The Year of the Ox may be the Year of the Bull instead. Among the reasons to like China as an investment opportunity include:

• On an annualized, quarter-over-quarter basis, fourth-quarter growth was around 4%, indicating a growth pattern.
• Industrial production and imports are growing relative to exports and their trade surplus, which has begun to shrink dramatically.
• About 6.7 million jobs have been created, and the job market remains strong and supportive.

In the long run, China is at a fork in the road.

Chris McMahon for SFO Magazine reports that if China’s recovery and strengthening are based on less reliance on low-cost exports, that shift would obviously increase the cost of goods for consumers in the United States and elsewhere. (Issues that could hinder a recovery).

On the other hand, a stronger domestic Chinese economy could put upward pressure on commodity prices and choke off a recovery in the rest of the world’s economies. (Other reasons China’s economy is faring well).

For more stories about china, visit our China category.

• SPDR S&P China (NYSEArca: GXC): up 64% year-to-date

• iShares FTSE Xinhua/China 25 Index (NYSEArca: FXI): up 54.9% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 62.7% year-to-date

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO): recently launched

The U.S. trade deficit grew to a more-than-expected $36.5 billion in September, and 60.5% of the deficit was to China alone, writes Justin Fox for TIME. The U.S.-China economic relationship won’t be resolved anytime soon because of U.S.-based corporations selling products that were partly or entirely made in China. The more important fact, however, is that there is no way to ignore a rising political and military power like China. (Reasons to watch China).

The trade model between China and the United States remains unchanged, with China keeping the yuan artificially low and focusing on its export industries while the United States incurs a higher trade deficit and more debt, remarks Mark Trumbull for The Christian Science Monitor. (Is a strong Chinese yuan a good thing?)

Obama has not shown any pushback against China’s seemingly non-free market policies, despite promises on a tougher stance on China. However, economists are doubtful that any pushback would occur, citing several reasons:

• The tougher approach could result in higher-priced goods for U.S. consumers and the protectionism would rapidly spread to other nations, putting up trade barriers.
• China’s manufacturing power is not slowing one bit.
• An adjusted yuan won’t necessarily help U.S. manufacturers.
• The United States doesn’t have much leverage on China since China is the country’s main lender.

U.S. trade representative Ron Kirk stated that the United States wants trade and investment barriers removed to promote an open global trade system and Obama wants the United States to pursue “pragmatic cooperation” with Beijing, according to BBC News. Obama also urged Asian countries to break away from their dependence on exports and pursue “balanced,” sustainable growth.

For more information on China, visit our China category.

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 58.2% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 66.8% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 65.9% year-to-date

• Claymore/AlphaShares China Small Cap (NYSEArca: HAO): up 96.5% year-to-date

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO): recently launched

Max Chen contributed to this article.

Many politicians and intellectuals feel that the balance of power is shifting from the United States to China and some believe that the co-operation of the near-equals could solve world’s woes, according to The Economist. (Reasons to watch China).

China is the world’s biggest holder of American debt, which gives the country a unique hold on the American economy and reserve-currency status. Nevertheless, China will continue to lend to America and talks about the Chinese yuan becoming a world reserve currency may be just that.

With the Occident in a less-than-satisfactory state, Chinese companies may push to lift the trade barriers on high-technologies imposed by the West and start to court America’s high-tech industries. Perhaps, China may soon have a more permanent presence in the United States in areas such as the car industry.

Some Chinese leaders have voiced caution over the stability of China’s recovery. Yu Yongding, former adviser to China’s Central Bank, argues that wasteful spending on unnecessary infrastructure projects could drain the country’s fiscal strength, which would leave China with “no more drivers for growth.” (Things China needs to grow).

China is still grappling with many issues that need attention inside the country including rising protests, corruption, surging crime and leaders who fear their own citizens. If you’re invested in China, be sure to have a strategy for both entry and exit. It’s a country with tremendous growth potential, but it’s not without its issues, either.

For more information on China, visit our China category.

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 57.3% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 66.2% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 62.5% year-to-date

• Claymore/AlphaShares China Small Cap (NYSEArca: HAO): up 93.3% year-to-date

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO): up 7.1% in the last week; YAO launched on Oct. 19 (read about it here)

Max Chen contributed to this article.

