The leadership in Beijing was taken aback both by how rapidly COVID spread across the country following the relaxation of strict virus curbs in December, and by how quickly the economy rebounded thereafter.

Or so said someone “familiar with the matter” who spoke to Bloomberg.

Assuming there’s any truth to that, it could mean stimulus provision won’t be aggressive going forward. Another source indicated that ahead of the National People’s Congress, state media were instructed to say the Party now views the economic situation as less urgent.

That’s good news for the economy, but not so good for the liquidity impulse that so many have insisted was the driving force behind the global stock rebound since mid-October.

On Wednesday, a combination of re-positioning coming out of February and an upbeat read on China’s official manufacturing PMI helped drive a raucous rally in Hong Kong-listed Chinese shares. The Hang Seng China Enterprises Index rose 5%.

H-shares — and particularly the hyperactive Hang Seng Tech gauge — led the charge higher from the October lows hit following Xi’s coronation at the National Congress, which was accompanied by hand-wringing about one-man rule. Bargain-hunting and, eventually, re-opening optimism, drove a sharp recovery, but the rally faltered in February. H-shares recouped almost half of last month’s correction in a single session Wednesday.

Admittedly, I’m inclined to a caustic cadence when covering official Chinese economic releases. The data was always a standing joke, but in the 2020s, skepticism is compounded by extreme macro ambiguity and China’s turn for what may as well be totalitarianism under Xi.

For whatever it’s worth, the 2.5-point rebound in the official manufacturing PMI was celebrated Wednesday as evidence of renewed economic vigor.

The non-manufacturing index, which plunged in December to levels consistent with both the Shanghai lockdown and the original COVID containment effort, hit 56.3 (the construction index printed 60.2, and the services gauge 55.6).

The figures were greeted with the usual round of boilerplate, perfunctory quotes which could’ve been written by ChatGPT. For example: “The latest economic data suggests China’s reopening has been working well.”

Of course, the data isn’t totally contrived, and there are ways of corroborating it. Chinese factories were re-opening after the holiday, and common sense (not to be confused with “common prosperity”) dictates that when you let people out of their homes, economic activity tends to pick up. In addition, regional PMIs were generally upbeat too, even as Japanese factory activity remained mired in contraction.

Notably, the largest MoM gain among manufacturing PMIs released Wednesday belonged to Taiwan, where S&P Global’s gauge jumped from a lackluster 44.3 in January to 49, just short of expansion territory. “Taiwan’s manufacturing sector saw a much softer deterioration in operating conditions during February, with the latest PMI data signaling much weaker drops in output and new orders,” Annabel Fiddes, associate director of economics at S&P Global Market Intelligence, said. “Input buying also declined at a notably softer pace, while supply chain pressures were greatly reduced compared to this time last year, with delivery times close to stabilizing,” Fiddes added.

I wonder how quickly those chip factories can be retooled for defense. Asking for interested parties in Beijing.