As the end of the year looms it is tough to know whether China or France is the more worrying situation for the global economy next year.

Many were startled last week when the Chinese authorities warned media outlets and financial journalists to stop referring to a "cash crunch" and to play down reports of difficulties in the interbank lending market. Some short-term interest rates shot up to double digits last week as the Shanghai market continued its slide.

Short-term money market rates continued to climb Monday despite the injection of some $50 billion by the Peoples' Bank of China into selected banks last week. The problem seems to be the simultaneous need of banks to meet end-of-month and quarterly cash regulatory requirements and of businesses to settle outstanding debts.

The alarm among Western observers had three origins: First, they are hearing growing concern among Chinese financial experts about their shadow banking system and the way non-performing loans are being disguised. Second, they expect China's exports face a tricky adjustment to the tapering of easy credit by the U.S. Federal Reserve. Third, the reforms announced by the new Beijing leadership won't be easy to implement.

As Yukon Huang, former World Bank director for China, put it in a recent paper: "China's debt problems can only be resolved through a major reform of the intergovernmental fiscal system. ... local authorities have increasingly relied on bank borrowings and land development to fund their expenditures rather than the budget. This has led to excessive credit for speculative property development and the reckless accumulation of debt."

Until we see how Beijing is able to make its reforms stick, the jury on China's debt issues will remain out. Given its underlying strengths, however, China's glass is best described as at least half-full.

France looks worse than half-empty. The alarm bells have been ringing for France for some time, with ominous signs that the country is slipping back into recession just as the European economy as a whole seems to be clambering out of the pit of the euro crisis. The latest purchasing managers' index suggests France is in for another quarter of declining output.

More troubling still was the open letter published last week in Les Echos, the business newspaper, and signed by 50 top managers of subsidiaries of global corporations with headquarters in France, which said, "In recent years we find it increasingly difficult to convince our parent companies to invest and create jobs in France."

Between them, these 50 business leaders employed more than 150,000 people in France and were responsible for sales of more than $137 billion, a significant fraction of French gross domestic product.

But the 50 who signed were just the tip of the iceberg of foreign investment in France. More than 20,000 foreign-owned companies, with more than 2 million employees between them (1-in-7 of the French workforce), account for one-third of French exports and almost a third of French industrial sales and of France's research and development investment.

"This wealth is priceless," argue the 50 business leaders in their letter. "France has the resources, talent and innovation but we are penalized by the complexity and instability of the legislative and regulatory environment, a lack of flexibility of labor law and by complex, lengthy and uncertain procedures and, more broadly, a cultural mistrust of the market economy.

"In all these areas, our global headquarters consider the situation in our country has not fundamentally improved. Rather, things are getting worse."

Indeed they are, with a new top tax rate of 75 percent for those earning more than $1.37 million a year, unemployment stuck stubbornly high in double digits (and more than twice that level for young people) and the government tinkering with the retirement age even as the pension system is going broke.

A European Commission survey indicated that even while confidence in the economy was starting to rise in most of Europe, it fell in France last month, reflecting "worsening expectations about the future general economic situation, unemployment expectations and savings over the next 12 months."

Industrial output dropped in the third quarter of this year, a decline that continued last month as exports continued to suffer from high labor costs and taxes. France's structural reform plans were only making "limited progress," the commission noted.

The ratings agency Standard and Poor's has cut France's credit rating from AA+ to AA, adding in a commentary that they had doubts about the country's creditworthiness and were worried by the high level of unemployment.

The ratings agency went on to forecast that government debt would reach 86 percent of GDP in 2015 and saw no prospect of unemployment falling below double digits over the next three years.