So you've heard of all the capitalists striking it rich in this great place of socialism and you want a piece of the action too huh? It's true that millionaires have sprung up like bamboo after the rain, but most of the people got that way though entrepreneurial exploits creating businesses to serve the needs of a more affluent society, or manufacturing goods for export. The really lucky ones, like He Ping, the son-in-law of Deng Xiaoping, used their guanxi (Chinese connections) to strike up sweet deals with powerful Party officials.
As a so-called "emerging" market, there are still plenty of opportunities for investors to earn a reasonable return, but speculators need to beware; as with anything Chinese, investing is a complex matter with many subtleties unappreciated by the typical Westerner. But if you follow my advice, you may strike it rich. Ok, maybe not, but you will have some practical advice and maybe avoid a few pitfalls. Even with economic growth in China expected to remain at close to 10%, don't forget the basics of buying stock. When you are buying a stock, you are handing over your hard-earned money to a company that is supposed to use your money for things like purchasing more equipment that will help them earn more money by manufacturing more stuff. However, there are countless cases in which businesspeople have pocketed the newly invested funds rather than using the money to expand their business. So be careful, and consider yourself warned.
The best way to directly invest in China's economy is by purchasing Chinese company stocks that trade on the New York Stock Exchange such as China Eastern Airlines or China Unicom. A handful of others trade on the NASDAQ. The bottom line is that numerous Chinese stocks can be purchases using a typical US broker as easily as you would purchase a U.S.-based company's stock. In this case your money is subject to U.S. investment laws, so it is presumably safer.
Besides the obvious "buy low" and "sell high" advice, you might consider the old "diversify your investments" approach, in which case you should put your money into a mutual fund with investments in Asia generally or China specifically. Some of the larger U.S.-based financial service companies offer mutual funds that hold securities from all over Asia. In such a mutual fund, the return on your investment should mirror the overall Chinese economy's performance, so you shouldn't need to sell your clothing for food, but you won't be able to strike it rich either.