Mr Pei has been working as a part-time consultant on the building for his company, the New York-based Pei Partnership, now managed by his son, C.C. Pei, who will monitor the construction.

Located on Washington's International Drive, a park-like enclave set aside by the District of Columbia exclusively for new embassies, the new Chinese mission will dwarf all 15 other foreign legations there. Until now, the largest structures were the Malaysian and Nigerian embassies, each with 100,000 sq ft. At a sprawling 250,000 sq ft, the Chinese embassy will be the biggest foreign mission ever built in the US, reflecting Beijing's swelling importance in the eyes of the US.

To fit the structure on the available land, China had to acquire the last three remaining lots in the complex, thus closing the area to any further development. Previously, no other countries had taken more than two building sites. China's location, between the Singapore and Israeli embassies, gives the building the centrepiece position on International Drive. As visitors drive in from Connecticut Avenue, the first embassy they see will be China's.

Unlike the current embassy building - a lacklustre brown-brick apartment block - China's new compound will include key Chinese elements. A cobble-stoned motor court with flowering plants and pine trees lining the sides will lead to the main entrance, and there will be a large contemporary version of a traditional Chinese garden.

Chinese officials say the current staff has outgrown its present facilities on Connecticut Avenue.

But in fact, the new embassy provides far more than some extra elbow room; it is a physical declaration in steel and stone that China has now become a major power and wants to have its presence felt in the capitol of the world's last superpower.

Says Theodore Strickler, head of the US office of foreign missions: 'Washington is seen as the premier diplomatic capital in the world. So every country wants to be represented in the best possible way, and that extends beyond sending their best diplomats and staff. It also involves the quality and appearance of their embassies.'

The Americans seem to agree with China's assessment of its growing political and economic significance. Secretary of State Condoleezza Rice has announced that the US State Department will do away with 10 diplomats in Russia, but will be adding at least 15 more personnel to China, including a dozen more staff in Beijing. America's ambassador to China, Clark Randt, says: 'The US bilateral relationship with China may well be the most important relationship in the world today.'

Meanwhile, in Washington, Han Jiekung, an official in the construction office of China's current embassy, declined to comment on the cost of the new building. And the embassy's project manager at Pei Partnership, Gerald Szeto, told the South China Morning Post that both the building's cost and the design fees paid to his firm were confidential.

However, no money was exchanged for the land itself. Under the terms of a bilateral agreement between China and the US that took 12 years to negotiate, China has agreed to provide the US government with free land to build its new embassy in Beijing. In return, the US has leased the plot of land at the International Centre at no cost to Beijing. China's lease runs for 90 years, with an option to extend for 90 more.

The new American embassy in Beijing will also open in 2008. According to Charles Williams, director of the US Bureau of Overseas Building Operations, the new facility, now under construction on one of Beijing's outer ring roads, is 'the largest single construction project undertaken by the State Department on foreign soil'.

China's ambassador to the US is the urbane Zhou Wenzhong . The 61-year-old British-educated diplomat was a one-time interpreter for Deng Xiaoping , and later became China's ambassador to Australia, before becoming Beijing's envoy to the US in 2005. He previously managed China's consulates in San Francisco and Los Angeles, and has publicly made it his goal that while in Washington he will visit all 50 US states and meet all 535 members of Congress. Nearly a dozen of his staff have been assigned to work directly on liaison with congressmen.

While Mr Zhou's new embassy will have state-of-the-art facilities, it will not have - at least Chinese senior officials hope - electronic bugs. That is the primary purpose for Beijing importing hundreds of its own trusted construction workers to do the lion's share of core construction on the chancery. They will be housed in the US for nearly three years.

Beijing apparently still remembers 'the problem' with the 747-400 aircraft they bought from Boeing several years ago. The aircraft was to be their version of Air Force One. But soon after delivery, according to unconfirmed reports, the Chinese discovered electronic bugs in the armrests of the first-class section for their VIPs.

The Americans themselves have been burned by electronic bugs. In 1946, the US State Department was furious to discover that a bug had been boldly planted inside their ambassador's Moscow residence, inside the Great Seal of the United States. The beautiful hand-carved wooden work of art, which showed a massive, glint-eyed American bald eagle, had been presented to US ambassador Averell Harriman by Russian schoolchildren. The delighted diplomat decided to hang the elegant gift directly over his desk.

A routine security check, six years later, discovered that the seal contained an electronic microphone. The Americans were so embarrassed that they did not bring their complaints to the UN until 1960. And then throughout the cold war the Americans were constantly discovering bugs in most of their East European embassies.