It's almost difficult to believe, but just 8 years ago, in 2007 and right before the world was swept in the worst financial crisis in history, China had only $7.4 trillion in debt, or 158% in consolidated debt/GDP. Since then this debt has risen to over $30 trillion (specifically $28.2 trillion as of Q2, 2014) representing a staggering 300% debt/GDP.

Here is the summary breakdown from McKinsey.

This means that China was responsible for more than a third of all the $57 trillion debt created since 2007, making a mockery of the QE unleashed by all the DM central banks - something we first noted about two years before the famous McKinsey report went to print.

However, it was precisely this credit expansion that not only allowed China to completely ignore the global depression of 2008/2009 but to build lots and lots of ghost cities such as these.

To be sure, many noticed but everyone kept quiet: after all, to build these cities China not only had to create trillions in debt, it had to import a hundreds of billions worth of commodities form places such as Brazil and Australia.

Then, in the late summer and fall of 2014 something happened: for whatever reason, as we noticed one year ago, the most unregulated aspect of China's financial system, its shadow banks, not only stopped lending money but actually went into reverse, thus putting a lid on China's Total Social Financing expansion, which had been the world's "under the radar" growth dynamo for so many years.

At that moment not only did China's ghost cities officially die, but it meant an imminent collapse for China's feeder commodity economies such as the abovementioned China and Brazil.

In the US this phenomenon was given a very simpler name by the brilliant economists: "snow."

And since China's domestic demand, not only from "ghost cities" but all other fixed investment was a function of pervasive credit, suddenly China's commodity industry in general, and steel industry in particular, entered a state of shocked stasis.

To get a sense of how bad it is, look no further than China's steel industry. It is here that, as Bloomberg reports, "demand is collapsing along with prices," and "banks are tightening lending and losses are stacking up, the deputy head of the China Iron & Steel Association said on Wednesday."