For Jeff 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,” Mr. 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 Mr. 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 newfound 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, Mr. Immelt, a lifelong Republican, is matter-of-fact about China’s inevitable rise, Reuters reports.
Indeed, reflecting this pragmatism, GE is this week signing a joint venture agreement in commercial aviation with a state-owned Chinese company that — despite any risk of handing over advanced technology — will mean sharing some of the most sophisticated airplane electronics.
“It is going to be the biggest economy in the world,” Mr. Immelt said of China. “The only question is when.”
Underlining this new reality, Mr. Immelt spoke after attending a White House summit of U.S. and Chinese CEOs, and before a state dinner for Chinese President Hu Jintao in Washington.
In the American public discourse, the big strain in the American-Chinese economic relationship is the renminbi, and what many Americans view as the government-manipulated undervaluation of the Chinese currency.
Some U.S. businessmen — who share Mr. Immelt’s enthusiasm for the Chinese market — are so keen to court Sino-investors that they are reluctant publicly to criticize China’s exchange rate policy.
Mr. Immelt is bolder. He supports the open complaints from Mr. Obama and his administration about the exchange rate — but not why you might think. For the GE chief, the renminbi 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.
At a time of much worry that the American public debate is dumbed-down and parochial, the fact that currency exchange rates have become a populist issue says a lot about Americans, and their awareness of the impact of globalization.
Here’s how Mr. 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 Mr. Obama was right to complain, Mr. 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 Mr. 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 Mr. 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.”
If you stop to recall that just 20 years ago America was the proud victor of the Cold War, confident it could export democracy and free-market capitalism to the rest of the world, that is quite a concession, particularly coming as it does from a conservative, millionaire, college-football playing, Cincinnati-raised businessman.
But it speaks to Mr. Immelt’s belief — shared by other global-minded American businesspeople — that the defining challenge for America in the 21st century is understanding that “there are certain things that are taking place that you have to treat as real and important, and the emergence of the developing world is one of those.”
And Mr. 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 Mr. 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 Mr. Obama must be seen as trying to reduce stubbornly high unemployment.
Expect to hear more on Friday, when Mr. Obama and Mr. Immelt, who is a member of the President’s Economic Recovery Advisory Board, are scheduled to visit GE’s birthplace in Schenectady, New York, and talk about … how to create American jobs in the competitive global economy.