Noah Smith:

China has a huge and growing trade surplus, as you can see in the chart above. That chart is via Brad Setser, who is really a one-man army in terms of tracking global trade and financial flows. Here’s a thread from Setser with a lot more detail on China’s surplus. Interestingly, China’s exports to the developing world are a lot bigger of a factor herethan its exports to the U.S. and the EU, though the latter are up by a little bit. 

This is the Second China Shock. Trade surpluses like this can’t be explained by the good old theory of comparative advantage — a Chinese trade surplus is just countries writing China IOUs in exchange for physical goods. Countries don’t really have a comparative advantage in writing IOUs.1

Why trade surpluses and deficits do happen is an important and interesting and complex question, and my general impression from reading a bunch of economics papers on the topic is “No one really knows”. It probably has something to do with the fact that China’s government is directing its banks to loan vast amounts of money to manufacturers, and paying manufacturers tons of subsidies on top of that. But there also has to be some sort of financialfactor involved that prevents China’s currency from appreciating and allowing Chinese people to buy more imports. This could be something the Chinese government is doing intentionally, or it could be a natural outgrowth of China’s economic difficulties. More on this later.