Everybody knows about China.

It's the place where cheap junk is made. Where toys and sneakers are glued together and cheap clothes spun out. Even tourists in Japan looking for gewgaws for their aunts are often chagrined to see the words "Made in China" on them; such is the might of the country's export market.

China is stereotyped by investors, too, who have in the past mainly invested in it for the strength of those exports. "That's what provided their whole movement is giving cheap labor to the world," says Jim Trippon, the Houston-based editor of the China Stock Digest.

Otherwise, investors have used it as a proxy play for commodities. The country's voracious hunger for items such as oil, iron, coal and copper to build its rapidly urbanizing infrastructure has made China one of the drivers of global commodity prices. The country is so in sync with commodities, some say the safe play is to short them if you think China's economy will tank.

But there are two Chinas. You can either look at it as the country with a 53% rural population mired in the past, a country that still mainly pumps out cheap stuff for other nations. Or you can look at the China of the future: a country with a growing middle class, an incubator for a massive consumer culture with flashy brand names for cars, sporting equipment, clothes, desktop computers, cell phones and lotteries. As the population urbanizes and GDP grows, the country has all the critical mass for an economic supernova.

This is the country that has long-term investors more piqued. China has now surpassed Japan as the world's second-largest economy. It has become the world's largest car market, passing the United States, and some observers now call it the world's largest consumer of energy, too. Furthermore, the country's GDP has continued to grow steadily in the 9%-10% range, even during the economic crisis, while the United States' GDP is huffing and puffing. The real U.S. GDP was negative 2.4% in 2009, and it grew only 1.7% in the second quarter of 2010. The World Bank predicts China's gross domestic product will climb 9.5% in 2010 and 8.5% in 2011.

"I remember when I was a broker of Australian stocks ten years ago," says Andrew Sleeman, a portfolio manager of Franklin Templeton Investments' Mutual International Fund in Short Hills, N.J. "It was all about an Asian company's exposure to the U.S. It's not about that anymore. Now it's the exposure to China. I expect that to continue to be the case."

China itself is now encouraging this trend, having launched a 4 trillion yuan stimulus package in late 2008 to spur internal demand after watching its export markets collapse (an amount that totals about $586 billion). That collapse led to thousands of factory shutdowns and a rise in unemployment. The Chinese government has vowed not to let it happen again, and has made moves to "decouple" somewhat from the global economy.

 Richard Gao, a portfolio manager at Matthews International Capital Management LLC, who helms the company's China and Pacific Tiger funds, says the government's gambit has so far paid off, as internal consumption has continued to soar after the export collapse. The retail sales figure in China has grown at an average of 16% to 17% over the past five years on average, he says, even amid global financial upheaval, and the average income has also been growing at 12% to 13%.

What does that mean for investors?