What's going on?

China reported a bunch of new economic data on Wednesday. One of the key insights was that the country imported a lot more stuff in May than economists were expecting….

What does this mean?

� which means that demand within China was stronger than economists thought – and a sign that the economy is doing better than expected. China still has lots of problems, but this supports the argument that its situation has improved markedly in the past six months.

One of the problems China faces is that money is continuing to leave China. Wednesday�s data showed a lot more stuff was sold into China from Hong Kong. This is almost certainly due to Hong Kong companies falsely overcharging Chinese firms – which is a way for Chinese firms to get money out of the tightly controlled country (i.e. the Hong Kong firm pays back the Chinese company via a bank account outside of China � presumably after taking a fee!).

Why should I care?

For the market: It�s good for companies that sell into China. German exporters, like Siemens, and American companies, like Starbucks, that are targeting the Chinese market probably liked the news. It�s good when one of your biggest markets seems to be doing better than expected!

The bigger picture: Lots of investors are still very negative about China. One reason is that money continues to leave the country – and that drives down the value of its currency (the yuan). So China buys its own currency in order to protect it from declining too much. It buys the yuan with the US dollar savings it has (read our more detailed explanation here). But its US dollar savings are not infinite (and are declining), which is why some investors are worried that China won�t be able to keep its currency from collapsing. And if that happens, China would be importing a lot less (because it couldn�t afford to buy as much with its weaker currency, e.g. new Volkswagens).