Japanese tourism and retail shares fell sharply on Monday after China issued a travel advisory asking its citizens to avoid visiting Japan, deepening a diplomatic standoff triggered by Japanese Prime Minister Sanae Takaichi’s remarks on a possible military response to a Taiwan conflict.
Travel warning sends shockwaves through Japanese markets
The downturn began early on Monday, with Chinese social media filled with calls to boycott Japan as a tourist and study destination. China is Japan’s largest source of inbound travellers, known for spending generously on cosmetics, electronics and clothing. The possibility of a steep drop in arrivals immediately rattled investor confidence.
In morning trade, shares of Shiseido plunged 9%, department store giant Takashimaya slipped more than 5%, and Fast Retailing — owner of the Uniqlo brand — fell over 4%. Analysts noted that tourism, shopping and entertainment industries remain especially vulnerable to even minor diplomatic strains, given Japan’s heavy reliance on Chinese visitors.
Chinese state media further escalated restrictions by indefinitely postponing the release of two Japanese animated films, a move widely interpreted as a countermeasure linked to the current tensions.
What triggered the diplomatic rift
The dispute began last week when Prime Minister Takaichi — known for her conservative and hawkish views — suggested during a parliamentary session that a Chinese military action against Taiwan could amount to a “survival-threatening situation” for Japan. She cited a scenario where battleships or active military force near Taiwan, which lies only about 100 km from Japan’s nearest island, could warrant Japan’s Self-Defence Forces (SDF) intervening.
Her comments reflected a position held by some members of the right wing of the Liberal Democratic Party (LDP), but they sparked an angry reaction from Beijing. China summoned Japan’s ambassador and issued travel and study warnings, urging its citizens to avoid Japan until further notice.
Beijing also stepped up maritime activity, with the Chinese coastguard conducting a “rights enforcement patrol” near the disputed Senkaku islands — controlled by Japan but claimed by China as the Diaoyu islands — over the weekend.
Japan seeks de-escalation, sends senior diplomat to Beijing
In an attempt to prevent the situation from worsening, Japan is dispatching Masaaki Kanai, Director General of the Foreign Ministry’s Asia and Oceania Bureau, to Beijing for high-level talks on Tuesday. He is expected to meet his Chinese counterpart, Liu Jinsong.
Japanese media reported that Kanai will reassure China that Takaichi’s comments do not represent a shift in Japan’s longstanding security posture. Tokyo maintains that its military involvement is restricted by domestic laws permitting force only under defined existential threats.
Under the landmark 1972 joint communique that normalised relations, Japan acknowledged China’s position that Taiwan is “an inalienable part” of its territory. Despite Takaichi’s remarks, officials insist that Japan’s official stance has not changed.
Takaichi’s political background and timing
Takaichi, who took office only last month, has long been openly critical of China’s expanding military influence in the Asia-Pacific. Before becoming prime minister, she regularly voiced support for deeper ties with Taiwan and even visited the island.
Her comments last week came shortly after her first meeting with Chinese President Xi Jinping during the APEC summit in South Korea, which observers described as cordial. The contrast between the diplomatic tone of that meeting and her parliamentary remarks has puzzled analysts.
Taiwan, for its part, praised Takaichi as a “staunch friend,” signalling that Taipei welcomes Tokyo’s firmer language in the region.
Economic fallout could widen
China’s travel and education advisories are likely to intensify economic pressure beyond the tourism sector. Japanese universities, which host tens of thousands of Chinese students, have already reported enquiries from applicants reconsidering admission.
With China delaying the release of Japanese films and hinting at further countermeasures, the economic impact could broaden into consumer goods, retail partnerships and cultural exchange sectors.
Experts warn that prolonged friction could adversely affect bilateral trade, which remains vital for both countries despite recurring geopolitical clashes.
Conclusion
Japan and China — Asia’s two largest economies — remain deeply intertwined economically but perennially strained politically. As both sides attempt to cool tempers through diplomatic channels, markets and businesses continue to brace for the fallout. Whether the latest tensions fade or evolve into a longer standoff may depend on the outcomes of Kanai’s Beijing visit and Takaichi’s future rhetoric on regional security.