GROWTH IS GOOD:

THE NEW SILK ROAD: Trade Is Booming between Asia and Middle East: Historic bonds between the Middle East and Asia are being revitalized in a torrent of trade and investment in energy, infrastucture and manufacturing. (Stanley Reed, Dexter Roberts and Nandini Lakshman, 11/07/08, Der Spiegel)

The Arab world and Asia have a legacy of trade ties dating back to caravans that transported textiles and spices across the desert on the so-called Silk Road and to Gulf traders that sailed the blue waters of the Indian Ocean in chunky ships known as dhows. Today a new Silk Road leads from the busy ports of Shanghai, Hong Kong, and Singapore to the Persian Gulf—and from sparkling airport lounges in Dubai and Riyadh back to Asia's bustling cities. The merchants on this new route are Arab investors looking for smart places to park their petrodollars and Asians seeking to lock up energy supplies and find markets for the goods churned out by their factories.

Trade between the two regions has been expanding at a 30 percent annual clip. Since 2006, Asia has been the largest trading partner of the Gulf Cooperation Council, a group of six wealthy Arab countries, according to data compiled by Standard Chartered Bank. As of last year, Asia accounted for 55 percent of the GCC's total trade of $758 billion, the bank says. The mainstay of Gulf exports to Asia is oil, but some energy-intensive manufactured goods such as aluminum are also joining the mix. In return, China and Japan send to the Gulf products ranging from cars to computers while India and other Asian countries supply much of the food consumed in the Middle East. And while the scale of investment lags the trading ties, investors from the Gulf are buying stakes in everything from Asian banks and department stores to hotels and office buildings. Standard Chartered estimates that the Gulf countries invested $60 billion in Asia from 2002 to 2006.

It's easy to find evidence of the growing links. Delhi newspapers advertise homes built by Emaar Properties, a Dubai developer. Smaller companies from Algeria, Egypt, Morocco, and elsewhere have factories in China to make shoes, toys, and the like. And so many Middle Eastern traders visit the wholesale markets in the southern Chinese town of Yiwu that road signs are posted in Arabic as well as Chinese and English. "Power is moving from West to East," Al-Muhairy says. "It is a huge opportunity."

The Asians are getting a foothold in the Middle East, too. China has plowed billions of dollars into North Africa's oil sector, especially in Sudan and Algeria. Along with the energy investment comes work for Chinese companies building roads, pipelines, and other infrastructure. Goods from Chinese appliance manufacturer Haier and electronics maker TCL are available across the Middle East. Indian engineering outfits Larsen & Toubro, Voltas, and others help out on real estate and industrial projects in the Arab world. And Malaysian developer MMC is working on a vast new city in Saudi Arabia. "We are seeing serious investment flows from Asia to the Middle East," says Rachid Mohamed Rachid, Egypt's trade & industry minister.