WASHINGTON, D.C. – Looking for a growth market in China? Try stock markets. 

The Chinese government is “going to have to build up bigger equity markets inside China to create the securities that pools of capital need to have,’’ Goldman Sachs Group chief executive Lloyd Blankfein said Thursday at the general membership meeting of the fund industry’s advocacy group, the Investment Company Institute.

“The pools of capital in turn will fund Chinese growth,’’ he said.

Right now, he said, “the infrastructure for a market system is not there.’’

But the “pretty impressive” growth that has taken China’s gross domestic output from $488.2 billion in 1992 to $7.7 trillion in 2012 and an estimated $8.7 trillion this year, will need capital market support, Blankfein said, if China’s leaders want the outlook to keep up for 20 more years.

Some of the challenges facing China include a rapidly aging population, a political and economic divide between urban and rural residents, and possible social unrest from citizens “yearning for financial opportunity” and accountability, said ICI chief executive Paul Schott Stevens, in the on-stage conversation with Blankfein.

But those problems also translate into opportunity, Blankfein said.

“The population means that they are going to have to go out and create social services. Which means they’re going to have to create pools of capital,’’ said Blankfein.

Creation of the pools of capital also mean Chinese companies will need to “go to the outside world and issue their equity on the Hong Kong market,’’ he said.

But Chinese leaders also are “going to have to build up bigger equity markets inside China to create the securities that pools of capital need to have,’’ he said. “The pools of capital in turn will fund Chinese growth.’’

What – or who? -- could help jumpstart that process? Not the average Chinese citizen with his or her savings.

“You have a remarkable situation now where the Chinese can put money in a savings bank at no interest,’’ he said. “The only people who can really invest in China … are (a firm such as) Goldman Sachs,’’ which could invest in one of China’s state-run investment corporations.

The next year in China, though, “kind of confuses me,’’ Blankfein said. “There’s not a lot of visibility. The market doesn’t tell you things, like it does here.’’

So Goldman Sachs stays invested in Chinese companies, “but we watch how much we have in the country,’’ he said.

The investment banking operation of Goldman is constantly financing and investing in Chinese firms, carefully, he said. Because it does not want to have to pull back or out, if a major economic crisis should emerge.

“When we invest, we also sell other things,’’ he said. “And we try and keep a level of risk in that country that we think we can support under even dire circumstances.’’’

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