The recent news from China has been mixed—staggering improvements, seemingly endless avenues for profit and a burgeoning population keen to make and consume all the offerings of a capitalist economy. On the other hand, China has had massive product recalls on everything from toys to toothpaste and medicine to food for humans and pets as well as violations concerning corruption and human rights.

Nonetheless, growth is the story in China, argues Burton G. Malkiel, one of Wall Street's savviest observers and the Chemical Bank Chairman's Professor of Economics at Princeton, in the forthcoming book, From Wall Street to the Great Wall: How Investors Can Profit From China's Booming Economy, due out next month. And China's fat times can mean more business and brisk sales for you.

"In the past 30 years, China has transformed itself from an economically and technologically backward nation into one of the world's most dynamic economies," writes Malkiel in the book that he co-authored with Patricia A. Taylor, formerly of Bank of America, Jianping Mei, a professor at Cheung Kong Graduate School of Business in Beijing, and Rui Yang, a mutual fund manager at Bosera Asset Management, one of mainland China's largest mutual fund companies.

Malkiel maintains that investors should have a piece in their portfolio that capitalizes on China's abundance. "I've put together a portfolio of companies—not domiciled in China—but that benefit from it," says Malkiel. "It's a very well-diversified, low-risk way of availing yourself of opportunities," the economics expert says.

For instance, even though the U.S.-based Yum! Brands Inc., parent of KFC and Pizza Hut, has experienced flat store sales in the U.S.; because of China, the food company's earnings are on the upswing. "They've got Kentucky Fried Chickens on almost every street corner in Shanghai and Beijing, and a chain of Chinese-style family restaurants," he notes. In fact, the company recently reported that its China and Yum! worldwide divisions had robust sales that helped drive earnings per share growth of 15% in the second quarter.

Malkiel is also bullish on exchange-traded funds, especially those associated with China. "Not necessarily the A shares, but the H and N shares," he points out. He also recommends that investors have part of their portfolio in energy and raw materials, again because of China—and India.

Malkiel acknowledges that the Chinese food and product recalls are "not a positive," but thinks they'll diminish over the next months. "The one thing I do know about the Chinese," he says, "is that they are acting against corruption—even almost too strong in some cases."

What outshines those types of setbacks, he argues in the book, are the fiscal realities of China. Among them are that it's the third largest trading nation; a major international investor, with official foreign-exchange reserve now exceeding $1 trillion. It's also a massive subscriber of wireless phone services, specifically, 400 million now, with a projected 200 million more expected by 2011. Finally, China is also a major consumer of luxury goods, that is, 12% of the sales worldwide.

Malkiel predicts that the Chinese economy will overtake the U.S. within 20 years. "The growth rate in China has been absolutely unprecedented, at 9.5% to 10% this year; and this is after inflation," he concludes.

The 300-page book begins with a historical perspective on China, from 2,500 years ago to the present. Although they developed porcelain, gunpowder, the wheelbarrow, the compass, the spinning wheel and paper, the Chinese, who had the highest gross national product in the 17th century, never capitalized on their discoveries, Malkiel writes. Their placidity, he adds, was due to the influences of the philosopher Confucius, whose teachings focused on serving the public good, not earning profits, and the leader Qin Shi Huang, who consolidated China into a monolithic state that discouraged competition.

In the tome's second section, Malkiel discusses the intricacies of the Chinese stock market and its stocks as well as investing in real estate, art and bonds. He concludes with strategies, some of which are excerpted in the sidebar "Four General Rules to Minimize the Risk of Investing in China" (see below), and includes sections on preparation, the homegrown, offshore, go-for-broke and optimal-investment strategies.

Stephen Horan, head of Private Wealth at the CFA Institute, says of Malkiel: "Burton has got a perspective here that is well worth hearing. It's interesting that he's talking an investment strategy in relationship to China, and that's something different than what he is known for."