The 29th Olympic Games opened today. They are expected to cost China a staggering $40 billion. 

Bill Patalon in Money Morning says the games are a reminder that every investor needs a China strategy. Despite the country’s benchmark Shanghai exchange being in “double bear” territory, China’s economy is white hot right now, and it’s expected to grow by double digits this year.

The bottom line, says Bill, is that ignoring China is ignoring the world’s second-most-important economy - not a way to profit in the long term. Consider the following facts:

• In 2007, China contributed more to global growth than the United States - becoming the first country to do so since the Great-Depression-ridden 1930s.
• China last year took over the top spot as the world’s largest consumer, pushing past the United States as the biggest user of four of the five most basic energy, food, and industrial commodities, Newsweek reported.
• China’s manufacturing sector is now bigger than its U.S. counterpart, with an output value that eclipses the $2.7 trillion in annual production generated by U.S. factories - a capability that could ultimately also enable the Asian Grand Dragon to position itself as a military superpower.
• And China is now the world’s No. 2 market for automobiles and the No. 1 producer of ocean-going merchant ships.

And this is just the beginning.

During a January 2007 speech in Beijing, economist and former U.S. Treasury Secretary Lawrence H. “Larry” Summers pointed out that Europeans who lived through the Industrial Revolution saw their standards of living increase by about 50% during their average 40-year lifespan. When industrialization spread to the more-entrepreneurial United States, living standards of the beneficiaries improved by four to five times. But residents of Asia - and especially China - who live through the ongoing “Asian Miracle” will see their living standards improve a hundredfold during their lifetimes - or 10,000%.

The wealth created from all this growth during our lifetimes alone will be enormous. But it won’t happen overnight, and it won’t occur in a straight line. Just as we’ve seen here in the U.S. financial markets, there will be periods of political and economic strife that whipsaw the values of such assets as stocks, bonds and real estate. Long-term, however, the trend is for the value of these assets to increase - and at a much steeper rate than we’ll see in any other market in the world.

That’s particularly true at a time when the United States may well be facing a Japanese-style “Lost Decade.”

And that’s also why it’s crucial for every investor to have a China investment strategy.