As CEOs descend to pay tribute to China in the White House and all Hail the Chief at a Celebrity filled state dinner, the American people are once again left out in the cold. Literally, Barack Obama denies China has captured American manufacturing and our jobs along with it.
Obama and Hu greeted the CEOs in a room in the Eisenhower Executive Office Building (the mammoth building next to the White House that looks like a Victorian-era hotel) and made a few remarks before leaving for their presser.
“I think our goal here today was to make sure that we break out of the old stereotypes that somehow China is simply taking manufacturing jobs and taking advantage of low wages,” thereby straining the U.S. employment base, Obama said. “The relationship is much more complex than that, and it has much more potential than that.”
“I also have a message to American entrepreneurs,” Hu added. “That is, we welcome you as companies to China….We will, as always, try to provide a transparent, just, fair, highly efficient investment climate to U.S. companies and other foreign companies.”
Nice huh? China wants what is left of American innovators. Obama rolls out the red carpet to have a meet and greet.
While announcements of $45 billion in exports to China are a nice sound byte, the reality is these are deals with companies such as G.E. & Boeing and Caterpillar, who already offshore outsource to China. Now it seems they are giving away critical advanced technology:
The lure of vast state subsidies for Chinese industry is too tempting for US companies to resist. In exchange for these investments and joint ventures, US firms are compelled to give up sophisticated technology that the Chinese have yet to develop for themselves. One side is playing a short-term gain, while the other is looking for a long-term advantage.
General Electric Co. (NYSE: GE), Alcoa, Inc. (NYSE: AA), Duke Energy Corp. (NYSE: DUK), American Electric Power Co. (NYSE: AEP), and Boeing Co. (NYSE: BA) all have new agreements with China. Alcoa, for example, said it will partner with Chinese companies on $7.5 billion in clean energy projects to reduce the pollution associated with aluminum smelting. Making aluminum requires enormous amounts of electricity, most of which China generates using coal. The Chinese want to work on wind- and solar-energy projects that will reduce the demand for coal in smelting.
GE will collaborate on combined heat and power gas turbines and coal gasification plants that are expected to generate some $650 million in revenues over the next five years or so. GE wil also sell some locomotives to China and create a joint venture to help develop a high-speed rail system in China.
By far the most important deal is a joint venture to supply avionics systems for China’s planned C919 passenger plane, a contract that could be worth up to $2 billion.
That avionics deal makes available technology now used by Boeing in its most advanced passenger planes available to a Chinese company that is expected to become a Boeing competitor in the middle of the current decade. There is also a concern that GE’s avionics technology could be use in China’s military aircraft.
JVs, or Joint Ventures means jobs in China, manufacturing in China and worse of all, agreements to share know-how, advanced technology. In other words, to make some short term profits and get to that Chinese mythical consumer market, U.S. multinationals will sell their souls, their country, their workers and their mother. G.E. just did and they are not the first.
The good news is the mainstream Financial Press is really starting to get they literally are destroying the U.S. economy with these sorts of moves.
General Electric (GE) plans to sell its aircraft electronics to Chinese companies, and if you don't have a problem with that, maybe you should. After all, China just flight-tested a prototype stealth fighter (pictured), it continues to build up its military -- and we can only hope it's not planning to expand its territory in ways that threaten the U.S.
But if China does decide to get aggressive with the U.S., GE will have provided it with the aircraft technology it will be using.
According to The New York Times, GE is signing a deal to sell avionics technology -- electronics that control an aircraft's basic in-flight operations -- to Commercial Aircraft Corp. of China (CACC), which aspires to build commercial and military aircraft. GE will do this through a joint venture with a Chinese company, Aviation Industry Corp. of China (Avic). Avic makes avionics for CACC and for China's military -- including its stealth fighter.
Sure, GE is based in the U.S., but that doesn't mean its shareholders expect it to be loyal to U.S. interests. Still, selling technology it developed for U.S. companies like Boeing (BA) to Boeing's Chinese competitors -- which are trying to build a competing aircraft company -- may be going too far.
This Washington Post piece says it all:
The right response to these challenges would be for the president this week to laud China for the success of its economic policies and announce that the administration will begin forthwith to apply each and every one of them to Chinese exports into the United States. Subsidies and directed credit for local companies, buy-American provisions for government agencies and government contractors, currency manipulation, the rules on "conditional market access" and "indigenous innovation" - surely China could hardly complain if we were to pay them the highest compliment by embracing their economic model.
It's no accident that Obama's three state dinners are for most notorious offshore outsourcing destinations, Mexico, India & China. Remember we heard the same bold face job lies, gift wrapped outsourcing deals, during India's State Dinner. What was that official United States unemployment rate again? Shhh! We're being eaten.