According to Patricia Oey at Morningstar, China’s Shanghai Composite Index is up 60% year-to-date, the nation is expecting to see GDP grow by 8% and price/earnings ratios for China ETFs are at year-to-date highs, around 18 times trailing 12-month earnings, but still below highs of around 28 times, reached in 2007. (How to play China).

When considering China it’s important to keep in mind both the political and economic risks involved in investing in an emerging market.  With the vast array of ETFs on the market, China is relatively easily accessible. (China in a bubble?)

For more stories on China, visit our China category.

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 52.5% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 61% year-to-date; heavily weighted in financials, telecom and energy

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 60.7% year-to-date; enables investors to invest in companies listed in the United States

• Claymore/AlphaShares China Small Cap (NYSEArca: HAO): up 91% year-to-date and offers investors fairly balanced sector weightings

• Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO): YAO launched on Oct. 19 (read about it here)

Kevin Grewal contributed to this article.

Xiong Bilin, a top economic planner, said the growth rate for January-September would be more than 7%. September showed improving trade, housing sales, manufacturing and car sales, reports Elaine Kuternbach for Associated Press. The official numbers will be released tomorrow. China is also on pace to surpass its target growth rate for 2009. (Is China in a bubble?)

Such growth is helping offset falling trade and export numbers, reports Elyse Andrews for Cabot. Other facts continue to support the health of China’s economy, according to The CIA World Factbook:

• The opening of trade routes in the 1970s, and a market-oriented economy has taken China’s growth from a centrally-oriented system to a world power.
• The currency has been tightly linked to the U.S. dollar, however, re-valued currency has taken the renminbi up 2.1% against the dollar.
• In capital terms, the country is still lower-middle income dominated. The government faces challenges to sustain this and keep growth moving in the right direction.

How to play China with ETFs:

• Claymore/AlphaShares China All-Cap (NYSEArca: YAO): Began trading on Monday; the fund had trading volume of more than 1.3 million shares, making it the 11th largest first-day volume for a U.S.-listed ETF ever. (Read more about this ETF).

• Claymore/Alpha Shares China Small Cap (NYSEArca: HAO): up 88.7% year-to-date; small caps tend to do better in a recovery than large caps because they’re more nimble and quicker to react to changing economic conditions. (Read more about small-caps).

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 54.2% year-to-date

• SPDR S&P China (NYSEArca: GXC): up 62.5% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 64.6% year-to-date

For more stories about China, visit our China category.

The trade disputes between the United States and China are likely to ripple throughout markets, however, major impacts will be felt in the United States as the supply of cheap goods could drop off. Daniel Harrison for Index Universe explains that investors in China will begin to get squirmy if the dispute worsens, as income from exports won’t hold up as firmly as they did at the start of the year.

Analysts say that China is working overtime to try and stimulate their economy by as much as 30% in an effort to reach an 8% return on GDP growth. The size of its stimulus package has left China wanting income so they don’t get left “holding the bag” someday.

Watch the trend lines as this situation develops, and have an exit strategy if the situation worsens:

• iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 51.9% year-to-date

• PowerShares USX Golden Dragon Halter (NYSEArca: PGJ): up 61.1% year-to-date

For more stories about China, visit our China category.

U.S. economic activity has been slow to recover, but China, the world’s second-largest oil consumer, is once again putting its economy on a path to growth. This growth is having an impact on oil prices. China’s oil refiners  operated at a record rate in June, drawing down crude inventories, though stockpiles are still nearly 10% higher than they were last year, explains Madalina Iacob for The Wall Street Journal.

• United States Oil (USO): up 13.7% year-to-date

Rana Foroohar for Newsweek reports that China may soon surpass Japan economically, and it is only matter of time before they do so politically. Japan, which was once the second-largest economy after the United States, is  nervous about being displaced by China. Japan has only recently emerging from their “lost decade” of the 1990s.

• iShares MSCI Japan (EWJ): up 3.4 year-to-date

Indicators such as China pushing crude oil futures prices higher are reinforcing the other efforts made by China to secure their spot as a world power, second only to the United States.

