Both corporate and household lending fell more than 60% from the previous month. In short: the credit impulse just shriveled up and died. 

To some observers, this was a shock. After all, between multiple rate cuts and round after round of liquidity ops, you'd certainly think that banks would have excess cash to lend. Of course the problem isn't liquidity. The problem is the economy and, in China, a worsening NPL problem. 

Leaving aside Beijing's souring loan crisis for now, the overarching point is that while central banks can keep the liquidity flowing, what they can't do - despite what Draghi, Kuroda, and Yellen will tell you - is boost aggregate demand. This has become abundantly clear in the post-crisis world as trillions in global QE have failed to engineer a robust recovery in either global demand or trade.

When economic activity is anemic, you can expect the credit impulse to dry up. Businesses don't want to invest when the economy is in the doldrums and when everyone has an overcapacity problem. As one loan officer at a Big Four bank told MNI over the summer, "our bank's loans in July in the Beijing area were even weaker than in June. We can't find the demand."