The word "historic" is often applied rather freely, but this really is a historic moment. As the Financial Times noted, America overtook Britain to become the largest economy in the world in 1872. For almost 150 years US economic preeminence has been the foundation and the source of American power, and the American power has done more than anything else to define a whole era in world history, and shape the world as we know it today.

It would be a profound mistake for America not to see what this means. It does not mean that America is in decline. Nor does it mean that China will necessarily replace America at the pinnacle of global power that it has occupied for so long: China will not "rule the world".

But it does mean that China today is a country that is fundamentally more powerful than any that America has ever had to encounter before. It is also a country that has a stronger sense of its place and status than any country in the world except perhaps America itself.

Both need to rid themselves of the assumption that the other cannot be a trusted partner in such a deal. There is no reason at all to assume that a mutual accommodation cannot be reached between them. America will not accept the establishment of Chinese primacy over Asia, but it might well be brought to accept that it should share the leadership in Asia with China, thus according China far more status and influence in Asia than it has enjoyed for centuries.

As Japan considers how far it can rely on US assurances of support for its position on the disputed islands, it is also wondering how far it can continue to rely on the US for Japan's overall security as America's relative power and influence in Asia decline.

Likewise as America considers how far it should go in supporting Japan in the East China Sea dispute, it is also thinking about the consequences for the US-Japan alliance, and for the whole US position in Asia, of any failure to fulfill its alliance commitments.

The stakes therefore could hardly be higher for all three countries, which is what makes the situation rather risky. And it suggests that to reduce those risks, it will be necessary not just to reach some agreement on the islands themselves, but to address the underlying questions about the roles of the US, China and Japan in Asia's new order.

The author is former prime minister of Australia. The article is an excerpt from his speech delivered at the 2nd International Symposium on Security and Cooperation in the Asia-Pacific Region, hosted by the China Institute for International Strategic Studies in Beijing recently.

(China Daily 06/19/2014 page9)