Opinion

Chrystia Freeland

GE’s Immelt speaks out on China, exports and competition

By Chrystia Freeland
January 21, 2011

UPDATE — Since I wrote this column early on Thursday morning, my prediction (in the final paragraph), that we would today hear more about Immelt and his ideas on how to create U.S. jobs has been vindicated: President Obama this morning appointed Immelt to lead his outside panel of economic advisers. To hear more from Immelt, watch my exclusive interview with him here.

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For Jeffrey Immelt, the CEO of General Electric, the 130 year-old American industrial behemoth, the financial crisis marked the end of the age of America’s economic dominance.

“I came to GE in 1982,” Immelt told me this week in Washington. “For the first 25 years, until the bubble crashed in 2007, the American consumer was the definitive driver of the global economy.” But Immelt said the future will be different. For the next 25 years, he said, the American consumer “is not going to be the engine of global growth. It is going to be the billion people joining the middle class in Asia, it is going to be what the resource-rich countries do with their new-found wealth of high oil prices. That’s the game.” A lot of that game will be played in China. At a moment when it is compulsory on the American right to pay homage to the exceptionalism of the United States, Immelt, a life-long Republican, is matter-of-fact about China’s inevitable rise.

“It is going to be the biggest economy in the world,” Immelt said of China. “The only question is when.”

In the U.S. public discourse, the big strain in the American-Chinese economic relationship is the yuan, and what many Americans view as the government-manipulated undervaluation of the Chinese currency.

Some U.S. business people—who share Immelt’s enthusiasm for the Chinese market—are so keen to court Sino-investors that they are reluctant to publicly to criticize China’s exchange rate policy.

Immelt is bolder. He supports the open complaints from Obama and his administration about the exchange rate – but not why you might think. For the GE chief, the yuan is a valid focus of U.S. economic policy, not because of its impact on his company’s bottom line, but because of its impact on American public opinion.

Here’s how Immelt explained GE’s perspective: “Is it the one, two, three, four or five issue for GE? It isn’t, because we make and sell things in so many different countries around the world.” Yet Obama was right to complain, Immelt added, because “it’s important for the President to do the right things inside our country so that people feel like China can be a partner, and if it means sometimes you have to talk tough … then I want the President to do that.” But the GE chief had a warning for those Americans tempted to attribute China’s rise, and possibly their own country’s economic malaise, to the Chinese exchange rate.

“If the American people sit back in the comfort of their home, whether it is in Ohio or New York state, and think that the only reason the Chinese succeed is because of the cheap currency, they’re missing the point. And I think that’s dangerous.” The China challenge, in Immelt’s view, is about much more than a manipulated exchange rate and “cheap labor.” “It is the adaptability, it is the speed with which they move, it is the unanimity of purpose, it is the productivity of thought,” he said, adding that when he visits his interlocutors at the Ministry of Railways in Beijing, the mandarins are at work on Sunday.

Nor does Immelt flinch when, in conversation, it is suggested that this “business model that works for them” is Communist authoritarianism. “That has been very effective,” he said. “They’re in their 12th five-year plan and they’ve done quite well.”

Immelt thinks he knows what America needs to do to thrive in this changed world. “If you want to be a great country, which the U.S. has every right to want to be, you have got to be thinking about being a better exporter,” he said. “Our only destiny can be as a high-tech exporter, that creates jobs, high-paying jobs … Export-led growth is the key to national success.” Happily for Immelt, that national destiny would be very good indeed for high-tech manufacturers, like – to take one not very random example – GE.

Both the approach, and the man who advocates it, are finding favor in a White House keenly aware that Obama must be seen as trying to reduce stubbornly high unemployment.

Expect to hear more on Friday, when Obama and Immelt, who is a member of the President’s Economic Recovery Advisory Board, are scheduled to visit GE’s birthplace in Schenectady, N.Y., and talk about … how to create American jobs in the competitive global economy.

Comments
3 comments so far | RSS Comments RSS

We can take Immelt at his word: He is positioning GE to win in China. He wants to win even if the Untied States loses. But can he play on both teams?

Should such a man be allowed to have any say at all in the strategy deliberations about United States trade policy?

Also, implicit in Immelt’s position is real danger that could easily lead to incredible disaster in the United States and the world. Immelt’s obfuscation about “cheap labor” is deeply disturbing. The United States was almost destroyed by the Slavery Question once before in a terrible civil war. Now, once again, we have profit seeking executives, many of whom do not KNOW their own country’s history, betraying the American commitment to Freedom itself. Americans hate slavery and will react with total anger when the discover what is being done to them by it.

The PRC is NOT a source of “cheap labor”. It is the home of Slaves owned by the CPC of the PRC. When Americans gain this knowledge, Immelt and his progeny may rue the day that they failed to take a stand. No matter what the future holds, Immelt and his supporters will deeply regret their lack of introspection on this point.

What Immelt avoids is the issue that HE KNOWS is arriving in the West with horrible and stultifying potential. There are 400 MILLION MORE slave workers standing on the sidelines in China’s interior. When this huge mass walks onto the Manufacturing playing field, then will Immelt and his apologists be thrown into the gutter by their fellow CPC “mangers”?

Posted by SuperMike1661 | Report as abusive
 

note to Reuters staff:

Thanks for posting this. It WAS pretty incendiary, but it is something that Western readers need to know.

Also, I understand the “homer” nature of the Business Press, but Freeland’s interview, on this hugely important subject, was not her greatest day. Well, I must say that she DID press him on the difference between “political” communication. and “real” communication… at least.

Finally, unlike Jack Welch, Chairman Immelt is an earnest man who has not taken well to the hundreds of hours of PR and speaker training that he has received over the years (a key reason the Immelt was chosen to head the firm is because of his “honest face” and demeanor that lets him “sell” for a company that has always valued its public image, e.g. Reagon). But in this interview, Immelt fails miserably at disguising his own mixed feelings about what he is doing to his country and his father’s company.

mike cahill

Posted by SuperMike1661 | Report as abusive
 

This may sound very politically incorrect, but why are we educating the best of India and China in the US and then training them in our companies? They do not seem to appreciate it. They only seem eager to compete with us.

Where would they be if we did not educate them, train them, outsource to them and buy their goods? Donald Trump is right. They cannot believe what they are getting away with. We better start waking up. I bet atleast 75% of the young Indian and Chinese participants at Davos were educated in America.

Posted by elainedecoulos | Report as abusive
 

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