Following are excerpts from the transcript of a CNBC interview by Geoff Cutmore and Steve Sedgwick, and John Rice, Vice-Chairman of GE.
GC: Good morning, John, nice to see you.
JR: Hi, Geoff.
GC: Thanks for coming and joining us at this time of the morning. So Sri led into us by saying there are still people out there who believe that China is not going to slow rapidly from here, and that we should stop being so negative about the Middle Kingdom. Just give us, very quickly, a thumbnail sketch of why we should be optimistic about China.
JR: Well, you know, Geoff, people have been predicting a hard landing in China for a long time, and we are of the view that a growth rate of 6% ish, maybe a little more, maybe a little less, it's the world's second largest economy, there's plenty of room for growth. If you're in the infrastructure businesses and you take a long cycle view, you have to bet on China. You have to be part of it.
GC: And they're going to buy some of your business, Haier stepping in where Electrolux weren't able to complete. Do you think this deal will get signed off at the government and at the regulator level? Because I know there will be concerns about selling anything to China, in the US.
JR: We believe so. We believe it's really a very good strategic fit. It's really good for our business and our employees in the United States, they're going to commit to keep the headquarters in Louisville, Kentucky, they're maintaining employment levels. They already have a manufacturing base, they're a credible US company, and they're a very progressive management team. I mean, if you look closely at Haier, they are doing things that a lot of companies around the world wish they were doing.
SS: But there will always be those, John, and good morning to you, who will use China relationships, or sales to China, as a stick to beat up people with, and actually beat the corporate sector with, and Donald Trump has been very aggressive about his language about Apple, not GE, and where they should produce iPhones, and their goods, as well. It's a lot more complicated than that, as you were saying to us off camera, but what do you say to those American politicians, and those with very loud stances in the US who say we shouldn't be doing so much with China, we shouldn't be exporting jobs to China, we shouldn't be producing American goods in China.
JR: We have thousands of jobs in the United States that exist because we can do business in China. In our jet engine business, our gas turbine business, our healthcare business, all of this, it's a global ecosystem, it's a global supply chain, and it feeds into our production, whether that production takes place in the United States or another country, and because we have access to markets like China, we can maintain and grow those jobs.
GC: The situation with the election this year does make closing of deals like Haier just a little bit more interesting, and a little more sensitive. Do you think there is a risk that Donald Trump, and others who want to bang this drum about America first, climb aboard your Haier deal and start to create problems?
JR: We're going to spend a lot of time with everybody who's interested in this to make sure that they understand the facts and the reason that this combination will help protect jobs in the United States and create a stronger business, and we think in the end that that logic will carry the day.
SS: John, let's move on to other issues, as well. You and I were at an event last night, and it was a fantastic event where a lot of people had some really good exchanges of views about other issues, and things that are very close to GE, as well, including the electrification of countries, as well. How is GE's power and electric portfolio looking at these lower oil prices, as well? How are your activities looking there? Is it less profitable? Is it more difficult to make money out of some of these areas because of what's going on in commodity prices?
JR: It's a complicated answer, right? At one level, it makes fuel costs low, but it gives governments that need to invest in some of these technologies less money to spend. So one of the challenges is how do you get capital and connect capital from where it is, and there's lots of it around, to the infrastructure projects around the world that need to be financed. So this shortfall of infrastructure investment that you hear a lot about, one of the big reasons is that things aren't getting financed the way they used to, and lower commodity prices, whether it's oil, gas, copper, iron ore, coal, really creates pressure on governments, and we've got to be creative in terms of how we come up with financing solutions.
GC: I had a very interesting interview yesterday with Mr Rajan at the Indian Central Bank, and I notice here in the conversations in the corridors, where people are saying, 'Maybe we're not going to put more money into China yet,' everybody's trying to work out how they can get an angle on India right now. GE's had business in India for a long time here. Just a thought on how well you think Mr Modi is doing with these reforms, because a lot of people are starting to scratch their heads and ask, 'So where's the delivery? Where's the implementation?'
JR: Reforms are hard. You're talking about big structural challenges that have taken decades, maybe centuries, to create. So unwinding them and fixing them takes time. We believe that the Prime Minister, and the rest of the Indian leadership team, is committed to do it, and when you look at the government of India today, it's a very competent group of people. We've been going there for a long time, as you mentioned, we've been doing business there, we won one of our largest orders ever at the end of the year, to modernise Freight Rail Locomotives. India is definitely moving forward, and, you know, we want to be part of it.
GC: And just a wrap up comment, or question. We have at the moment, as you've seen, tremendous volatility in financial markets right now, but there seems to be a bit of a disconnect between how financial markets are feeling and how some corporates are doing, and GE's stock prices, back where Steve and I used to buy it when we were still part of the family here, obviously it's been a big ride over the last 10 years for GE, but things look a whole lot better now that the group has slimmed down. John, just talk to that. How disconnected is the nervousness over financial assets and the actual economic activity that you're engaged in.
JR: Well, you know that you can still buy GE stocks, so feel free.
SS: Yes, we don't get that company discount any longer!
GC: We don't get the discount, John!
JR: Feel free. It's the difference between the headlines and the facts. When you look at the headlines, there is a lot to be anxious about. When you look at the facts, in our world, we've concentrated our capital on technology infrastructure businesses, we're moving away from financial services in a world that needs infrastructure, so we had some of our biggest years ever in countries last year that are in the middle of this geopolitical tension and where you see all the negative headlines. So if you're in the right businesses, and doing the right things, there's still business.
GC: Nice to have you with us John, thanks so much for coming down so early in the morning for us.