"In George Orwell's famous novel '1984', the world was divided into three competing blocks, Oceania, Eurasia and Eastasia," Goh told the Boao Forum, a yearly event begun by China last year to discuss regional issues.

"These blocks were locked in a struggle for ideological supremacy," Goh said, adding that the world had avoided Orwell's scenario of perpetual military conflict with the end of the Cold War.

"It would be ironic if we fulfilled Orwell's vision in the field of trade," Goh said.

While Asia was moving toward a free trade zone stretching from Australia to South Korea, the United States was eyeing a trade bloc covering the Americas, and the European Union was set to expand to 25 member nations from 15, Goh said.

"If trade regions turn inwards and adopt an isolationist, beggar-thy-neighbor attitude, everyone loses," Goh said. "Political tensions will rise as each region competes for resources like oil. Conflicts will result."

Goh said Singapore was taking initial steps to avoid such tensions by participating in a "P3" free trade trio of Pacific countries including Singapore, New Zealand and Chile.

That meant a "P5," bringing in the United States and Australia, was possible, Goh said.

Boao host China, the region's star economic performer, would play a key role in helping the rest of Asia to develop, Goh said.

"China has become the world's factory floor, while India has become its IT and back office," Goh said, referring to information technology.