Japan’s Export Growth Jumps to Three-Year High as Shipments to China Surge

Japan’s exports rose 16.8% year on year in January, marking their fastest pace of growth since November 2022, as shipments to China and other Asian markets accelerated sharply, government data showed Wednesday.

The figure exceeded market expectations of a 12% increase and represented a significant jump from December’s 5.1% growth.

Exports to China, Japan’s largest trading partner, surged 32% in January, compared with a 5.6% rise in December. The increase came despite diplomatic tensions between Tokyo and Beijing following comments by Prime Minister Sanae Takaichi regarding Taiwan.

Shipments to Asia overall climbed nearly 26%, while exports to Western Europe rose more than 25%, offsetting a 3.3% decline in exports to North America. Exports to the United States, Japan’s second-largest trading partner, fell 5% after an 11.1% drop in December.

Strong Commodity Performance

By product category, food exports rose 31.3% year on year, while machinery shipments increased 14.3%. Electrical machinery, including semiconductor-related products, jumped 27.3%.

Transport equipment, which accounts for more than 20% of total exports and includes automobiles and auto parts, edged up 0.8%. The sector has faced pressure amid tariff concerns in the U.S. market.

Imports, meanwhile, fell 2.5% year on year in January, contrasting with economists’ expectations of a 3% increase and following a 5.1% rise in December.

Market Reaction

Financial markets responded positively to the stronger trade data. The Nikkei 225 index rose 0.9%, while the broader Topix gained 1.26% in afternoon trading. The yen strengthened slightly to 153.43 against the U.S. dollar, and yields on benchmark 10-year Japanese government bonds eased by one basis point to 2.119%.

Economic Context

The strong start to 2026 follows a weaker performance last year, when export growth slowed to 3.1%, compared with a 6.2% rise in 2024.

Japan’s economy expanded by just 0.1% year on year in the fourth quarter, supported mainly by private demand, while net exports shaved 0.8 percentage point off overall growth. For the full year, gross domestic product grew 1.1%.

Exports had declined in mid-2025 amid concerns over U.S. tariffs but rebounded toward year-end after a trade agreement reduced duties to 15%.

Earlier this week, U.S. President Donald Trump announced that Japan had begun financing projects worth $36 billion as part of its broader $550 billion investment commitment to the United States. The projects include an oil export facility in Texas, an industrial diamonds plant in Georgia and a natural gas power plant in Ohio.

Japan’s Economy Minister Ryosei Akazawa said recently that initial projects are expected to be finalised before a planned meeting between Takaichi and Trump.

Analysts say sustained export growth will be critical to supporting Japan’s broader economic recovery, particularly as domestic demand remains modest and global trade conditions continue to evolve.