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The whole world seems to be looking towards China with a mixture of hope and trepidation, and investors are no different. What does the rise of China mean? Will it continue? Will it be peaceful or painful? Will the sun finally set on the West? Can it save the global economy?

The question facing investors is perhaps a little simpler than that. Can we make still make money from it?

Chinese democracy

China continues to captivate by doing things the rest of the world can only dream about:

• Like growing its economy by 8% this year, while the US is set to shrink by around 1.5% and the UK by 4.5%.
• Like launching a government-funded stimulus package that actually seems to be working.
• Like hoovering up the world's supply of foreign exchange, $2 trillion of the stuff, while western countries sink ever deeper into the red.
• Like having banks that actually lend money and companies that manufacture stuff people want to buy.

If you ignore quibbles over democracy, freedom of speech, human rights abuses, official corruption, environmental destruction, the trigger-happy penal system, peasant riots, and Tibetan and Uighur grievances, China is an incredible success story.

Hong Kong garden

I first visited Hong Kong and mainland China in 1991, two years after Tiananmen Square, and was astonished by the capitalist vigour of this communist country. I told anybody who would listen that if they ever adopted the free market, their ruthless commercial mindset would expose the West for the softies we are.

For once I've been proved right. So should we piggyback on the country's success by shovelling all our spare pennies into their companies?

It is very tempting, given that the Shanghai Composite Index has soared 75% this year, which puts the FTSE 100's recent little spurt into perspective.

Chinese arithmetic

China is the first major global economy to get its recovery underway, growing 7.9% in the last 12 months. And it has done so while controlling inflation. Retail sales rose 15% in the last year, while consumer price inflation fell by 1.7%. Money supply rose a record 28.5% in June alone. A figure like that just boggles the mind, as so much Chinese arithmetic does.

With money from global investors pouring in, its foreign exchange reserves just get larger and larger. Can Alistair Darling have some, please?

Investors in China are less worried about how long the recession will last, than whether the recovery is already creating property or banking bubbles that will spark the next crash. But they aren't worrying too much. Emerging economies have always been notorious for going boom then bust. China appears to have broken this mould, which is perhaps its greatest triumph.

China crisis

Of course, the country still has challenges. Its exports fell an astonishing 26% in the last 12 months. That is now levelling off, but is still an incredible reversal. And despite all the wealth the country is creating, private consumption hasn't increased in the last two decades.

Being Chinese didn't look much fun when I was there in 1991 (which partly explained their commercial ruthlessness, I thought), and it doesn't sound much more fun today. The $585 billion fiscal stimulus programme won't last forever, and the economy may suffer withdrawal symptoms. The Chinese government has also warned that the recovery is unstable, volatile, and from a week base.

Investors should also be concerned that all the good news is already factored into Chinese share prices.

China in your hand

You've got to have money in China, if you're serious about investing. Although you may already have more exposure than you think. Much of the gains you have enjoyed during the last seven or eight trading days were made in China, as the country's recovery helped boost stocks and sentiment around the globe.

I've been tapping into China through investment trust Scottish Oriental Smaller Companies (LSE: SST) and unit trust First State Greater China Growth. Both have done very nicely in a very short time. To buy these funds, I recycled money from a FTSE 100 tracker and UK equity income fund, and boy, I'm glad I did. So my wealth, like much of the world's wealth, is gradually shifting from West to East. I expect the trend to continue.

Turning Japanese

But we shouldn't get too carried away, for good or bad, about the rise of China. When I was a boy, we said Japan would rule the world, and look what happened to them. China could also over-reach.

I also think the decoupling argument has been overstated. East and West are inextricably linked to each other, and can't go their separate ways without destroying themselves.

China depends on the West as much as we depend on them. They need us to buy their exports, and kindly lend us the money to do so. If we stop buying, or they stop lending, we all fall down. At some point, this will have to become a better balanced relationship. The Chinese need to consume more, and we need to consume less. It will be a massive challenge.

So China may be rising now, but for its success to continue, it will have to pull the West up with it.