For investors in the world's most important emerging market, the last few years haven't been so kind. Shares of Chinese firms have dwindled as slowing economic growth in the hot nation has prompted many investors to head for higher ground and abandon the developing country. Overall, the Chinese stock market is down around 40% from its highs reached in 2009.

However, recent data coming from the Dragon has been quite positive - spurring many analysts to believe that Asia's largest economy may finally be turning a corner. For investors, now could be the best time to add China to a portfolio and exchange traded funds (ETFs) could be the best way to do it.

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The Dragon Roars Again
Despite its long-term promise, the short term hasn't been kind to investors in China. However, things may finally be looking up. New economic data coming from the emerging market has been quite positive and could signal a resurgence of the Chinese economy.

First, there are signs that the nation's troubled real estate sector may be coming back. China's ultra-hot property market needed to be cooled and measures taken by Beijing essentially completely "put the fire out" in the sector. Property values in certain key cities stalled and growth associated with housing shrank. According to official data by the National Bureau of Statistics of China, that cooling may have finally ended. The Bureau's latest report shows that the majority of China's top 70 cities showed modest increases in residential property sale prices in the summer. Those higher sale prices prove the local real estate market is on the mend. That's certainly bullish news for the economy as housing continues to be a major driver of growth. At the same time, data from the nation's industrial and manufacturing sectors are proving positive with the latest PMI reading, the first expansion in manufacturing in more than a year.

Secondly, the smart money has begun to return to Chinese shares and foreign direct investment continues to rise. Reuters reports that nearly $4 billion as gone into Chinese equity funds in the past two months. More importantly, the Chinese government has taken steps to streamline the approval process to encourage more direct foreign investment. That will help China benefit from the lower interest rates and stimulus programs implemented around the world as investors continue to look for returns.

Finally, stocks within the nation are cheap when compared to its emerging market and BRIC peers. The broad MSCI China index (ARCA:MCHI) currently can be had for a forward P/E of 9.2. That's less than Brazil at 9.9 and India at 13. China is also currently cheaper than the broad EM measure, the iShares MSCI Emerging Markets Index (ARCA:EEM).

Buying the Dragon
Given China's potential rebound and long-term promise, investors may want to give the nation a prime spot in their portfolio. The ETF boom has made it possible to add a swath of Chinese equities quite easily. The easiest way to do that is through the popular iShares FTSE China 25 Index Fund (ARCA:FXI). The fund is a $6.5 billion behemoth tracking 25 of China's largest firms. This includes exposure to oil producer CNOOC (NYSE:CEO) and China Mobile (NYSE:CHL). The fund trades almost 16 million shares a day and charges 0.72% in expenses. Investors looking broad exposure may also want to add the SPDR S&P China (ARCA:GXC). That ETF features a broader range of holdings.

Investors seeking broad exposure to China may also be interested in the new WisdomTree China Dividend ex-Financials (Nasdaq:CHXF). Many analysts believe that much of China's risk lies within its "shaky" banking system. The WisdomTree fund bets on a basket of Chinese stocks - that pay dividends - and eliminates the troubled financial sector from its holdings. The fund then offers better diversification that the FXI or GXC.

Finally, for investors who want more "oomph" from their China investments, both the Guggenheim China Real Estate (ARCA:TAO) and Global X China Consumer ETF (ARCA:CHIQ) could make great buys. The Guggenheim fund allows investors to bet on the nation's growing real estate sector, while the Global X ETF can be used to bet on its burgeoning consumer story.

The Bottom Line
While China has struggled in recent years, its long-term promise is still great. More importantly, recent economic data is pointing in the right direction. For investors, now could be the best time to add the emerging market giant to a portfolio and ETFs are a quite way to do just that. The previous ideas, along with the Market Vectors China ETF (ARCA:PEK) make ideal picks.

At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.

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