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Today, traders from Asia and Europe haggle over handbags and cell phones, airplanes and nuclear-reactor construction deals. Four hundred years ago, the objects of desire were a little different, but the relationship between East and West was already underpinned by an intoxicating sense of commercial potential. An enormous gold-leaf, six-panel screen currently on display at London's Victoria and Albert Museum (V&A) shows a Portuguese trading ship arriving amid great anticipation at a lively 17th century Japanese port. The rest of the story unfolds on the screen: the captain marches ashore under a ceremonial parasol, Portuguese dignitaries pay court to the feudal lord, and Western businessmen offer their wares to intrigued customers, tantalizing them with everything from books to tiger skins. Even then—centuries before Jacques Chirac and Gerhard Schröder landed in Asia with their retinues of corporate executives—East and West shared common ground, each equally fascinated by the other.

This is the essence of "Encounters: The Meeting of Asia and Europe 1500-1800," at the V&A until Dec. 5. The exhibition, three years in the organizing, covers the artistic, decorative, commercial and technological interrelationships between Europe (mainly England, Holland and Portugal) and

Asia (China, India and Japan) during that breathtakingly dynamic period. The show is a trove of magnificent scrolls, silks, lacquer ware, furniture, clocks, telescopes, maps, wood-block prints, engravings and porcelains from the world's most important private and public collections, including Beijing's Palace Museum.

The exhibition's main starting point is 1498, when the Portuguese explorer Vasco da Gama established the first direct maritime connection between Europe and Asia, rather than a centuries-earlier time, when intercontinental goods traveled overland via the Silk Road. This approach bolsters the thesis that the relationship between Europe and Asia during these 300 years went far beyond exchanging silver for spices and silk—just as today we see cross-fertilization not just in manufacturing and outsourcing but in everything from fashion to film to yoga. The meeting of East and West not only challenged both sides' assumptions in geography, art, science and religion, but also affected taste, broadened imagination, and altered lifestyles.

Among the more than 200 pieces of evidence at the V&A: the Gaignières-Fonthill Vase, a lustrous, bluish white Chinese porcelain that arrived in Hungary in about 1338. The exhibition tracks Western attempts to replicate its shimmering glaze, including an unsuccessful example—a soft-paste, blue-and-white "Medici porcelain" dish from 16th century Italy. Europeans became so obsessed with Asian ceramics that even Augustus II, Elector of Saxony from 1694 to 1733, traded a regiment of 600 soldiers for 151 porcelain articles. Augustus also sponsored a project to promote domestic ceramics technology, which led to the production of the first true high-fired, hard-paste European porcelain by German manufacturer Meissen. The white Meissen teapot on display is itself a representative of melding cultures: tea was the most profitable cargo exported from China, and the pot features a flowering prunus, a classic Chinese design.

In oils, wood-block prints, miniatures and scrolls, you can see Easterners and Westerners trying to figure each other out. In about 1750, the ever-curious Qinglong Emperor of China commissioned four handscrolls to illustrate the various peoples of the world. Above the painting of each couple is a summary of their national traits. Of the British pair, a calligrapher wrote, with some accuracy: "Men are commonly dressed in woolen flannel and like drinking alcohol. Women, before marriage, bind their waists to make them narrow."

The exhibition provides plenty of cross-cultural dressing, too. There is a portrait of Emperor Yongzheng, who ruled China from 1723-35, in a wig, a waistcoat, a cravat and a long overcoat—none of which he probably ever wore. The British in India, however, often dressed in comfortable, local clothes. In a 1761 portrait by Joshua Reynolds, Captain John Foote wears a gown, a sash and a shawl of white muslin and colored silk embroidery. Next to the painting is the magnificent Mughal outfit itself, in near-perfect condition. Another portrait is of Sake Dean Mohamed, dressed as an English gentleman in a formal black suit, a high-collared shirt and signet rings. But in this case, the dress is no costume. Mohamed, the first Indian to write a book in English, emigrated to Ireland in 1782, and then, with his Irish wife, went to London where he opened the city's first Indian restaurant before establishing himself in Brighton as proprietor of the famed Mohamed's Baths.

The prize for the most apt title in the show goes to an 18th century hanging scroll, A Meeting of Japan, China and the West. Three men of learning sit at a European table supported on a Chinese-style pedestal. The Chinese scholar, with a scroll and a scepter before him, keeps his distance from his Japanese and European counterparts, suggesting that he doesn't share their scientific views. The hanging scroll, probably by Shiba Kokan, the father of Western painting in Japan, shows above them three different ways by which Japanese, Chinese and European men extinguish a blazing fire. Change the subject from fire fighting to, say, protectionism or workers' rights, and this unique representation of cross-cultural debate seems surprisingly contemporary.

While porcelains, mother-of-pearl, lacquer ware, textiles and furniture moved from East to West, technology tended to flow in the opposite direction. The Europeans brought maps, telescopes, guns and clocks as gifts, and they're on view here. The Chinese, for instance, had no apparent knowledge of mechanical timepieces until about 1600, when Emperor Wanli received two chiming clocks as presents. A hanging scroll of an imperial concubine shows she was clearly a later Emperor's favorite because of the gilt-edged clock among her treasures. As for the Japanese, they measured time in a different way from Europeans and Chinese, and used imported clocks more as personal accessories than as timepieces. A tall, standing steel clock with a bell on top is displayed next to an 18th century Japanese wood-block print of just such a bizarre timepiece with three elegant courtesans posed beside it.

The bearers of much of this technology were the Jesuits and other, mainly Catholic missionaries. They hoped their knowledge—of artistic perspective, astronomy, cartography and mathematics—would give them access to the highest levels of power and thus assure promotion of, or at least protection for, their faith. The priests used visual arts from the Western canon to make their case. The converts responded with hybrid adaptations, marrying Christian symbolism with Asian traditions. Some results, as displayed at the V&A: a standing baby Jesus in ivory from Goa; a jade crucifix inlaid with teardrop-shape rubies from India; and a porcelain statue from Japan of the Bodhisattva Guanyin, with a beaded cross around her neck and children at her feet, looking very much like the Virgin Mary.

The exhibit travels effortlessly from the sacred to the profane. There's betting and blood sport in Colonel Mordaunt's Cock Match, painted in India around 1785 by Johann Zoffany, as well as two Japanese pictures from about the same period—one shockingly explicit—portraying Dutchmen and their courtesans. "Encounters" also moves gracefully from the small—a Japanese netsuke (a miniature sculpture toggle that was traditionally clasped to a man's sash) of a floppy-hatted European carrying a rooster—to the large: a hand-painted wallpaper panorama of Canton's bustling waterfront that once hung in Scotland's Strathallan Castle and now takes up an entire wall at the V&A.

The object that closes the show is as symbolic as the Japanese depiction of the Portuguese trading ship that opens it: a mechanical tiger, made mostly of painted wood, devouring a prone British soldier. The tiger's body features a crank, which raises and lowers the victim's arm, and an organ, which plays the animal's roar and the soldier's shrieks. Built in India in about 1795 for Tipu Sultan of Mysore, it was seized by the British at his defeat a few years later. With the collapse of the Mughal empire in India and the beginning of the Opium Wars in China, the era of openness and fluidity between East and West came to an unhappy end. But not before leaving both worlds irreversibly changed, and producing the wonderful objects that make up this show.

• Ann Morrison | London
• A riveting exhibition recalls an earlier era when Europe and Asia fascinated and enriched each other