Visiting China was considered an indulgence for most financial executives just a few years ago.

China has been important to global economic growth for years, of course. The country likely emerged as the world's second-largest economy in 2010. It is expected to show close to 10% growth in both 2010 and 2011.

But China didn't seem to matter much to most deal makers and wealth creators.

That's all changing. China is opening its markets, slightly loosening the reins on its currency, and is emerging as a key to the future of almost every Wall Street firm. It's also a linchpin of the investment strategies of a growing number of hedge- and private-equity funds.

Meanwhile, mergers-and-acquisitions specialists are racing to China to work with companies like China National Offshore Oil Corp., known as Cnooc, and China Petroleum & Chemical Corp., or Sinopec, among the biggest deal makers in 2010. China also was the second-most frequent target of purchases by foreign companies in 2010, after the U.S.

In currency markets, analysts say more traders are laying big bets on whether the yuan will be allowed to appreciate further in 2011

That all helps explain why some of the largest investors are boosting wagers on—and against—China

he calls "Shake Hands With China," and betting against those having a hard time competing with Chinese rivals.

Mr. Arbess is focused on companies like Solutia Inc., Apple Inc. and Yum Brands Inc. that are growing quickly in China, as well as those that produce commodities in demand in China

The bears also point to China's expensive real-estate market and so-called ghost cities that relatively few inhabit, despite billions poured into them by Beijing

Meanwhile, many private-equity firms are racing to cut deals in China, to tap into the nation's growth—and to demonstrate to clients that they're capable of finding opportunities in China.

To be sure, a number of private-equity and hedge-fund chiefs privately share frustrations about China, even as they search for opportunities in the country. The rule of law is weak, some say, making it harder to resolve disputes. Others question the reliability of data published by private and public bodies, or aren't sure who controls Chinese companies, which usually are influenced by Chinese government officials.

At the same time, it's risky to bet against an economy with $2.6 trillion of foreign currency reserves and where the majority of the population is only beginning to fully urbanize and embrace higher standards of living, a trend likely to bring more investment opportunities.

Strong future growth may come only if Chinese leaders can transform the nation into a consumer-focused economy. But it may be hard to spark much more spending among a populace that has a relatively flimsy safety net, though the government is aiming to boost social welfare spending.

Whether Chinese development and growth can continue without major setbacks could be more important to global markets and financial firms than anything the Federal Reserve or European Union do in 2011.

The transition to a consumer society in China represents the single biggest challenge for the global economy," says Perella Weinberg's Mr. Arbess, "and the biggest opportunity for markets."