China Data Puzzle

China data puzzle: how come there is such a gap between the reported property new starts and completions? At the first glance (chart below), this looks concerning. But the correct data interpretation in China often requires a much more detailed view. The two data points may have different definitions/scope of coverage. The sales figure composition changes over time through cycles (e.g. more previously completed units sold in the inventory clearing push in lower tier cities). The meaning of ‘new start’ as the development phase in China vs pre-sale permit stage (and pre-sales based model) and completion, are important to understand, incl. the time lag. And, most interestingly, the timing of ‘completed’ status has impact on when certain tax (land value appreciation tax) becomes due. Allow for some ‘indeed an issue’ and the picture gets more realistic. A lot to consider even for the two apparently simple data points.