Japan's exports surged 16.8% in January to 9.19 trillion yen ($59.8 billion), driven by strong demand from China and other Asian markets, the Finance Ministry reported Wednesday. The data showed a 32% year-on-year increase in shipments to China, despite political tensions over Taiwan.

Imports fell 2.5% to 10.3 trillion yen ($67 billion), resulting in a trade deficit of 1.15 trillion yen ($7.5 billion)—less than half the deficit from a year earlier. Analysts attributed the surge partly to the Lunar New Year falling later than usual this year, on February 17.

Despite the export growth, Japan's economy expanded at just 0.2% annual pace in the last quarter, with 1.1% growth for 2025. Exports to the U.S. declined 0.5% in January, with vehicle shipments falling nearly 10%. The semiconductor and computer component sector showed the fastest growth, reflecting the AI boom's impact on data center equipment demand.