The National 2008-04-22 09:26:57Here in The New Rome, where nothing is news until the Washington Post says it is, few have noted the recent procession of Gulf leaders calling on their Chinese counterparts in Beijing. It is one thing to ignore diplomatic ritual halfway around the world, however, and quite another to overlook the Leviathan that inspires it: a half-trillion dollar commercial nexus that is transforming the global economy. According to the Dubai International Financial Centre, Sino-Middle East trade has doubled since 2000 to US$240 billion (Dh881bn) annually. A recent report from the management consultants, McKinsey & Co, estimates that Gulf investors will sink about US$250bn into Asia over the next few years, and most of that money will end up in China The spark behind this emerging growth engine is, of course, China's enormous appetite for energy and the Gulf's abundant supply of it. But unlike Chinese dealings in Africa and Latin America, mere reprisals of Victorian-era resource plundering, the Sino-Gulf relationship is both sophisticated and diversified. Gulf companies are building multi-use property developments in China and Chinese retailers are investing a fortune in Dubai shopping centres. Chinese companies are building cement factories and metro lines in the Middle East while Arabs are buying shares in Chinese banks. Investors on both sides are teaming up to launch equity funds, some of which are Sharia-compliant. The flurry of diplomatic exchanges between China and the Middle East retraces the old Silk Road and will only intensify along with the pace of Sino-Arab commerce. Consider Beijing-based Zhongon Construction, which is investing US$100m in Dubai property, or the retail giant Dalian Dashang Group, which has earmarked US$200m for the Gulf's retail sector. Last year, Saudi Prince Alwaleed bin Talal led a consortium of Arab investors for the purchase of a 20 per cent stake in China's largest bank, Industrial & Commercial Bank of China. In Bahrain, Ithmaar Bank is joining forces with a major Chinese lender to set up a US$100m investment fund. Meanwhile, the Kuwait Investment Authority has invested an undisclosed sum in Jade Alternative Investment Advisors, a fund of funds that manages equity stakes in Chinese firms. If there is a whiff of schadenfreude to this, the lucrative pairing of the world's most liquid economies amid a US credit crunch, well, bring it on. At the very least, America impelled the Chinese-Arab embrace by making itself such an inhospitable place to do business. In 2005, when the Chinese energy giant, CNOOC, was forced by nativist US politicians to withdraw its bid for California-based Unocal, it found welcome partners in the Gulf. A year later, when Dubai Ports World was driven out of the US market, it turned to China, where it now manages six container terminals. In response to America's prohibitively rigid visa requirements imposed since 9/11, a generation of Chinese and Arab students and businessmen are finding warmer receptions from Shanghai to Damascus. But in fact, the flourishing Sino-Arab trade is as much a salvation of the US economy as it is a challenge to it. A recent report from JPMorgan called Arab-Chinese commerce a "virtuous circle" of trade and investment that will moderate the global downturn. Economists tout Sino-Gulf collaboration as the most dramatic example of the "decoupling" of the global economy, as developing countries mature into a web of largely self-sustaining regional blocs. While this may be difficult for fin-de-siècle Washington to accept, the evolution of a multipolar global economy is both inevitable and desirable as a weak dollar and chronic US indebtedness erode America's share of global consumption. Nonetheless, official Washington will most likely address Sino-Arab convergence in the same way it responds to everything else it cannot control: with alarm. Already in this election year, Beijing's ties to "rogues" Syria and Iran are getting enhanced scrutiny while the Congress is calling for regulations that would inhibit sovereign wealth funds - the largest of which happen to be managed by China and Arab countries - from investing in US assets. It would be a perversely hostile reaction from a country that, by its addiction to debt over savings, has already auctioned away its economic destiny to foreign investors, a growing share of which are wearing the new version of the Silk Road into a well-travelled path.