As some of us in the West sit in the wreckage of the fallout of 'slash and burn' cuts resulting from the post-2008 financial sector induced mess, we may cast increasingly admiring glances to parts of Asia that weathered the economic storm so much better. Indeed, even the commonly portrayed 'sick economy' of Japan expanded as its fastest rate for 20 years, by a very respectable 3.9% in 2010. This performance was dwarfed by China's eye watering 10.3% growth or Singapore's blistering record 14.7% in 2010. Japan's nominal gross domestic product of $5,474 billion in 2010 compared to China's $5,879 billion confirmed what many have already known since the second quarter of 2010 - that China has displaced Japan, after four decades, as the second biggest economy in dollar terms. In purchasing power parity terms China has been 'Number 2' for years, the new "Asian Tiger" economy.

What key issues stem from this accession? First, the causes of growth and its sustainability is debated. Much has been underpinned by low labour costs and "perspiration not inspiration" (as Krugman put it) based on increases in investment and employment. These are not sustainable and once spare labour is used up and capital per worker reaches rich country standards, diminishing returns and slower growth will follow.