“China will see the biggest merger and acquisition boom in the history of the world over the next decade.” That was one of the more bullish messages we heard from Donald Straszheim, former head economist for Merrill Lynch, at a recent China forum.

He also projected that China’s astonishing growth is not finished, that clever Western firms can take advantage of that growth, and that the dealmakers (or breakers) in most transactions are the local city mayors who “never saw an investment project they didn’t like.” The importance of cultivating these all-important city officials cannot be exaggerated. Nor can the necessity of catching the next plane to Beijing.

Mr. Straszheim is currently head of Straszheim Global Advisors. He has been a regular visitor to China for the past 20 years, and has focused his economic research exclusively on China since 1998.

According to Mr. Straszheim, “Every company in the world appropriately sees China as a threat or an opportunity, or both.” His job? To help corporations and investors navigate the often unpredictable and unfathomable currents of Chinese capitalism; in other words, to prevent newcomers from losing their shirts.

Mr. Straszheim spoke recently in New York as part of a panel assembled by the Association for Corporate Growth, whose membership of 9,500 worldwide is tilted heavily toward private equity investors. Mr. Straszheim has long been known for discovering telling facts in the rubble of economic statistics. Here are some he favors to describe the enormity of China today:

The nos. 1, 2, and 3 Mercedes-Benz dealerships in the world are in China. Wal-Mart is on track to import $25 billion in goods from China this year; were Wal-Mart a country (some would argue it might as well be), it would rank as China’s fifth-largest trading partner.

China has 1.3 billion people, of whom approximately 500 million are living in urban areas. In that category there are now some 200 million to 300 million people who constitute what could be defined economically as a middle class. An ongoing migration of people from inland regions to the more highly developed coastal regions and from rural to urban areas is swelling the ranks of potential consumers, who are expected to number 400 million a decade from now on.

So it is that Wal-Mart not only imports goods from China, but has also recently opened its 52nd store in the country. Wal-Mart has expanded its reach to consumers in Northeastern, Central, and Western China, where the economies are just beginning to support such investment.

Mr. Straszheim contends that the astonishing 9.3% GDP growth experienced by the Chinese from 1978 through last year is likely to persist. Productivity gains are easy when most of the country is at the bottom rung of the development ladder, and labor is clearly plentiful. As he points out, such growth is almost unheard of for a country of China’s size.

Even so, doing business in China can be risky. It is a complicated marketplace, with restrictive rules, corruption, a lack of transparency, and an inadequate financial infrastructure. In some instances, though, problem areas in China can translate to extraordinary business opportunities.

For example, Mr. Straszheim describes China as the most polluted country on earth. Increasingly, the government is recognizing a need to clean up the air and water, and is inviting Westerners to help. Mr. Straszheim highlights the environment as the top growth area in China. Some 700 million Chinese still drink nonpotable water, and 16 of the 20 most polluted cities in the world are located there. The government has recently responded by adopting, among other measures, automobile pollution standards that are tougher than those in California

Another huge area of government sanctioned spending is nuclear power. Since the country’s growth has caused a substantial rise in oil imports (it used to be self-sufficient but production has not and likely will not keep pace with consumption), the government has decreed that oil will be used exclusively for feedstock for its growing petro-chemicals industries and for transportation.

Increasing needs for power will be met by building nuclear power plants, creating the largest nuclear construction project ever mounted. Specifically, the government announced last year its intention to build 27 new plants to complement the nine already producing power; this year that target was raised to 40 plants. (There are some advantages to having a centralized government.) This is another potential area for Western engagement.

Mr. Straszheim cautions that equity investing in China is complicated since, among other reasons, the financial markets are underdeveloped. Stocks listed on the Shenzhen and Shanghai exchanges are generally considered weak on governance (that’s the polite translation) and the state-owned enterprises whose ADRs are now listed on the New York Stock Exchange tend to represent the “old economy.” Investors are increasingly trying to invest in China’s growth through the Hong Kong and Taiwan exchanges, while some small companies are now listed on the Nasdaq.

The SOEs are rapidly declining in importance. In 1978 virtually all economic activity flowed through these bureaucratic units. Today the figure is roughly half. Only those companies engaged in “strategically vital” activities are likely to go on being 100% government-owned. Most are being sold off.

These sales accentuate the country’s booming merger and acquisition activity. Chinese companies are not just bystanders; consolidation is ongoing in several sectors. Overseas buyers are lined up at the border, keen to make direct investments. Anecdotally, such transactions can take two to three years to complete, frustrating Westerners. Not only are the politics complex, but the financial markets are woefully unprepared for the influx of capital. This, too, represents an opportunity to many Western firms.

Is it worth it? Mr. Straszheim is unequivocal. “Any firm not participating in China or not planning to is asleep.”