• iShares FTSE/Xinhua China 25 Index (FXI): up 43.7% year-to-date

• SPDR S&P China (GXC): up 50.7% year-to-date

• PowerShares Golden Dragon Halter USX China (PGJ): up 59.5% year-to-date

For more stories about China, visit our China category.

Talks between the United States and China are going to focus on the global economy, economic policy and the ill-at-ease feeling Beijing has about holding U.S. bonds. David Pierson and Don Lee for The Los Angeles Times reports that Washington’s desire to reduce China’s reliance on exports and the need for both sides to reach consensus on tackling climate change will also be tackled.

Steve Chiotakis for Marketplace reports that Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner co-chaired the two day talks. Other major topics include:

• Major overhaul within environmental policy
• Beijing’s economic reform to focus on domestic consumption, rather than exports
• The U.S. economy and stimulus plan must make progress, as China is deeply concerned about bonds and financing
• The strength of the U.S. dollar bears weight upon China’s record $801.5-billion holdings in U.S. Treasuries

Ultimately, China may find the talks reassuring. President Barack Obama told officials that the dollar is sound, their investments are secure and that the United States is working feverishly to fix its economy. Obama stressed the need for cooperation between countries. If his words have an impact, a mutually beneficial future may be in order.

• iShares FTSE/Xinhua China 25 Index (FXI): up 47.9% year-to-date

• PowerShares Golden Dragon Halter USX China (PGJ): up 57.7% year-to-date

For more stories about china, visit our China category.

The second-quarter reports from China show a GDP growth of 7.9%, exceeding the 7.8% ballpark figure from Bloomberg analysts. Bloomberg news reports that China has officially exceeded Japan as the globe’s second-largest stock market, measured in value.

The $585 billion stimulus package appears to be having a positive impact upon the economy, by encouraging lending and adding to share prices. The government now seems likely to achieve the full 8% full yer growth target set earlier this year, reports David Barboza for The New York Times.

Although the general sentiment is positive, there will still be a few challenges ahead to keep the growth on its path:

• Uncertainty about the banks and worries that lending could result in wasteful spending, inflationary pressures and bad loans;

• State-owned banks have played a major role in the recovery rather than government financing, and exports aren’t a role in the recovery;

• Weak electricity consumption numbers and a drop-off in foreign investment shows growth may not be as strong as official data reported;

Nonetheless, the signs of strength outweigh the weakness, and the recovery in the country is remarkable, considering that most China ETFs were down about 50% in 2008.

• SPDR S&P China (GXC): up 38.9% year-to-date

• PowerShares Golden Dragon Halter USX China (PGJ): up 41.5% year-to-date

• iShares FTSE/Xinhua China 25 Index (FXI): up 35.3% year-to-date

For more stories about China, visit our China category.

The nation has started to adopt policies that aimed at encouraging exports while curbing imports by expanding three programs to help exporters, states Keith Bradsher of The New York Times. The three programs include offering large tax rebates, more generous loans from state-owned banks to finance trade and more government paid travel to promote themselves at trade shows around the world.

In an effort to strengthen its own exporters, China has gone as far as to limit the amount of certain raw materials that can leave the country.  To stir up even more controversy, provincial governments have cut back on their enforcement of counterfeiting laws other intellectual property protections, making imports less appealing because of higher costs than Chinese counterfeits.  Lastly, China has halted the rise of the renminbi against the dollar by intervening heavily in currency markets, dumping billions in renminbi and buying dollars and other currencies.

On the one hand, these acts and policies can help ensure that China’s economy will continue to grow. On the other hand, it will increase global trade tensions at a time when more countries are resorting to administrative measures to restrict trade and the World Trade Organization has warned against protectionism. The European Union has already filed a complaint with the WTO accusing China of limiting exports such as zinc and bauxite, of which China is the world’s largest producer, to give an unfair advantage to Chinese manufacturers that use the materials.

• iShares FTSE/Xinhua China 25 Index (FXI): up 30.9% year-to-date.

• SPDR S&P China (GXC): up 34.2% year-to-date

• PowerShares Golden Dragon Halter USX China (PGJ): up 40.9% year-to-date

For more stories on China, visit our China category.

Kevin Grewal contributed to this article.