According to newly released data from Japan’s Ministry of Finance, the country’s net outbound foreign direct investment (FDI) increased by 17% in 2024, reaching 31.63 trillion yen ($208.2 billion)—the highest level since 1996. This figure excludes acquisitions of foreign companies and investments in Japanese firms abroad while deducting capital withdrawn from previous projects.
Japan’s net FDI into the U.S. hit a record 11.73 trillion yen ($77.3 billion), continuing its upward trend as economic and geopolitical concerns led to reduced investment in China. This amount accounted for nearly 40% of Japan’s total net FDI abroad and has more than doubled since 2014, when the Ministry of Finance first began publishing country-specific FDI data.
Conversely, Japan’s net FDI into China in 2024 was 493.1 billion yen, nearly the same as the previous year but down almost 60% from a decade ago.
Japan’s FDI into ASEAN (Association of Southeast Asian Nations) member countries has increased by 36% over the past 10 years, reaching 4.44 trillion yen.
“Japanese companies may be holding back investment in China due to rising geopolitical risks and economic slowdowns caused by the country’s real estate crisis,” said Takeshi Makita, an expert at the Japan Research Institute.
He also pointed out that this trend has been accelerating since former U.S. President Donald Trump’s previous term, amid escalating U.S.-China tensions.
During Japanese Prime Minister Shigeru Ishiba’s meeting at the White House on February 7, President Trump expressed his desire to bring the U.S.-Japan trade deficit “to a balanced level.” The U.S. president also informed the Japanese leader of his plan to impose tariffs on aluminum and steel imports—a move that was formalized through an executive order on the evening of February 10. In this context, analysts believe Japanese businesses may shift more production to the U.S. rather than manufacturing abroad and exporting to the American market.
According to Japan’s Ministry of Foreign Affairs, during the meeting, Prime Minister Ishiba emphasized that the U.S. is Japan’s most important diplomatic and security partner. He also expressed his hope for continued cooperation to raise Japan’s total investment in the U.S. to an unprecedented $1 trillion—a proposal that was welcomed by President Trump.
Japan’s outbound investment trend has been accelerating despite a weak yen making such activities more costly. Last year, the average exchange rate was 151.48 yen per U.S. dollar, a 7.8% decline from 2023.
Of Japan’s total outbound FDI last year, reinvested earnings—profits kept abroad instead of being repatriated—accounted for more than 40%. However, in absolute value, reinvested earnings grew by only about 3% compared to the previous year. The remaining nearly 60% was equity capital.
Meanwhile, inbound FDI into Japan was relatively sluggish last year, falling 13% to 2.56 trillion yen. This figure was significantly lower than the peak of 6.7 trillion yen recorded in 2020.
Data from Japan’s Ministry of Finance also showed that the country’s current account surplus increased by 30%, reaching a record 29.26 trillion yen. Trade deficits in both goods and services narrowed to 3.9 trillion yen and 2.62 trillion yen, respectively.
In the services sector, Japan recorded its highest-ever travel surplus of 5.9 trillion yen. This figure represents the difference between foreign tourists’ spending in Japan and Japanese travelers’ spending abroad. However, digital services had the largest surplus last year, totaling 6.6 trillion yen.
