Things are bad in both of China’s big exchanges; both the Shanghai and Shenzen are seeing companies halting their trading on both:

Over 700 Chinese companies have halted trading to “self preserve,” according to the state media. That means about a quarter of the companies listed on China’s two big exchanges — the Shanghai and Shenzhen — are no longer trading.

China’s stock markets are in trouble. The Shanghai Composite Index has fallen over 25% since mid-June. The Shenzhen, which has more tech companies and is often compared to America’s Nasdaq Index, is down even more.

Government intervention has not helped:

Chinese stocks fell on Tuesday, taking little comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved by Chinese Premier Li Keqiang’s failure to mention the market chaos in a statement on the economy.

Before the market opened, Li said in comments posted on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30 percent off Chinese shares since mid-June.

Morgan Stanley Asia Chairman Stephen Roach said some of China’s problems can be traced back to issues related to the debt-to-GDP ratio:

China is also trying to address its debt-to-gross-domestic-product ratio, which some estimates peg at more than 225 percent, Roach said.

“[But] they don’t have a full array of capital markets to support the economy, like places like the United States,” he continued. “So they have to rely on much more debt financing to grow this investment-led economy. They went too far, especially in the property area.”

It’s not hard to see how the property bubble and this stock bubble are related. From last April here on LI:

China’s property bubble has already started to burst as the country struggles to avoid a hard-landing after the housing market became overheated with soaring prices.

China’s commercial and residential property sectors are not doing well, especially in the city of Hangzho, which has “become the symbol of a market in distress”, according to Forbes.

The world’s largest retailer, Wal-Mart, is closing its Zhaohui store in Hangzhou on April 23 as a part of its overall plan to dump unprofitable locations. The sale of the large store comes as the city has too much supply of commercial properties, according to Forbes.

Hangzhou’s Grade A office buildings at the end of 2013 had an average occupancy rate of 30%, according to real estate broker Jones Lang LaSalle.

A month ago, investors were saying China was in “bubble territory” and were bearish on their stocks:

Morgan Stanley just did an in-depth survey to see how major investors currently feel about Chinese equities. They were not optimistic.

Brian Kelleher, Morgan Stanley China analyst, and his team find that, on average, respondents expect the MSCI China Index to rise a mere 1.4 percent over the next 12 months on a weighted average basis. That’s the smallest gain since Morgan Stanley began conducting its survey in March 2013.

Despite that, Roach remains relatively bullish on China:

Still, Roach said the Chinese economy will stabilize around 6.5 percent to 7 percent growth. “It’s not going to go to zero as some of the China bears” have predicted, he said.

Ironically, it was China’s government stimulus for infrastructure (sound familiar?) that helped to create the issue:

China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

We’ll see what shakes out, but when 700 companies decide to halt trading on your exchanges, it is not a good sign.