FORTUNE — Whispered in the halls of the World Economic Forum’s elegant Congress Center this year: Where are the Chinese? For the first time since anyone can remember, China has not sent a high level official to this Alpine gathering of the world’s top leaders and business titans.

Could it be that the Chinese economy is doing so well that Beijing felt no need to send a high-level entourage, one participant asked. Another speculated the Chinese held off because their government is in transition. Perhaps, but the explanation that makes the most sense came from the CEO of an Indian energy company. “You know,” he said. “It’s the Chinese New Year.”

Last year, the mood at Davos was quite positive, as those gathered here felt that America was coming out of its slump, China had avoided a bursting bubble and Brazil, India, and the rest of the developing world were humming.

All that is still true, but the crisis in the Euro Zone has put a bit of a damper on last year’s enthusiasm. The buzz this year is still optimistic but much more cautiously so.

While some bankers think Europe has put the worst of the debt crisis behind it, there’s still a lot of heavy hauling ahead. Prime Minister David Cameron today painted a somewhat bleak picture for the Euro Zone where, as he pointed out, growth is slowing and debt and unemployment are rising.

Cameron believes the European Union is in a crucial moment in its history and “bold” government action is needed to make the EU more competitive. “Tinkering won’t cut it anymore,” he said. Among his prescriptions: governments need to cut pension obligations, slice the corporate tax rate, and eliminate job-stifling regulations.

Now all Europe’s leaders need to do is win over the EU’s strong unions, which aren’t likely to receive these prescriptions with an open heart.