The world faces even greater political volatility than in the immediate aftermath of 9-11, but the nature of this volatility is almost going unnoticed, according to Ian Bremmer, president of the Eurasia Group, a leading global political risk and research consulting firm.

Speaking at the Public Affairs Council's Spring Executive & Board Meeting in Washington, D.C., on April 21, Bremmer said we have entered a "new world order," without understanding it. This new order is one "absent of global leadership" in which the United States will play a less commanding role.

"The U.S.-led model of globalization was one in which developed countries reached out to emerging markets and made them more like us," said Bremmer, the author of "The End of the Free Market: Who Wins the War Between States and Corporations?" Now the developed nations face serious internal economic problems, and China is becoming more dominant.

Relations between China and the U.S. will become fraught with conflict, and the "rebalancing" of economic relationships between the two nations will become "messy and inefficient."

But it would be a mistake to assume China will be democratized. "There will be no Jasmine Revolution in China," Bremmer said. "Increasingly, the government in China will have to pay attention to public opinion," but this does not mean its authoritarianism will end. "It will be clear, however, that big central planning of the kind that has driven China's economic growth will no longer work." Also, environmental pressures will render China's growth "unsustainable."

In the meantime, China will become increasingly involved in the economies of Europe which, like most developed nations, face huge deficits. The Chinese economic boom has been made possible through cheap labor, though China "will run out of cheap labor much as Venezuela ran out of cheap oil." Rising labor costs, however, will be less of a deterrent to foreign investment in China than concerns of intellectual property.

U.S. policymakers should give more attention to examining the nation's role in this rapidly changing trade environment. "Our debt levels are unsustainable," Bremmer said. "Everyone knows this." But elected officials are reluctant to address the problem in a serious way until at least 2013.

While U.S. influence in the world "will matter a lot less," Bremmer said he was in no way a "declinist." "The country is not falling apart. We are still the world's largest economy."

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