A consortium led by Gulf Finance House (GFH), the Bahraini Islamic investment bank, unveiled plans yesterday to build a residential and industrial city in China worth up to $5 billion.

China Energy City will be developed on 13 square kilometers in Yanjiao, near Beijing, offering facilities such as a branch of a planned Qatar-based energy exchange, a science park for energy education courses and a Sino-Arab business school, offering business education in English, Chinese and Arabic.

Esam Janahi, chief executive of GFH, said soaring demand in China for Gulf crude oil was a key factor in his company's decision to invest. Mr Janahi noted that while China had invested $7 billion in the Gulf, Arab investment in China was relatively modest.

"With more than 50 per cent of that oil supply expected to come from the Middle East, China is an attractive commercial opportunity for Middle East energy companies," said Mr Janahi, who is partnering with GFH sister company Gulf Energy and China's Long Juan Co.

The move will spur further Arab investment in China, he said. Arab money is increasingly looking east to find attractive returns for the surplus petrodollars that have accumulated in the region during the past four years.

Chinese companies have targeted oil, gas and construction projects in the Gulf, while demand for Chinese goods soars in the consumer societies of the region.

GFH has launched similar energy cities in Qatar and India, near Mumbai.