FOLLOWING the shorthand of today, the investment opportunities in emerging markets are commonly agreed to focus on the BRIC countries – namely, Brazil, Russia, India and China.

According to the International Monetary Fund, the share of global GDP growth accounted for by these four will grow to over 60% in the 2008-2014, a period when G7 nations will only manage just over 12%.

There have been emerging market booms before, but these have previously ended badly.

This time round, it is very different. The BRIC countries are well financed, with all four having substantial foreign exchange reserves and only India having a modest current account deficit. With both the means and the motivation to drive their own growth forwards, the dangers of this being a false dawn look slight.

Of these four countries, it is China that dominates.

China has the largest population, the greatest foreign exchange reserves and is the most linked-in to the rest of the global economy through its role as the world’s factory.

Very visibly, it is the enormous appetite of the “waking dragon” that now sets industrial commodity prices, while the need to attract her reservoir of savings is a key factor in determining interest rates in our own region.

Looking at China today, it is impossible not to recall Napoleon's reported comments in pointing to China on a map: “There lies a sleeping giant. Let him sleep. If he awakes, he will shake the world!”

Political judgments aside, so far the rapid growth of China has been an almost entirely positive experience for both China and for her trading partners.

The living standards of the Chinese people have increased dramatically, and we have benefited from her low cost labour and improved manufacturing standards, as low-priced imports have filled our retail shelves.

But that creates the problem that China has run up huge trade surpluses with the West, creating significant economic imbalances – and, with them, political and diplomatic problems that make those surrounding the visit of the Dalai Lama look like child’s play.

There are, however, some signs that China’s success may be becoming more of a double-edged sword from an investor’s perspective.

Aside from the traditional risks of pell-mell growth, in the shape of mis-allocation of resources and consequent periodic boom-bust cycles, China’s exchange rate policy is becoming increasingly untenable.

By keeping the yuan undervalued on world currency markets, China can be accused of keeping her own employment levels up at the expense of her trading partners.

This was not an issue when our own levels of unemployment were low – but this is no longer the case and the political pressure on China to be more flexible is increasing.

China's response to this pressure will be crucial in setting the investment backdrop over the coming years.

If the Chinese choose to resist mounting pressures to revalue the yuan, then the dangers of a trade war increase.

If the Yuan is revalued, however, this would assist in the rebalancing of global growth in a smooth way – clearly a major positive for the rest of the world.