WASHINGTON (Reuters) - General Electric Co (GE.N) believes China’s economy, a key source of revenue growth for the largest U.S. conglomerate, will slow this year but not substantially below 8 percent, said the executive who runs the company’s international operations.
“The growth rate in China is going to be a little bit lower than we thought a year ago. But still a very manageable, healthy if you will, 8 percent,” Vice Chairman John Rice said on Wednesday. “If it does drop below 8 percent for a while, that’s not the end of the world either.”
The world’s biggest maker of jet engines and electric turbines still expects to record double-digit revenue growth in the world’s second-largest economy this year said Rice, who is based in Hong Kong.
Multinational manufacturers including United Technologies Corp (UTX.N) and 3M Co (MMM.N) have already felt the pinch from Beijing’s efforts to dial back the recent torrid pace of growth in China to fend off any risk of the economy overheating.
Last year’s wave of popular uprising across the Arab world could serve to stimulate emerging-market spending on infrastructure equipment, as leaders realize the need to keep improving the lives of their populations, Rice said on the sidelines of a GE-sponsored conference on U.S. economic competitiveness.
“Somewhere between 25 and 30 percent of the world’s population lacks the basics (of modern technology) and the pressure to follow through on those investments, to create affordable power generation and reasonable health care got more acute last year during the Arab Spring,” said Rice, referring to uprisings last year that ousted the leaders of Tunisia, Egypt, Libya and Yemen and touched off Syria’s unrest. “Countries around the world saw what happened and they’re paying attention. In some places the infrastructure investments will be the last things cut in a downturn.”
GE makes electric turbines, water-purification systems, medical equipment and other infrastructure equipment that developing nations invest in as they industrialize.
GE believes that Myanmar’s diplomatic thaw could represent the opening up of an important new growth market, Rice added.
“It’s very interesting. I’m going there in a few weeks,” Rice said of the southeast Asian country, which Secretary of State Hillary Clinton visited in December — the first visit of that kind since 1955. “There are 60 million people in Myanmar. It’s an important country, there are natural resources and they are opening up. And we have to be prepared to support them in that process.”
The company sees an opportunity to boost its sales of wind and gas turbines in Europe over the next few years as some major nations scale back their reliance on nuclear power in the wake of Japan’s nuclear disaster, Rice said. Germany, for instance, last year shut down eight nuclear reactors after the Fukushima incident.
“As they take nuclear offline and need to find a replacement for that, that’s going to create opportunities for us in renewables and in natural gas,” Rice said.
That growth could come even as Europe grapples with a debt crisis, Rice said.
“Certainly GDP is going to be challenged in Europe for a while, but within that framework we think there’s still opportunities to grow,” he said.
GE generates about 60 percent of its revenue — forecast to hit $149.3 billion this year — outside its home country and about 70 percent of the heavy equipment orders in its backlog come from outside the United States.
The Fairfield, Connecticut-based company has forecast double-digit earnings growth this year, with robust demand from emerging markets, where its revenue was up 25 percent in the fourth quarter, offsetting weakening European demand.
Reporting By Scott Malone; Editing by Bernard Orr