Each year, Eurasia Group lists ten top political risks to watch and potentially guard against from a global market perspective. This year is different in that what leads the pack is not a traditional risk confined to a country or a region, but rather one of global architecture and a structural shift in its order. That is:

After the financial crisis, the G7 was replaced by the G20. This change brought no challenge to America's global military supremacy. But the rules of the economic road are a different story and the new geopolitical order is shaped not by a military balance but by an economic one. This new world order marks the end of a decades-long agreement on how the global economy should function. This is world-changing indeed, because the dominant economic trend of the last half century, globalization, now faces a direct challenge from geopolitics.

The rise of this new order will have a profound impact on nearly all of the world's big-picture, long-term trends. A lack of coordinated governance on key economic issues will become entrenched and give rise to lasting international conflict. States and corporations will become more closely aligned in both developed and developing states. Most significantly, we'll see a shift in the highest levels of global conflict to the region where globalization and geopolitics collide with greatest force: for the past twenty years, the sharpest geopolitical tensions were to be found in the Middle East; we'll now see a decisive and long-term shift of those tensions to Asia. ...

Surprisingly, and despite all the anxiety these changes have created, there's no name for this new era. We propose the G-Zero.

China is also on the list. To be precise, it is not a risk within China, but one that has to do with outside perception of the extent and speed to which China is engaged in the global economic rebalancing agenda. For instance:

Despite mounting political pressure, Beijing is extremely unlikely to provide much policy response. This is not because China rejects the notion of global rebalancing--the 12th five year plan is all about rebalancing the Chinese economy, and the official Chinese media recently printed articles by prominent economists highly critical of China's existing growth model. But Beijing will "rebalance" at its own deliberate pace, especially given the risks that come with continuing weakness in the global economy, growing inflationary pressures at home, and an upcoming leadership transition. China's leaders are especially concerned with sustaining the high rate of job creation that they see as central to domestic stability. These are precisely the conditions under which Beijing is least likely to pursue bold reforms or to respond to the needs of other governments.

In the past, China has adjusted the pace of its reform efforts in response to targeted international pressure--for example, by depegging the RMB from the us dollar immediately before the June 2010 Toronto G20 summit. But very few such "steam releasing" events will arise in 2011. President Hu Jintao visits Washington later this month, but the North Korea crisis will dominate this meeting, decreasing the likelihood that China will see much value in any major moves on rebalancing.

Nearly ten months will pass before the next G20 in Cannes, a gathering for which French President Nicolas Sarkozy has grand ambitions. During this long hiatus, frustration with and pressure on China will build. So too will the risks of market-moving international reactions to China's incremental, deliberate, consensus-driven approach...

In short, at the heart of the issue is a dissonance between the views outside of China and those inside it. Many outside believe Beijing's elevated status and growing clout ought to translate into a China that's pulling its weight globally. Yet, those inside China believe that it is already punching above its weight. So, even as the interests are aligned, how do you coordinate/approach those interests within the context of misaligned perceptions?

Just some food for thought to start off the year.