Apple (AAPL) has long coveted the rapidly expanding China market as a growth engine for its smartphone business and a way to access the Middle Kingdom's burgeoning design-conscious middle class. When Apple first entered China with its wildly popular iPhone, the response was warm but not overly so. But now, with the iPhone 4, China finally appears to have the Apple bug.

Gangbuster demand for the latest version of Apple's iconic smartphone has exhausted initial supplies in a single weekend, with reports of thousands of eager customers queueing up at stores in Shanghai, Beijing and other large affluent cities.

For Apple, a bigger boost from China could prove to be a huge boon. The Wall Street Journal reported that China Unicom, Apple's carrier partner, had logged over 200,000 preorders for the iPhone 4 prior to this weekend, when the first units were released to the clamoring public. This demand stood in stark contrast to the sales of roughly 100,000 handsets last October when the devices first went on sale in China. As demand leaps, so too could Apple's prospects as it finally puts in place a second giant-size profit center after the U.S.

Up Next: A "Halo Effect"?

True to form, Apple has maintained high prices and high margins on its Chinese sales. But in China, Apple is only the fifth-most-popular smartphone vendor, lagging far behind market leader Nokia (NOK). This means Apple has a lot of territory to gain as sales pick up steam.

What's more, Apple hasn't enjoyed in China the same "halo effect" of outsize sales increases for its computer products seen in the U.S. and other markets. Analysts have generally attributed this halo to the iPhone's robust and rapid penetration, and the desire of iPhone users to more tightly enmesh their smartphones with the rest of their computing needs.

Wall Street probably hasn't yet priced into Apple's stock a big hop in China sales for iPhones, let alone for Mac computers. That repricing could make the legions of Apple lovers among institutional shareholders even more bullish on the company. I'm an Apple shareholder and am definitely talking my own book here. But I certainly didn't expect this sort of iPhone4 turnout -- and I'm resetting my expectations accordingly.