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On a sweltering day in August, the towering ferris wheel and massive roller coaster of China's Jiyanghu Ecological Park, a two-hour train ride from Shanghai, stand eerily silent.
Down a shady lane buzzing with cicadas, a security guard stands inside the near-deserted park's administration building, its foyer featuring a reflecting pool and a two-storey-high stone relief of traditional Chinese figures in flowing robes.
"We have a large shopping and dining district here, and the amusement park here," says an employee offering a glossy brochure and a cup of tea in an office upstairs.
"But I have no idea where the financing comes from."
The amusement park, built three years ago in the dusty port city of Zhangjiagang, is owned by the municipal government and is being funded through a channel that until recently was being phased out by Beijing: the local government financing vehicle.
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These murky vehicles, which do not appear on a local government's balance sheet, are roaring back to life, funding new projects and, as in the case of the amusement park, refinancing old debts as Beijing tries to spur the economy.
Their return is an admission by Beijing that commercial banks alone cannot fund a badly needed revival in investment.
As well as resurrecting local government financing vehicles - monthly bond issuance by LGFVs quadrupled between February and July, according to Moody's - Beijing is pumping capital into state policy banks and allowing alternative funding sources to grow, such as Internet finance and private lenders.
"Our nation's economic situation is relatively bad," said the head of a finance department at another LGFV in heavily indebted Jiangsu province, home to the ecological park.
"The central government wants to control government debt but can't slam the brakes because, after all, the economy can't have a hard landing."
BACK TO THE FUTURE?
Economic growth is officially forecast to slow to a 25-year low of 7% this year, still strong by global standards, but uncomfortable for Beijing, which devalued the yuan last week in a move that should help struggling exporters.
Some economists suspect growth is closer to 5% - which could explain why Beijing is trying to boost investment on a scale not seen since the global financial crisis.
To enable local governments and state policy banks to do this, Beijing is underwriting a blizzard of new bonds: 2 trillion yuan ($313 billion) to refinance local government debts and another trillion yuan so that policy banks can fund big-city projects such as pipelines, water treatment or subway systems.
And those figures do not include the 800-900 billion yuan that Goldman Sachs estimates has been pumped by Beijing into the nation's wobbly stock markets. Much of that has been lent by state agencies to local institutions to fund stock purchases.
Cumulative stimulus is starting to rival the 4 trillion yuan spending package unveiled during the global financial chaos of late 2008, fuelling concerns that China's economic miracle could end the same way Japan's did - in high debts and deflation.
"China appears to be more or less slowly entering a debt-deflation trap," said Liu Li-Gang, chief economist for greater China at ANZ Bank in Hong Kong, adding that Beijing needed to sell state assets more aggressively to escape a debt spiral.
"But this requires strong political will which has so far been lacking," Liu added.
BONDS ARE THE NEW BLACK
Bank lending, sluggish in the first half of this year despite four interest-rate cuts and looser lending restrictions, has picked up in recent months, reflecting the banks' role in funding the government's bailout of stock markets.
But in terms of reviving bricks-and-mortar investment, bonds are doing much more of the work, such as those issued on behalf of the owner of Zhangjiagang's Jiyanghu Ecological Park.
Spread over 4.25 square km (1.6 square miles), the park already looks neglected. Beyond the entrance, there is a row of locked shops, including a shuttered gaming center covered in anime superheros. The paint is peeling off some facades.
The park's LGFV parent firm, Zhangjiagang Zhishu Development Co., plans to raise 1 billion yuan to refinance old loans, including a 120 million yuan bank loan for the park's operating firm, which has plans for a redevelopment.
"Our revenue is sufficient to cover our costs, and there is also some profit," an assistant to the park's operations manager said by phone.
The assistant, who gave his name only as Ji, did not provide any detailed figures. The park's operating company, a unit of the LGFV, made a loss for the first nine months of 2014.
Officials at the local finance and economic planning bureaus declined to comment on municipal investment policies.
As local governments gear back up, China's smaller and more productive firms still struggle to secure finance.
These firms are locked out of main stock markets by an official freeze on initial public offers and they get a chilly reception from banks which prefer to lend to state-owned firms.
Instead, smaller firms are resorting to non-bank finance, from crowd-sourced loans raised online to private lending firms that, according to market sources, can charge up to 15-18% interest on a secured loan in China.
"We have been inundated with requests," said Barry Lau, managing partner at Adamas Asset Management, one of a growing band of credit funds providing secured loans in China.
($1 = 6.3993 Chinese yuan renminbi)
