As we enter 2008, the countdown is well under way for August's Olympic Games in China. Yet, months before the Olympic torch sparks into life in Beijing, China and its fellow Asian nations have already raced into a position of global leadership. 

This year, emerging-market nations, led by Asia, will overtake the rich countries of the developed world to become the most important collective engine for global growth. 

As the mighty US economy falters and once-so-superior Europe stumbles, China, for the first time since the early 19th century, will become the largest national contributor to world economic expansion. 

That will be true whether China's impact is calculated by measuring what it produces at market values, or after making adjustments so that a dollar would buy the same goods if it was spent in Beijing or New York. This historic - presumably temporary - passing of the baton of global economic leadership from the West to the emerging powers of Asia is a moment as remarkable as the breaking of the four-minute mile. However, as Western governments confront the industrial world's diminishing prospects in what will be their most testing year since the start of the century, the passing of this milestone has left markets fretting over two crucial questions. 

First, can these emerging markets really sustain their outperformance, charging ahead at the front of the field even as the big economic powers of the Group of Seven developed countries fall behind? Secondly, will their stamina help to sustain the West's failing performance? 
The good news is that the odds look very much in favour of Asia and emerging markets sustaining their strong performance this year despite the G7's plight, a phenomenon that economists have dubbed "decoupling". 

The bad news is that while this trend will help to bolster global growth, its benefits to the industrialised world will be limited and are likely to come at a significant cost, both literally and metaphorically. 

Scepticism over the decoupling idea remains pervasive among financial markets as well as policymakers. The old dogma that if America sneezes the rest of the global economy must inevitably catch a nasty chill remains a deeply rooted piece of conventional wisdom - understandably so, since investors or governments dismiss the potency of the US economy as a driving force at their peril. 

Yet the reality is that this familiar prognosis of inescapable global contagion from America's ills is almost certainly misplaced. Crucially, the exposure of Asia and other emerging markets to this US downturn is vastly less than their vulnerability to the fallout triggered by the dot-com bust of 2000.

In the previous US downswing, there was no escape for emerging markets. The huge bubble in internet and technology-related shares was not only an American but also a worldwide trend. When Wall Street fell, stock markets across the world, including those in emerging markets, were, unavoidably, hit. The impact of the financial toll on Asia was then magnified since the region's factories were the world's workshop for huge quantities of the high-tech gear for which demand abruptly slumped. 

This time round, things are drastically different. The origins of US economic woes lie in its residential housing market, a sector that has its impact almost wholly within America's borders. As Merrill Lynch puts it: "The world does not build American houses."