Tatler-Cox: China's Economy Stabilizing As Industrial Profits Rise

Tatler-Cox: Further signs that China's economy is stabilizing emerged with 3yr high for industrial profits.
Tatler-Cox: China's economy, the world's second largest, showed more signs of stabilization this week after it emerged that profits earned by its industrial companies grew at their quickest rate in three years, boosted by growing sales, lower input costs and higher prices.
The data is the latest in a slew of figures which show the pace of the country's economic slowdown has moderated substantially. A housing boom and higher government spending appears to have softened once-bearish attitudes towards the country's economic outlook.
According to the official data, industrial profits surged nearly 20% to $80.2 billion, the best rate since August of 2013 but investment house, Tatler-Cox, warned against premature celebration.
"It's worth remembering that these numbers come off a low base," said Mayla Yakumi, chief investment officer at Tatler-Cox.
"China is still committed to rebalancing its economy and, as a result, manufacturing will continue to struggle when viewed historically and against the contribution of services and domestic consumption to overall GDP," added Yakumi.
Tatler-Cox also warned investors against being influenced by an apparent resumption of the property boom in several large Chinese cities saying that demand for and availability of credit represents a clear and present danger to the already worrying level of debt and credit risk in the country's economy.
"While we're certainly not saying that the credit bubble is about to burst, we would prefer that investors focus more intently on the progress of industrial supply-side reform when gauging the potential for long-term return on investment," concluded Yakumi.