China corporate profits rise on unstable foundation

Industrial profits increased 14.5% in November from a year earlier, China’s statistics bureau said on Tuesday, the second-fastest monthly growth since June 2014. But the agency cautioned that growth was “overly reliant” on a price rebound in oil refining, steel and other raw materials, the Financial Times reports. Coal mining profits rose 156% in January through November from a year earlier. Commodity price inflation is disrupting the government’s “supply-side reform” efforts focused on eliminating excess manufacturing capacity in sectors such as coal and steel. Analysts warn that a frothy property market and commodity inflation are not strong foundations for corporate profit growth. The government has imposed purchase and lending restrictions in recent months to cool the property market, amid fears of a bubble and anger at unaffordable housing.