China has been a relative laggard compared with the broader Emerging Markets indices for much of 2012, but the country’s equity market has all of a sudden caught a bid in recent weeks and is making a significant move.

Some market prognosticators have pointed to China’s recent equity strength as a reflection of an improving economic picture in China, and there has also been some commentary regarding China’s rally as an indicator that market participants believed the move precluded a potential Obama U.S. Presidential victory. [Investors Jump Into China ETFs]

The iShares FTSE China 25 (NYSEArca: FXI) is the largest ETF in the space in terms of assets under management with more than $6 billion currently, and the fund is now up 9.29% YTD with much of this move occurring over the past month (FXI +7.71% in the trailing one month period). [Small-Cap China ETF Rallies]

YTD, China appears to be narrowing the gap that has existed throughout most of 2012 in terms of head to head performance versus the broader MSCI Emerging Markets Index, as EEM (iShares MSCI Emerging Markets) is up 11.07%, mildly outpacing FXI.

China is the single largest weighting in the MSCI EM Index, at 18.90% currently. FXI, although it is the largest ETF in the China segment, largely does not provide a very high level of diversification because the fund holds only the largest cap names in China and has a walloping 57% weighting to the Financial Services sector within the country.

Other prominent ETFs that offer exposure to the Chinese equity market that will likely be in focus as well as China’s equity market improves include GXC (SPDR S&P China), MCHI (iShares MSCI China), PGJ (PowerShares Golden Dragon China Portfolio), YAO (Guggenheim China All Cap Fund), FCA (First Trust China AlphaDEX) and FCHI (iShares FTSE China).