There is a tendency, particularly in Washington and occasionally in Western Europe, to think of the rise of Japan, China and India as being in some way a matter of power shifting from the Western powers to the East. My belief, and the essence of the argument that I have made in my new book, Rivals, is that this is wrong. We should recognise this process as being one that is bringing about a rivalry, a competition, not between West and East, but between East and East.

In economic terms, these nations are becoming more integrated: trade between them is increasing as a share of their total trade, up to nearly 50 per cent now, which is lower than the EU's 65 per cent, but just above the intra-regional trade inside the North American free trade area. The Asian countries are more integrated because they are conscious commercial competitors and therefore, I think, stimulating the reforms in all three countries.

Inherent in the relationships between these three powers is a mixture of economic competition, growing commercial relationships and integration, but also political rivalry. One of the people I spoke to was someone who then became Japan's Foreign Minister, and I asked him what I should think about tensions between China and Japan. These were strong at the time I was speaking to him, with violence at football matches, big protests about visits to the Tokyo War Shrine, and things of that nature. He said; "Ah, I don't know why you Westerners are so surprised by all this tension between China and Japan. After all, China and Japan have hated each other for a thousand years – why should it be any different now?" I mention this because that man is now Japan's Prime Minister, Taro Aso.

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In other words, this is a region of great hope for us economically, which is reducing poverty at a faster rate than anywhere else in economic history, which is now rich in capital and can produce some upward momentum at a time when the world economy will need support. But it has severe political question marks hanging over it. I cannot resist finishing with Groucho Marx's response to someone when asked whether he'd had a wonderful evening. His answer was that he'd had a wonderful evening but this wasn't it! That is the danger for Asia.

Taken from a Gresham College lecture by the former editor of 'The Economist'