Gordon G. Chang, Forbes.com

Today, the semi-official China Federation of Logistics and Purchasing said its Purchasing Managers Index for March jumped 2.1 points to 53.1.  Analysts had expected a slight fall to 50.8 from February’s 51.0.  A reading above 50.0 signals expansion.

Seven Election Year Chinese Stocks
Portfolio Strategy: Hit The Refresh Button
The Five Personalities of Innovators: Which One Are You?

The semi-official number has shown expansion for four straight months.  So China’s slowdown must be over, right?

Perhaps.  The HSBC Markit PMI for March tells a different story.  Its index tumbled, falling to 48.3 from 49.6, indicating the fifth-straight month of contraction.

Why the difference in the two indexes?  The China Federation’s index is biased toward state manufacturers while HSBC’s is more heavily weighted toward the private-dominated export sector.

Moreover, as the Wall Street Journal’s Tom Orlik suggests, the semi-official number appears to be insufficiently adjusted for seasonal variations.  March almost always shows strong growth in manufacturing as the country gets back to work after the Lunar New Year holiday, and the China Federation index for the month historically has shown big increases.  As Orlik, who has keen eye for numbers, notes, the index would not do so if it were properly adjusted.

Nonetheless, the two indexes cannot be reconciled as they should move more or less in tandem.  Because they have not been doing so, either there has been a sudden and structural change in the Chinese manufacturing sector in the last few months or the China Federation has just been making up its number at the direction of Beijing.

Beijing would never publicly admit to ordering a fabrication of economic data, but Zhang Liqun of the State Council’s Development Research Center came close to doing so when speaking to the Financial Times.  “Looking at the PMI itself, it would seem that economic growth is recovering, but there is a clear difference if you look at market demand and the real economy,” the government economist said, referring to the China Federation’s index.

So there you have it.  Not even Chinese government economists want to defend theChinese government’s index.  Yes, the economy is that bad.