China's manufacturing and export-dependent economy crumpled,

and the ruling Communist party panicked.

Party leaders estimated they needed to sustain a minimum annual growth rate of 8%

if they were to contain political unrest that could threaten authoritarian rule.

The solution was to unleash what economists have called

"the greatest example of monetary easing in history,"

an enormous wave of easy loans channeled through the state-owned banking system.

In absolute terms,

China's total debt has ballooned from around 6 trillion dollars at the time of the financial crisis

to nearly 28 trillion dollars by the end of the last year.

As a percentage of GDP,

total debt has risen from 140% to almost 260% over the same period.

There is no question that the Chinese economy was saved in the short term

by the government's decision to open the credit floodgates.

But that has resulted in an economy addicted to borrowing

and afflicted with serious asset bubbles.

The ultimate test will come when Beijing eventually

attempts to wean the country off this debt dependence.