GE: Cool out about our China business deal

Engine giant General Electric says there's no need to worry about its relationship with China's AVIC aviation company, which it insists will not compromise any U.S. military secrets.

Virginia Rep. Randy Forbes, one of the top China skeptics on the Hill, demanded Oct. 17 that Secretary Panetta investigate GE's deal with AVIC to deliver avionics for China's home-built airliners. Forbes wrote that he was "deeply concerned" the technology at issue was too common with the GE-built equipment aboard the Air Force's F-22 and F-35 super-jets, potentially giving China an edge that may have cost the U.S. billions of dollars to get.

Not so, as GE told our distinguished colleague John Reed:

"Mr. Forbes did not have his facts right -- there is no correlation between the open-architecture operating system for the COMAC 919 to be provided by GE/AVIC and the avionics products provided by GE for the F-22," GE spokesman Rick Kennedy said in an email to Military.com.

GE also takes issue with Forbes' claims that the Pentagon and Commerce Department have failed to conduct a formal review of the joint venture. "The GE/AVIC deal -- which has been very public for almost two years --- has been thoroughly reviewed by the DoC and the DoD," said Kennedy. "In addition, GE spent two years meeting with every expert available before we entered this arrangement."

The Defense Department and Commerce Department have conducted informal reviews of the deal and said that no export license will be needed for the partnership.

In another place and time, this would be considered a win for the defense industry and Forbes, who is usually one of its biggest advocates. The industry and its allies are always complaining about stringent U.S. export regulations, which they say hamper their ability to do business internationally and only hurt U.S. firms by helping foreign companies compete.

Because this is about China, though, that whole playbook is out the window. There's a perception, perhaps a reasonable one, that China is already robbing us blind with its cyber-snooping. Plus critics say China holds foreign firms hostage if they want to do business there, forcing them to surrender proprietary secrets if they want access to its mega-market. Add it all up, and you get deep suspicion up on the Hill.

Remember when House lawmakers flipped out because of a Wall Street Journal story that said a Chinese firm hoped to bid on building a new Marine One presidential helicopter? There were a million reasons it was never going to happen. Then-Secretary Gates had never even heard of the idea before he was asked about it in a hearing. ("I'd be interested in the opinion of the Secret Service about that," he quipped.)

Still, there's a school of thought that the U.S. cannot even give China an inch, according to a report John quoted here:

Joint ventures with jet engine market leaders like General Electric (GE) have the potential to give the Chinese aerospace industry a 100 piece puzzle with 90 of the pieces already assembled. Enough is left out so that the exporting companies can comply with the letter of the export control laws, but in reality, a rising military power is potentially being given relatively low-cost recipes for building the jet engines needed to power key military power projection platforms including tankers, AWACS, maritime patrol aircraft, transport aircraft, and potentially, subsonic bombers armed with standoff weapons systems.

When your biggest potential adversary is also your second biggest trading partner, things get really complicated. Story Continues