China's V-shaped coronavirus recovery looks too good to be true

Official statistics out of China suggest it is bouncing back from the coronavirus outbreak that shuttered the country for much of the first quarter, but there is growing speculation that data is being massaged to paper over a bevy of nagging issues.

Driving the news: China said manufacturing activity returned to expansion in March, with its official metric rising to 52.0. Economists had expected a reading of 45.0 after hitting a record low of 35.7 in February.

• The official index tracking services and construction rose to 52.3, the government said.
• Official reports also showed 95% of factories had reopened by mid-March, the Institute of International Finance notes, cautioning that anecdotal evidence suggests "utilization rates are still low due to the lack of orders and workers."

What we're hearing: The services sector numbers, in particular, are worth watching, says Matthew P. Goodman, senior adviser for Asian economics at the Center for Strategic and International Studies.

• "It’s still pretty dubious that there’s been a substantial bounce back yet, and the authorities may be exaggerating those numbers to make people feel a little better about this than has been quite warranted yet," he said during a conference call Monday hosted by the Council on Foreign Relations.

Others were less kind. "The China COVID numbers are fake and the China PMI number is also fake," Alan M. Cole, senior economist at the U.S. Congress Joint Economic Committee, said on Twitter.

On the other side: Unofficial numbers tell a different story. "Overdue credit-card debt swelled last month by about 50% from a year earlier," Bloomberg reported, citing unnamed executives at two banks. Per Bloomberg...

• "Qudian Inc., a Beijing-based online lender, said its delinquency ratio jumped to 20% in February from 13% at the end of last year."
• "China Merchants Bank Co., one of the country’s biggest providers of consumer credit, said this month that it 'pressed the pause button' on its credit-card business after a 'significant' increase in past-due loans."
• "An estimated 8 million people in China lost their jobs in February."

Why it matters: "These issues in China are a preview of what we should expect throughout the world," Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, told Bloomberg.

Go deeper: Coronavirus could force the world into an unprecedented depression