When Fred Alger Management launched the China-U.S. Growth Fund in 2003, China was still a fairly new story, and it wasn't clear yet how the huge population and economic growth of this giant would sway the world's economies.

Since then, however, the country's gross domestic product has nearly doubled. Its middle class, nonexistent a decade ago, has grown to some 300 million people. In the 1990s, China's economy depended on the production of apparel and low-end electronics for export, but now it is increasingly driven by the growing ranks of the country's own domestic consumers.

Last year, the country's GDP expanded at a rate of 8.7%, and the World Bank predicts growth of 9.5% in 2010.

"We saw a huge opportunity in the emergence of China as an economic force to be reckoned with," says Daniel C. Chung, the chief executive officer and chief investment officer of Fred Alger Management, "and believed that the country's influence would make its mark on the next generation of investing."

The Alger China-U.S. Growth Fund invests in both companies based in China itself and also those located elsewhere but doing a significant amount of business there. The fund has benefited from the powerful economic trends helping China as well as the strong earnings growth of its portfolio companies.

For the five years ending in December 2009, it was the top-performing fund in Morningstar's world stock category. From its inception in November 2003 through mid-April 2010, a $10,000 investment in the fund grew to $22,202, while the same investment in the MSCI EAFE Index grew to only $16,447.

Chung sees the opportunity for powerful long-term equity returns in China going forward. "The buying opportunity in China is not dissimilar from the 1980s and early 1990s in the U.S.," he says.

Still, recent developments have left some investors wondering if China's growth spurt is leveling off. Its ability to export goods so cheaply has created trade tensions between it and the U.S. and Europe.

"I don't see any danger of it getting out of hand at this point," says Chung. "Some people are talking loudly about protectionism, but most of it is rhetoric."

In an effort to curtail inflation, the Chinese government added a few speed bumps late last year in the form of higher interest rates and more restrictive lending standards. Concerns about the impact of government control on economic growth put pressure on the country's stock market, which peaked in the fall of 2009 and has fallen behind the U.S. market since then. The Chinese government actions have also had a dampening effect on stock markets in the U.S. and other countries, where companies are looking to China's strong economy to help fill the gap left by slow-growth environments on their own turf.