Why GE's Jeff Immelt Is Wrong About China

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In a recent statement, GE’s CEO Jeff Immelt expressed surprise and dismay that the Chinese government and business interests are pursuing moves that will seemingly make the Chinese market less friendly and accessible to western companies. Then, he went one step further, accusing the Chinese of the attempted “colonization” of other countries.

Shortly after making the statement, GE seemed to take a step back from his statement, saying that his remarks were made out of context.

China’s opening up the west and western investment has been predicated on access to the Chinese domestic market in return for the west’s sharing of technology and access to western export markets. Since 1979, this has worked to a large extent: Chinese joint ventures and startups got technology, and Chinese consumers got access to western consumer brands such as Coca-Cola, McDonald’s and KFC.

In late 2008 though, the financial crisis forced western consumers to tighten up their spending, and the Chinese government had to quickly motivate Chinese consumers to spend, making up for the excess production capacity opened up by the collapse of western consumer spending. At the same time, Chinese government stimulus packages have driven development in green- and clean-tech technologies, which will be major technology and manufacturing growth areas over this century. China is a leader in the production of the rare earths which are crucial in the development of these new energy sources and has signaled to the west that they should seek alternative sources for materials besides China. Unfortunately, most of this information has not been properly covered in the western media.

To recap, the key technologies of the future are technologies which most western companies did not heavily invest in, and is one which Chinese companies are now leaders, and following 2008, the export markets’ collapse, western imports of Chinese goods have fallen off the cliff. As Europe tightens its belt further to wean itself off excess debt, it’s natural to expect Chinese exports to the EU to be largely anemic. As for the US, one of the few things which all sides seem to agree on is that the country has excess debt, and the problem needs to be addressed somehow.

In light of this situation, the west really has very little room for leverage in pushing China for anything. Why would Jeff Immelt, or anyone else, expect China to do anything else except pursue its own interests in light of this situation? And why should he expect those interests to be the same as the west’s? It’s not as if the west has been a shining example of responsibility, success and accountability for the whole world.

Where Jeff Immelt veered off into politics was his use of the sensitive word “colonization”. For most westerners who do not follow the Glenn Beck school of racial harmony, equality, and justice, colonization is associated with a largely shameful period in western history, which left a scar on its relations with Africa and India. Saying that Chinese intentions are the same as the west in the 19th century is an over-simplification, and it is too early to say how China and Chinese corporations will behave. For the most part, Chinese government policy and Chinese companies have had a laser-focus on mineral extraction and business, to the exclusion of everything else. They have shown no interest in getting Africans to adopt Chinese language, textbooks, and beliefs, as did most of the European colonial powers in the 19th century. For this reason, Jeff Immelt’s choice of the word “colonization” was unfortunate. In most cases, projecting past injustices onto the future don’t help us to gain further insights; instead, they appeal to the worst sides of our character and create further misunderstanding.

Countries like India have shown that they are very good at defending their own business interests and squeezing business concessions from China; they do not need help from the west.

If only the American taxpayer had been so well-protected!

Paul Denlinger is an expert and consultant on China and the Internet. This post originally appeared on his blog, and is reprinted with permission.

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