While China may be the last letter in BRIC, it's at the top of the list for many global investors. And China-focused exchange-traded funds ( ETFs) are proving to be an efficient and rewarding way to invest in this highflying emerging market.

The BRIC Buzz

The "BRIC" countries are Brazil, Russia, India and China. What do they have in common? According to analysts from almost every financial powerhouse in the world, the BRIC countries are the four emerging-market economies that are predicted to grow the fastest and most robustly over the next several decades.

That means an investment in a BRIC country today could outpace most anything you'll be able to to invest in domestically (see "'BRIC' ETF Investing: An Introduction").

Yes, BRIC is all the rage, and for good reason: BRIC companies and funds have seen serious growth (see the "Portfolio Tracking" section of Stockpickr's "Highest Yielding BRIC Stocks" Portfolio), and now BRIC-focused ETFs are making reaping the rewards from these emerging markets easier than ever before (see the Claymore/BNY BRIC ETF ( EEB)).

About the C in BRIC

Everybody's talking about China. Even if you don't follow the financial news all that closely, you've probably heard at least some chatter of China's economy growing in leaps and bounds. Well, the Chinese market really has taken off, and so have China-based companies' stock prices (see "Chinese Rocket Stocks" and "China's Baidu Ready to Rocket").

While China is a communist country on the surface, deep down the it seems to be filled with capitalists. China has long had a reputation for being closed off from the West, but several Chinese companies, such as China Mobile ( CHL) and SINA ( SINA), now trade here in the U.S. Shifts in China's foreign policy (such as allowing investors in the U.S. to invest money in Chinese companies) are fueling huge changes to their economy.

Manufacturing and Beyond

You probably know China as being the manufacturer of all things consumer, from that computer keyboard sitting on your desk to Apple's ( AAPL) iPod, and it's not hard to think of scores and scores of other products that are made in the land of the Great Wall. (Next time you're at a store, simply read the fine print on a few product labels.)

And growth still exists in China's manufacturing industry. In fact, so much growth exists that the country is having a hard time keeping its infrastructure up to par with the ambitions of Chinese enterprise. This is one reason why China has to worry about rolling blackouts.

But not all of China's growth is in manufacturing. As in other BRIC countries, a big part of China's ascension from the Third World is the emergence of a new middle class that's willing to spend money. Companies such as China Mobile are reaping the benefits of this growth as consumer products that were once thought to be luxury items (such as the cell phones China Mobile serves) enter into Chinese popular culture.

Contrary to conventional thought, communism actually has some advantages for investors in Chinese companies. Because industry regulation is so tightly controlled by the government, some Chinese companies are afforded competitive advantages that just wouldn't fly in the West. For example, in China, many large companies are owned (at least in part) by the Chinese government, and these guys know how to protect an investment. Whether or not it's the best situation for China's overall economic growth, a regulatory condition like this can be a little added comfort for an investor.

China ETFs

Foreign ETFs are becoming very popular for American investors as a way to put their money to work in overseas securities. In the realm of ETFs, emerging-market indices are being introduced at an astronomical rate. As more and more ETF products become available, so does your ability to target the markets and companies that you want to "track." (To learn more about ETF investing, visit TheStreet.com's ETF Center.)

If you're interested in investing in China, two China-focused ETFs are the iShares FTSE/Xinhua China 25 Index ( FXI) and the PowerShares Golden Dragon Halter USX China ( PGJ) (both have returned over 20% since January).

Do Your Homework First

Because of the demand for emerging markets' investment vehicles -- especially in places such as China -- some of the index and fund products that are springing up only have investments that are traded on U.S. exchanges as American depositary receipts, or ADRs. While this doesn't mean that they're any better or worse as investments, if you're hoping to use an ETF as a way to access stocks you wouldn't otherwise be able to invest in domestically, you may want to avoid this situation.

If you're thinking about investing in a Chinese ETF (or any fund-like product), it's worth finding out whether or not the product holds securities that aren't available on American exchanges as ADRs.

Also, like any investment, a China-focused ETF isn't without risk. And risk is often amplified in emerging markets (see "The Finance Professor: Understanding Risk"). Because of this heightened level of risk, investing in any BRIC country (regardless of the asset) should be done with due diligence. With China, infrastructure and the country's ability to sustain its newfound affluence are tops on the list of investment concerns.

But while investing in China isn't necessarily for the faint of heart, the rewards can be well worth the risk. China-focused ETFs are opening a whole new world (or at least a new part of our current one) to investors. Because they increase access to foreign investments and are overseen by experienced fund managers (see money manager), emerging-market ETFs are an attractive (and aggressive) supplement to almost any portfolio.

With China's fortune looking bright, investing in the land of the Great Wall could be a great decision. (To stay up to date on Chinese and other emerging-market ETFs, visit TheStreet.com's ETF Center.)

At the time of publication, Jonas Elmerraji had no positions in any of the stocks mentioned in this column, although positions may change at any time. Jonas Elmerraji is the founder and publisher of Growfolio.com, an online business magazine for young investors.

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