Thread by @Brad_Setser

Not a surprise to those following the data closely as the trend has been clear, but China's surplus in manufactures topped $1 trillion in the 12ms through August.

Think it is fair to say very few predicted the trade war would (somehow) drive China's trade surplus back up ...

In dollar terms, the rise in China's surplus in manufactures is comparable to rise during the peak years of the pre-crisis China shock.

It isn't as big as a share of China's own GDP, but it is still considerable at around 1 pp of GDP

Difference now is that the rise in China's surplus is coming from a fall in imports, not a rise in exports ...

That's why I argue that China has been the key factor driving the fall in global trade (US imports ex China are up even with the trade war)

yes, China imports in order to export, so the fall in exports to the US explains a portion of the fall in China's imports (hard to get more than $10-15b of the $75b or so fall in imports of out this tho (data reflects 10% tariffs on $200b/ 25% on $50b, not the escalation).

and yes, falling chip prices matter enormously to China.

but that should also be reducing China's exports (doubt Chinese producers get to capture lower memory chip prices via higher margins). So changes in chip prices do not explain the gap between exports and imports ...