture Hu intends to announce later this week with General Electric. GE already sells lots of engines to China for all those Boeing and Airbus jets it buys. Now GE is hoping to get the contract to provide avionics to the state-owned Commercial Aircraft Corp. of China, which intends to go into direct competition with Boeing. What better way than by forming a 50-50 joint venture with Aviation Industry Corp. of China, another state-owned firm?
In addition to $200 million, GE will be contributing technology to the partnership that will operate as the avionics brain for Boeing's new 787 Dreamliner. And going forward, the partners will jointly develop new radars, controls and guidance system at a jointly run research and development laboratory that is already under construction. Call me cynical, but this sure sounds as if one of America's leading technology companies has decided to sell some of this country's crown jewels to ensure access to China's rigged market, potentially jeopardizing the competitive advantage enjoyed by this country's leading export industry.
This is the nub of the problem. With its state-controlled economy, China can force its companies to act collaboratively to achieve the country's strategic economic objectives. And that gives it a tremendous advantage in negotiating the terms of trade with a country like ours, where China can strike deals that may provide short-term profits to one company and its shareholders but in the long run undermine the competitiveness of the other country's economy. What's good for GE or Honeywell or Rockwell is, in this case, almost certainly not good for America and American workers.
Americans are uncomfortable with the idea of industrial policy. But when competing against countries that practice it skillfully and aggressively, we may have no choice but to respond in kind - if for no other reason than as a way to negotiate a more level playing field for American firms and American workers. China has already leveraged this advantage to wipe out large swaths of American industry, build up a $3 trillion dollar war chest and help to put the U.S. economy in a rut characterized by low growth, high unemployment and unsustainable trade deficits.
How much longer must we wait, how much deeper does the rut have to get, before we say, "Enough!"?The Real Problem With China
For the United States, the No. 1 problem with China’s economy is probably intellectual property theft. Technology companies, for example, continue to notice Chinesegovernment agencies downloading software updates for programs they have never bought, at least not legally.
No wonder China has become the world’s second-largest market for computer hardware sales — but is only the eighth-largest for software sales.
Next on the list, say people who work in China or do business there, is the myriadprotectionist barriers China has put up. These barriers make this country’s recent efforts at“buy American” protectionism look minor league. In some cases, Beijing has insisted that products sold in China must not only be made there but be conceived and designed there. The policy goes by the name “indigenous innovation.”Solar Panel Maker Moves Work to China
Evergreen, in announcing its move to China, was unusually candid about its motives. Michael El-Hillow, the chief executive, said in a statement that his company had decided to close the Massachusetts factory in response to plunging prices for solar panels. World prices have fallen as much as two-thirds in the last three years — including a drop of 10 percent during last year’s fourth quarter alone.
Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.
“While the United States and other Western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint,” he said.China fact and sentence of the day
China has lent more money to other developing countries over the past two years than the World Bank, a stark indication of the scale of Beijing’s economic reach and its drive to secure natural resources.US democracy has little to teach China
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