This just in: GE (NYSE: GE) is planning to merge with China.

OK, not really. It just seems that way, as the company pulls out all the stops in its China investment strategy. The recent announcement that it will move the GE X-ray unit's headquarters from Waukesha, Wis., to Beijing should have surprised no one who has been following the company's expansion plans.

Jack Welch, former GE chairman and CEO, once said: "If GE's strategy of investment in China is right … it is the future of this company for the next century." Jeffrey Immelt, Welch's successor, told a group in Shanghai last year that he is looking to deepen GE's roots in China. And this past January, he said: "It is going to be the biggest economy in the world. The only question is when."

If you can't beat 'em, join 'em
GE obviously takes China very seriously and already has dozens of wholly owned entities and joint ventures there. Here are a few arrangements it has made lately that the company says will produce over $2 billion in revenue:

  • GE and CSR, China's largest railcar maker, signed a deal to build high-speed trains for lines in the United States. It hopes to compete with Siemens (NYSE: SI) and Bombardier for bids on those projects.
  • GE teamed up with China Huadian to collaborate on heat and power projects.
  • GE signed an agreement with Jiangsu Tianue Energy & Chemical Group for advanced gas turbine power generators.
  • GE has joined up with Shenhua Group to develop clean-coal technology.
  • GE has formed a venture with Harbin Power Equipment for wind turbines.
  • GE and State Grid will develop smart-grid standards.
  • GE and Aviation Industry Corp. of China joined up to develop avionic systems and jet engines for China's commercial aircraft industry. United Technologies (NYSE: UTX) and Rockwell Collins (NYSE: COL) are also competing in this market.

And then there's the X-ray unit's move, which has already begun. It will be the first of GE's businesses based in China. The company says the purpose of the move is to help develop more medical equipment especially for the Chinese market, one it considers to be GE Healthcare's most important for growth. Competitors here would include Siemens and China's own Mindray Medical International (NYSE: MR).

Will it work?
At the end of 2010, Immelt noted that China sales had risen at a near 20% rate and should grow in the "high double digits" in 2011. Tall expectations, but GE had aimed high before in this market and come up short. It had once hoped for $10 billion in Chinese revenue by 2010 but came up with only $5 billion. And that was down from $5.3 billion in 2009. But GE has been in China since 1906, so I guess it's in there for the long term. Maybe one day Chairman Jeff's portrait will be displayed along with Chairman Mao's and Col. Sanders'.

You know, I completely forgot to mention that GE pays a nice 3.3% dividend, which is not bad for an income-producing investment today. Even better, why not grab a list of 13 other income-producing stocks?