Within a few minutes of driving into Langfang, it is clear that China’s property boom is still going strong. At a traffic light, a tout knocks on the car window with a leaflet advertising a new housing development, Lion City. A second leaflet – for the sprawling 19 City States villa complex – is inserted under the windscreen wiper, followed quickly by a third, for Happy City.

A red-hot housing market might not seem unusual in China, where real estate prices have soared over the past decade. But what is happening in Langfang, one hour’s drive from Beijing, and other cities is new and potentially far riskier than anything that came earlier. Since 2010, the government has tried to cool the property market and made it virtually impossible for developers to secure loans from banks. Starved of cash, developers were forced to slow down.

But as the Langfang boom shows, property companies are finding funds again. The money is not coming from banks as the regulatory controls on loans to developers remain. Instead, developers are turning to China’s shadow banking system, a complex network of financing channels outside the formal banking sector.