NEW YORK - General Electric (IW 500/6) will sell its appliances business to China's Haier Group for $5.4 billion, it said Friday, in one of the largest Chinese acquisitions of an American firm yet.

The transaction epitomizes the changing nature of the global economy, with a 100-year-old U.S. company selling what was once one of its core units to a Chinese upstart that emerged from a refrigerator factory that was nearly bankrupt 30 years ago.

Haier (IW 1000/407) is seeking to establish itself as a global brand, while China is looking to re-balance its economy more towards consumption and away from the infrastructure and investment-driven model of the past.

The Chinese firm was "committed to growing the business globally," GE Chairman and CEO Jeff Immelt said in a statement, calling the agreement "a good deal which will benefit our investors, customers and employees."

GE had previously been due to sell the unit to Swedish rival manufacturer Electrolux for $3.3 billion, but the deal ran into opposition from U.S. competition authorities.

Haier Group is China's second largest electronics manufacturer, and emerged from the Qingdao Refrigerator Factory, in the eastern port of the same name, which its CEO Zhang Ruimin was appointed to run in the mid-1980s.

Zhang is renowned for his reaction to a customer complaint, when he examined the firm's warehouse and found 76 fridges out of more than 400 in stock were substandard.

He ordered the personnel to smash them to pieces, personally leading the destruction with a hammer.

"If I allow the 76 fridges to be sold, it would imply that I would allow 760 or even 7,600 such substandard fridges to be produced tomorrow," he was quoted as saying by the official news agency Xinhua.

The tool Zhang wielded is now in a national museum, Xinhua said.

Haier's methods have been studied in business schools including Harvard, but its exact ownership structure remains opaque.

Officially, the group is divided into several units that are collectively owned. It has two quoted subsidiaries, Haier Electronics in Hong Kong and Qingdao Haier in Shanghai -- which is the vehicle for the GE acquisition.

Haier has close ties to the ruling Communist Party, and Zhang Ruimin an alternate member of the party's elite central committee.