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General Electric Jet-Engine Exports to China in Jeopardy as White House Mulls Ban

The Trump administration is mulling a ban on sales of jet engines co-produced by General Electric for a new jet in China. Such a move would dent one of GE's strongest divisions.
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General Electric  (GE) - Get Free Report shares slipped after a report said the Trump administration is thinking of banning sales of jet engines co-produced by GE for a new jet in China.

The move would pressure GE, as its aviation division is one of its strongest performers. 

Last year, that unit climbed above the troubled power segment to become the Boston industrial giant's largest division, with annual revenue of more than $30 billion and a 21.2% operating margin.

After hitting $40 in October 2007, GE’s stock dropped to $6.75 in December 2018 amid woes in its power and finance units and excessive corporate spending. 

The shares have rebounded as Chief Executive Larry Culp has engineered a turnaround.

The White House wants to keep CFM International, a joint venture of GE and France’s Safran  (SAFRY) , from exporting more of its Leap 1C jet engines to China, people familiar with the matter told The Wall Street Journal.

The Asian nation is using the engines as it develops the Comac C919 plane, which is years behind schedule.

The Trump administration worries that China could reverse-engineer the CFM engines and then make them itself, according to the Journal. That could boost China’s exports.

The White House also hopes to undermine development of China’s new jet, the sources said. China wants the plane to compete against Airbus's  (EADSY) - Get Free Report and Boeing’s  (BA) - Get Free Report narrow-body planes.

GE is trying to dissuade the administration from acting, the sources said. GE officials weren’t immediately available for comment.

GE shares at last check stood at $12.76, off 0.6%.

The author of this story owns shares of GE.