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General Electric to Buy Chinese-made Jets

Published 11/04/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

As American giant Boeing struggles through strike-related difficulties, General Electric has agreed to purchase and lease 25 Chinese ARJ21-700 regional jets, according to MarketWatch.

This deal does not put the Chinese manufacturer – Commercial Aircraft Corp. of China – into direct competition with Boeing, but it does give the company a major boost when its expressed goal is to compete globally with American Boeing (and European Airbus) production. By backing a company which intends to eventually overtake a landmark of world aviation excellence, General Electric could be accelerating the doom of yet another sector of the United States’ dwindling productive base.

The deal between GE and Commercial Aircraft Corp. of China includes a stipulation stating the jets will be powered by General Electric jet engines. GE expects to profit perhaps $4 billion from worldwide orders of the Chinese jets. Unfortunately, China’s strict enforcement of “import substitution” makes any further deals unlikely.

The Chinese government eventually intends to produce everything it needs domestically. In order to do this the nation “clones” imported technology until it can replace it with its own version. This has happened with cell phones, computers and cars – many vehicles produced by Great Wall Motors are obvious knockoffs of Japanese Nissan and Toyota models. Now Chinese engineers will have the finest GE engines (as well as perhaps hundreds of other aircraft components) to reverse engineer and copy.

In yet another instance of short-sighted decision making, GE chose to make up to $4 billion over the course of the next 20 years (not a lot of money considering GE’s global scope) in exchange for eventual usurpation by their former customers.

International trade can be a good thing, but when other countries refuse to play by the rules (copyright and trademark infringements are no obstacle in China) the United States simply undermines itself. We need to stop focusing on making short-term money and start finding long-term solutions, including enforcement against the Chinese for their technological thievery.

Source MarketWatch:

General Electric Co. agreed to buy 25 Chinese-made regional jets Tuesday, marking the first overseas order for the aircraft and providing a major boost for the manufacturer. GE's leasing unit GECAS signed an agreement to purchase the 70-seater ARJ21-700 aircraft, the official Xinhua News Agency reported Tuesday.

…

Industry experts say China is seeking to raise the bar such that its aircraft can compete in international markets. These include plans to create larger aircraft that can go head-to-head with Boeing and Airbus aircraft.

…

GE, which is supplying of engines to the aircraft, expects to generate about $4 billion in such sales to Commercial Aircraft Corp. of China during the next 20 years. The two companies estimate about 500 ARJ21-700 will be sold over the next two decades.

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guest says "correction" on 11/04/08
I meant to say "shut down offices" not "should offices"

guest says "My 2 cents..." on 11/04/08
I agree, treason (as the first poster stated) is a bit much! However, the end result and the bottom line should match. CEOs that make their company billions in profits should get good bonuses, they earned them! However, those that run the company to the ground should be nothing, or at the very least competitive wages in regards to what the majority of the company's work force would earn. I worked at a company where they should offices to give the people at the top fat raises, they had to sell out due to their stupidity. I would not care except that it cost U.S. jobs. That is bad for the economy, not just bad for business.

guest says "RE: GENERAL ELECTRIC" on 11/04/08
I think you're jumping the gun with the treason thing... the executives aren't TRYING to undermine the United States, they are just accomplishing that end as a by product of TRYING to make a buck. We should tell our companies to start worrying about the end result as opposed to the bottom line.

guest says "GENERAL ELECTRIC" on 11/04/08
SINCE GENERAL ELECTRIC BUYS CHINESE, I WILL NEVER EVER HAVE ANOTHER GENERAL ELECTRIC PRODUCT IN MY HOUSE, AND I WILL CERTAINLY TELL OTHER PEOPLE SINCE I OWN A BIG INSURANCE COMPANY THAT ONLY HIRES AMERICAN, SCREW YOU GENERAL ELECTRIC,YOUR CEOS SHOULD BE TRIED FOR TREASON AGIANST AMERICA