GE’s Jeff Immelt Surprised That Chinese Interests Are Different

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!

11 Responses to “GE’s Jeff Immelt Surprised That Chinese Interests Are Different”

  1. I loved reading about Immelt earlier. It’s staggering how clueless the business elite often are. Immelt comes across as quite unpleasant considering he also attacks POTUS which some comments say is the real story.

  2. Anonymous says:

    I’m not sure whether this was Immelt’s real intention, but what this points out very clearly is a major difference between China and the West, or at least the US.

    While China is by no means a monolithic entity, Beijing has done a remarkable job at determining what they want to get out of their relations with the rest of the world and pursuing those interests with laser-like focus.

    The US, on the other hand, looks like the kid on the playground who just wants to be everyone’s friend when it comes to trade policy. US administrations, and the businesses who put them into office, have all swallowed neoliberal economics to such a degree that they never question their commitment to “free trade”.

    This is not to say that “free trade” is a bad thing, but it is bad when one side remains largely committed to it while the other does not. (And, yes, there are still areas in which the US talks out of both sides of its mouth on this issue.)

    The US pushed to get China into the WTO hoping for a couple of things that they didn’t bother to get in writing. First, they hoped that China would eventually decide to abandon its trade restrictions (and there are many of them) that aren’t covered under the WTO agreement. They haven’t.

    And second, the US has continued to support openness to trade with China in the hopes that economic growth in China would lead to political liberalization, which it hasn’t.

    The last sentence of your article sums up the argument perfectly: indeed, if only the US taxpayer had someone in Washington looking out for their interests in the way that the Communist Party looks out for its interests.

  3. Ooops! Forgot to fill in my identifying information before posting my comment above. Sorry!

  4. I disagree with your view that the US wishes everybody to be its friend. That’s the sort of opinion I’d expect to see shaping the population’s thinking from the WSJ or NYT.

    Look no further than Confessions of an economic hitman to see both how the US really operates and how the much of the worlds economies to suffer hardship see how the game is played.

  5. @CharlesFrith,

    Point taken. I do acknowledge above that the US often talks out of both sides of its mouth regarding trade.

    My point is that, at least in the East Asian region (which is the only region of the world I will claim to know anything about), the US has long endured largely unequal terms of trade.

    The US has done this mostly on faith that others would play the game by similar rules. When everyone buys Ricardo’s theory of comparative advantage, everyone wins — but not everyone gets to have, for example, an auto industry.

    Clearly the dynamic economies of East Asia don’t buy Ricardo’s theory. They’ve always viewed the international division of labor as a hierarchy, and they’ve had no intention of remaining poor and agrarian. And can we really blame them?

    If everyone else plays to win, I don’t see why the US can’t. That seems to be the source of frustration behind Immelt’s comments.

  6. Panda lover says:

    Could this be the start of another round of trade wars reminisce of the Japanese in the 80s? All I hear in Chinese media is that how China will not follow the Japanese footpaths but I fail to see how they can avoid the double whammy of inflation and falling demand. I do agree with the low carbon technologies though, still anticipating BYD to unveil their world beater all electric vehicle.

  7. OK Mr Anderson, I think the wider picture is that free trade constitutes only one segment of the entire historical relationship between the US and the far East. If we ignore that the US has endless trade agreements outside the usual ‘fair’s fair’ framework with the far East then we’re missing how power really operates. Look no further than the ‘special’ relationships the US enjoyed with Taiwan, South Korea, Thailand to achieve its military aims. The reason why Bangkok has the largest US embassy in SE Asia is Vietnam. Ipso facto Baghdad repeats the formula.

    Free trade agreements are just one element of how the dealer dealers and the reality is that self interest is the legacy the US leaves behind.

    China knows that.

    China would laugh at any other suggestion.

  8. Sorry, Mr. Frith, but I’ll have to disagree with you when it comes to the topic of Mr. Denlinger’s article. The point is that China not only has exemptions to WTO rules built into their accession agreement, but that China has managed to find and exploit many loopholes.

    China has been taking advantage of US gullibility over free trade for decades and laughing all the way to the bank while many in the US cling to the doctrines of neoliberal economics.

    The United States has had a long succession of Presidents who buy this theory, each of whom has professed his faith that trade with China would eventually pay dividends, not only in terms of trade, but politically as well.

    While I don’t disagree that the US often looks out for its own interest around the world (a couple of recent wars come to mind), when it comes to business relationships with China (again, the topic of this article), the US has taken a very liberal approach.

    China, as you astutely point out, is a textbook picture of realism. But the thing about realists is that they assume everyone else is a realist. Their assumption is that the US does not buy its own liberal rhetoric, but is instead using it to try to take advantage of China.

  9. Mr Anderson (Delayed reply but still an interesting topic)

    There is no greater trade fiddle then printing dollars (quantitative easing) The US gets to do this with impunity because it’s the default global currency. Not because its finances are ship shape.

    All China is doing is exercising competitive advantage wherever it can. The US would like to think it’s benign but then the propensity for it to forget what is largely seen as manipulation is only exceeded by the scale with which it exercises that manipulation.

    Our greatest delusion is tying in freedom with prosperity and concluding that we;re all good. We’re not.

    The last to know it are the Americans and I’d argue the British.

  10. Mr. Frith,

    “All China is doing is exercising competitive advantage wherever it can.”

    Precisely. And the sooner the US realizes that, the sooner the US can start to consider its own industrial policy that favors US companies and US workers.

    Right now, China and the US are both playing for a win-win. Unfortunately our definitions of win-win are not the same. To the Chinese, it means they get to win twice.

  11. Mr Andersen

    That’s a much better definition that I wont argue with though I would say that Marx had some interesting things to say about capitalism eating itself too often to provide the stability that populations need.

    I’m just saying.