Burton Malkiel, the esteemed professor of economics at Princeton University, says the big growth story in the coming years will be China, and within 20 years, its economy with overtake that of the U.S., sister publication On Wall Street reports.

Malkiel argues that it’s the world’s third-largest trading nation, a major international investor, a major consumer of luxury goods and has 400 million wireless phone users, expected to grow to 600 million by 2011.

“In the past 30 years, China has transformed itself from an economically and technologically backward nation into one of the world’s most dynamic economies,” Malkiel writes in a new book due out next month, “From Wall Street to the Great Wall: How Investors Can Profit From China’s Booming Economy.” Malkiel wrote the book along with Patricia A. Taylor, formerly of Bank of America, Jianping Mei, a professor at Cheung Kong Graduate School of Business and Rui Yang, a mutual fund manager with Bosera Asset Management.

“The growth rate in China has been absolutely unprecedented, at 9.5% to 10% this year, and this is after inflation,” he writes.

Malkiel recommends investing in companies that aren’t domiciled in China but that benefit from it, and has put together a portfolio of such firms.

The economist admits that the recent recalls of products and food from China are “not a positive,” but says he believes they will diminish. “The one thing I do know about the Chinese, is that they are acting against corruption, even almost too strong in some cases,” he writes.

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