New data shows that over the past three years, China doubled the amount of oil it imports from Saudi Arabia, topping 1 million barrels per day in 2009. Meanwhile, the U.S. dropped below the same threshold for the first time since 1988. That's just one of several 2009 milestones marking the eastward rebalancing in the world economy:

  • The Chinese car market grew by 46% to become the largest car market in the world, ahead of the United Sates.
  • China was the largest source of foreign public stock offerings on U.S. exchanges last year, with 11 of 14 listings. Over the past five years, Chinese company initial public offerings raised $210 billion worldwide; American companies raised just $184 billion.
  • China passed Germany to become the world's largest exporter.
  • Japan just barely clung to its status as the world's second-largest economy in 2009, ahead of China. That status is unlikely to last another year. Adjusting for purchasing-power parity, China passed Japan some years ago.

"The Decade the World Tilted East"
In light of those facts, it's easy to see why Harvard financial historian Niall Ferguson recently penned an article in the Financial Times titled "The Decade the World Tilted East." China's economic achievements over the past three decades have been nothing short of remarkable. The rebalancing now occurring looks unlikely to reverse; a relative decline of U.S. economic standing appears inevitable. However, it is by no means assured that China will leap past the U.S. in absolute terms on a precise schedule that simply extrapolates recent growth rates.

China is an investors' conundrum, combining extraordinary potential with significant risks: ethnic tensions, corruption, and enormous disparities in wealth and income. Most participants are seduced by the country's self-explanatory growth story, focusing only on its promise while ignoring its pitfalls. Nevertheless, the range of valuations on individual stocks suggests that Chinese shares aren't currently in bubble territory:

Stock

Forward Price-to-Earnings Multiple

LDK Solar (NYSE: LDK)

25.6

AgFeed Industries (NYSE: FEED)

17.7

Yingli Green Energy Holding (NYSE: YGE)

15.2

JA Solar Holdings (Nasdaq: JASO)

12.5

Trina Solar (NYSE: TSL)

12.0

A-Power Energy Generation Systems (Nasdaq: APWR)

9.1

China Security & Surveillance Technology (NYSE: CSR)

6.5

*Based on the current fiscal year's estimated earnings-per-share. Source: Capital IQ, a division of Standard & Poor's.

Long-term participant, short-term contrarian
To balance risk and reward, I think the most sensible approach to investing in China combines:

  • A willingness to participate in China's long-term growth. Given the size of the opportunity, excluding China from one's portfolio looks like the greater risk. It is completely sensible for investors to seek exposure to China.
  • Tactical contrarianism/opportunism. China's economic rise isn't preordained, nor will it necessarily occur at a linear 8%-10% growth rate. Canny investors will seek to build their exposure during periods in which the Middle Kingdom encounters setbacks, investor sentiment turns negative, and valuations look attractive.

Another possible implementation of this opportunistic approach would focus on companies or industries that are relatively less high-profile. Everyone has read the accounts and seen pictures of gleaming skylines in the coastal cities at the fulcrum of China's development. But other things are taking place all over the country, in places that most investors would never dream of visiting.

Venturing off the beaten path
On a research trip last year, Motley Fool Global Gains co-advisor Tim Hanson searched for opportunities in rural China -- including time on the ground in inner Mongolia. One of the companies he discovered there was Yongye International, a small but well-run fertilizer producer with a huge potential market. Best of all, the stock was inexpensive. Apparently, fertilizer doesn't stir investors' imaginations in the same way online gaming or paid search does.

China's growth story will probably play out for years, with spurts and slowdowns along the way. So if you don't own a piece of it yet, you haven't missed the boat. However, it pays to begin implementing your China strategy within your portfolio today -- the opportunity is too large not to give it full consideration. If you'd like to see where the Global Gains team has been placing its bets in China, take advantage of a 30-day free trial now. You'll be able to see every stock pick, including a Chinese stock that has gained more than 500% since Tim selected it!

Fool contributor Alex Dumortier loves macro-themed investing; he has no beneficial interest in any of the stocks mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.