With the markets selling off so strongly in 2008, there are great bargains popping up everywhere. Fundamentally strong Chinese companies are selling at steep valuations and have now become low-hanging fruit for us to pick.

While this provides investors with profitable opportunities, some investors may think this means that we can close our eyes, pick any Chinese company out of the bucket and expect to make great profits. The reality is that we still need to be cautious and only take advantage of the best opportunities for our money.

And the best place to be investing your money right now is in China.

So why will China — and not any other stock market — lead the emerging market rebound? Here are four reasons why China is at the top of the list.

Reason #1: It’s All About Leverage

China is far less leveraged than most countries, since its citizens save more money than any other nation in the world. That has made it less vulnerable to the global financial de-leveraging that is taking place right now.

In fact, since China has the world’s largest foreign reserve — approaching $2 trillion — China is helping other nations overcome the global financial crisis. And it is likely that China will use its current account surplus to purchase U.S. Treasury securities and indirectly help finance the U.S.’s $700 billion financial bailout.

Reason #2: Less Bad Debt Than The West

China doesn’t have a lending mentality — it’s still in the early stages of developing its consumer finance industry. So, unlike many developed nations, there simply isn’t a lot of bad debt to weigh on China’s economy or to destabilize Chinese banks.

Supporting this “savings mentality” are new policies in China’s real estate sector. Recently, China’s Ministry of Finance implemented some new policies that should give the industry more life…

There will be lower property transaction taxes, a lower mortgage rate floor and minimum down payment requirement and an acceleration of public rental property development.

I think that these new policies are very bullish for China’s real estate market. They will allow people to more easily buy houses and rent apartments in the months and years to come — without going into deep debt. I look for these policies to prevent a sharp sell-off in Chinese real estate market, like other countries have experienced, and instead allow the sector to strengthen in the months to come.

Reason #3: Continued Strong Economic Growth

China’s economic growth continues to be robust — growing around 9% in 2008. At first glance, I’m sure many investors are discouraged by China’s economic growth slowing from 11.4% in 2007 to 9% in 2008. But, what you need to remember is that the 9% economic growth rate is still very respectable, especially in an economic downturn like the one we’re experiencing now. With a 9% GDP growth rate, China still has the fastest growth rate of the world’s 20 biggest economies.

And unlike many nations around the world, the Chinese government has taken a proactive stance towards overcoming the global financial crisis and economic slowdown. In recent months, China has eased its monetary tightening policy, as inflation in the country has finally cooled — in November, economic data showed that inflation is at 2.4%, the slowest pace since June 2007.

With inflation finally stable in the country, the Chinese government can remain focused on stimulating economic growth, and it also gives policymakers the ability to continue slashing interest rates. All of which bodes well for Chinese stock prices. (See also: “Building a Case for China.”)

So as you can see, China is still well-positioned to continue its robust economic growth and come through the financial crisis relatively unscathed compared to other global economies. Leading economists are projecting a slower but still robust GDP growth for China in 2009. Most are anticipating that the country will grow 8%. Regardless, China will be the world’s fastest growing major economy. And a strong economy will support a resilient stock market.

Reason #4: Beaten Down Markets Poised For a Turnaround

As I already mentioned, China’s stock market sold off dramatically in 2008. And while these losses are hard to swallow, they also signal that the Chinese stock market is due for a correction to the upside.

Helping Chinese stocks turnaround is China’s stable inflation rate. As we discussed above, the Chinese government has plenty of room to make more rate cuts this year, which bodes well for Chinese stocks. China’s inflation rate is stable, with an annual average inflation in 2008 of around 6%. And CPI inflation in 2009 could be as low as 3% and should be no higher than 4%. (See also: “Why China Will Shine in 2009.”)

This, in addition to the oversold condition of the Chinese stock market, is allowing Chinese stocks to gear up for a powerful rebound. They are gaining steam as we speak — since the lows set on October 27, Hong Kong’s Hang Seng index has rallied 41.7%. And that is just the beginning. I’m expecting the Chinese government’s bold actions to stimulate economic growth to really kick in early 2009, which will lead to an economic recovery in the second half of the year.

And since equities tend to rally six months before the economy really rebounds, Chinese stocks are headed even higher. That’s why now is a great time to be picking up shares.

Prepare Now!

As I just discussed, not every Chinese company will participate in the rebound. But many stocks will and fuel the global markets move higher — you just need to know which companies will benefit the most. And in China Strategy, that’s exactly what you’ll find out. My subscribers are already preparing for the Chinese market rebound by investing in my China Strategy companies that will be leading the charge.

But if you sit on your hands too long, you may miss the start of the Chinese market bounce higher. Join China Strategy risk-free today and receive the names of five stocks that are set to surge. If you can buy these top stocks today — while they’re still bargains — you could be looking at 20% to 40% gains in the next 12 months as the flight to safety lands squarely in China. You don’t want to miss the incredible gains, so add these five stocks to your portfolio now.