Except it isn't really a government giving money to itself, it's the banks.

When and if the enterprises default, the banks will go under. This means that Chinese people will lose money (or the government will try to be fiscally prudent to recover money lost in bad investments, which will mean that Chinese people will lose money).

Money owed by a government owned bank to a government owned enterprise is a real debt, which if defaulted upon will have a lot of real effects.

Here is a toy scenario, suppose we have 1000 people and they are capable and willing to build a new solar electric system. The problem is, nobody has any money. The 1000 people could form an institution, let's call it a bank, that would hand out IOUs to anyone who wants to build and install the solar panels. Some of the 1000 people agree and start building out the electric system. Once the system is in place, people start paying the organization for electricity and then all the IOU holders can get payed for their work.

The payments to the organization might come in the form of goats, chickens, timber, or even IOUs!

If the organization had used the debt to make a bunker instead of an electric system. The citizens may not be so interested in hanging out and using (paying) for the bunker, so all the IOU holders would be out of luck.

In other words, if the IOUs to the contractors aren't eventually repaid. People won't accept IOUs from the organization (bank) anymore.