Remember the famous 1953 quote before Congress–actually it was a misquote– by the president of General Motors: “What’s good for GM is good for the country”? That remark was just rephrased to GE’s CEO, Jeff Immelt, in a question by a Wall Street Journal (Sept. 30,2011) reporter under the headline “China Venture is Good for GE but Is It Good for U.S.?” Immelt’s edgy response: “I’m done”.
The basic question is whether the U.S. can compete in China without giving away the store. The Journal asks: “What’s to 
keep GE’s new avionics joint venture with China from transferring the best of U.S. technology abroad, empowering a new set of Chinese companies to challenge U.S. aircraft makers?” After all, avionics–the “brains” on an airplane–are at the pinnacle of American know-how. It’s where the U.S. is still highly competitive and it’s technology that China covets.
GE says it has built protection into the transfer of technology. But one Congressman says: “To suggest there are going to be firewalls that will stop this technology from going to the Chinese military is approaching laughable”. This is not, of course, the first case of industrial companies striking difficult bargains with Chinese state-owned firms in exchange for access to the growing market. Siemens earlier joint venture in high-speed rail resulted in direct competition from Chinese firms that borrowed its technology. China’s industrial strategy has been explicit about “metabolizing” foreign technology and making it China’s own.
“We’ve been passive in deciding how to deal with China’s aggressive industrial policies”, says a former Commerce Department official. Adds a China expert: “It’s unclear whether anyone in the U.S. government took a look at the GE deal in terms of U.S. competitiveness–the future of the aviation industry 10 or 20 years out”.
Discussion questions:
1. Make the case for and against GE’s joint venture.
2. Should the government play a more active role to protect Boeing from China’s planned passenger jet that will use GE avionics?