Jun 01, 2012 03:49 PM

A Point Man's Talking Points


It started with a deal that has left a lasting impression. The entrance of Goldman Sachs in China began in 1997 when it was hired as the lead underwriter for China Telecom's listing in Hong Kong and New York. The deal was a milestone for Chinese companies listing overseas.

After the debut, then vice premier Zhu Rongji said in a meeting with Goldman Sachs executives: "I heard you have a great banker who accomplished this project. Who is he?"

The chief operating officer of Goldman Sachs at the time, Henry Paulson, pointed to Michael Evans. The vice premier then posed another question. "How many such people do you have?"

"Only one," replied Paulson.

Evans could be called one of the most experienced bankers in China. Since 1997, he's maintained a steady involvement in several of the company's major deals in the country.

In 2001, he became co-head of the company's equities division, and in 2003 began working as the global co-head of Goldman Sachs' securities business. Evans was named chairman of Goldman Sachs Asia Pacific in 2004 and vice chairman of the firm in 2008. In January 2011, he was appointed global head of growth markets.

In a recent interview with Caixin, Evans shared his thoughts on China's economic outlook. When asked whether he believes China needed another round of stimulus to save it from a hard landing or if the economy could see a painless transition his reply was, "Neither."

Excerpts of the interview follow:

Caixin: China has set its GDP growth target at 7.5 percent. It seems China's growth is slowing down to roughly 7 percent. Would you say it's a temporary slowdown or a new normal.

Evans: First of all, the target of 7.5 percent is just a target. Secondly, if you look at the targets that have been established in the past, whether it is part of the five-year plans, those targets have always been low, relative to actual performance. So there aren't necessarily correlations between the target that has been set and where the economy will ultimately end up. I think people believe that China's economy is slowing; the big debate is by how much. We are probably more optimistic than a number of other market participants. We think growth may slow a little bit in the second quarter, so our forecast for the rest of the year continues to be above 8 percent. So we're not as concerned as others are about a "hard landing" or a significant slowdown in the Chinese economy. Clearly events in Europe, events in other parts of the world, will affect the economy, and they'll probably slow as opposed to growing more quickly, but not in a significant way.

Today there are at least two different schools of thought on the current Chinese economy. One is that it is collapsing; we need another huge round of stimulus. Others think this is a normal restructuring. Maybe now it is painful, but we should not panic and kick off another round of huge stimulus to further distort the economy. Which group do you support?

Neither. I think that are lots of different views about what's going on in the Chinese economy. There are views internally and there are views externally. Some people externally are more positive, and believe the growth will slow but still remain high. The biggest issue I think is the rebalancing of the economy, which people have been talking about for a long, long time. And I think that rebalancing is happening.

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