Bolstered in part by compelling valuations and recently announced reforms, including favorable alteration of the infamous one-child policy, China exchange traded funds have their groove back.

With Tuesday’s modest gain, the iShares China Large-Cap ETF (NYSEArca: FXI)  is now sitting on a 1.2% gain for the year. That does not sound like much, but consider that FXI was firmly in bear market territory in the second quarter after sliding more than 20% to start 2013. [Reforms Lift China ETFs]

The new db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) might just be one of the best-timed ETFs in recent memory. Not only has ASHR already accumulated more than $110.5 million in assets since its Nov. 13 debut, Monday marked the first day the ETF traded over 1 million shares.[China A-Shares ETFs Capture Investors’ Attention]

“The recent rise in ASHR’s trading volume continues to demonstrate the strong investor demand for this game-changing ETF,” said Martin Kremenstein, head of Passive Asset Management for Deutsche Asset & Wealth Management Americas, in a statement. “As reforms that favor foreign investment continue to be announced in China, we expect to see increased daily trading volume in ASHR, given its status as the first ETF to offer direct equity access to China A-shares.”

Even with Tuesday’s loss, ASHR has still gained 6.4% since its debut and despite the recent, intense rally for scores of China ETFs, some market observers see more upside.

“The massive upside reflects the significant de-rating of the China market. Currently, the P/B of H-share index is 1.24x as of last Friday, 27% lower than the long-term average of 1.7x. 2007 and 2008 are removed in the calculations of long-term average P/B as the valuation over most of these two years was extremely high. If our 15,000 index target is reached, trailing P/B and 2014E P/E would be re-rated to 1.7x and 9.0x (up from 6.4x currently), respectively. No matter what, the market can support a meaningful rebound in case long-term outlook of China improves,” according to a Credit Suisse note posted by Barron’s.