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Japan's export growth unexpectedly eased in June from a year earlier in a worrying sign that China's slowing economy is hurting overseas demand and could potentially undermine Tokyo's efforts to revive the world's third-biggest economy.
The 7.4% increase in exports in the year to June was less than the median estimate for a 10.3% annual increase. This could be a concern for Prime Minister Shinzo Abe as it would suggest that a weakening yen alone may not be enough to sustain exports.
Japan's trade balance was in deficit for the 12th consecutive month in June, showing that a weak yen is also a burden as it pushes up the cost of energy imports.
"Overall, the picture isn't that strong," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"China's slowdown is starting to become more dangerous. Japan's economic growth is likely to remain strong in the second quarter due to consumer spending, but exports won't be much of a factor."
First-quarter data showed Japan was the fastest-growing major economy in the world.
Exports to China, one of Japan's two largest trading partners, rose 4.8% in June from a year ago, much less than an 8.3% annual rise in May in a sign that China's slowing growth is hurting demand for Japanese goods.
Shipments to the United States, Japan's other main trading partner, rose an annual 14.6%, versus a 16.3% rise in the year to May, suggesting a slight moderation in demand from the world's largest economy.
Japan's imports rose 11.8% in June from a year ago, less than the median estimate for a 13.6% annual increase.
The trade balance came to a deficit of 180.8 billion yen, more than the median estimate for a 160.6 billion yen deficit.
The yen has weakened around 20% versus the dollar since November due to expectations for aggressive monetary easing from the Bank of Japan.
The yen's retreat has helped exports to a certain extent, but it has also inflated the cost of energy imports, which are rising because Japan must import more fuel as almost all of its nuclear reactors remain idle since the Fukushima disaster in March 2011.
China's gross domestic product growth has slowed down in nine of the last 10 quarters, and there are worries growth could continue to slow as the country tries to limit fixed-asset investment. This could hurt Japan's exports.
Abe, fresh from a strong election victory over the weekend in upper house elections, has vowed to proceeding with his "Abenomics" programme of hyper-easy monetary policy, government spending and economic reform to end 15 years of deflation.
