TOKYO — November 17, 2025 — Japan’s tourism and retail stocks fell sharply on Monday after China advised citizens to avoid travel to Japan, deepening a diplomatic rift sparked by remarks from Japanese Prime Minister Sanae Takaichi regarding Taiwan.
The Ministry of Foreign Affairs in Beijing claimed that Takaichi’s recent comments had increased risks to Chinese travelers’ “personal safety and lives.” The statement marked one of the strongest warnings since tensions between Tokyo and Beijing began escalating earlier this month.
Sharp Declines In Tourism-Linked Shares
The Tokyo Stock Exchange saw heavy losses across travel-related sectors as investors reacted to China’s announcement. Department store chain Isetan Mitsukoshi dropped more than 11%, while Takashimaya fell 5% in afternoon trading.
Major carriers and retailers also saw steep declines: Japan Airlines slipped 4%, Fast Retailing — the parent company of Uniqlo — dipped 5%, and cosmetics giant Shiseido plunged nearly 9.5%. Market analysts attributed the sell-off to fears of reduced inbound travel and consumer spending from China.
Economic Impact Of Falling Chinese Arrivals
China remains Japan’s largest source of foreign tourists, accounting for nearly one-quarter of total arrivals in the first nine months of 2025, according to the Japan National Tourism Organization (JNTO).
Economist Ryota Abe of Sumitomo Mitsui Banking Corporation estimated that a total collapse in Chinese arrivals could reduce Japan’s GDP by 0.5%. A more moderate decline of 30% would still cause a 0.1% to 0.2% contraction, he said.
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Tensions Rooted In Taiwan Security Remarks
The dispute stems from comments by Prime Minister Takaichi, who suggested that Japan’s military might intervene to prevent a Chinese takeover of Taiwan. Beijing strongly condemned the statement as interference in its internal affairs.
Tokyo, meanwhile, has argued that its position remains unchanged and focused on maintaining regional stability and freedom of navigation in the Indo-Pacific. The Taiwan Strait, located near Japan’s southwestern islands, is a vital corridor for global trade.
Government Response And Diplomatic Efforts
Chief Cabinet Secretary Yoshihide Suga said China’s travel advisory was “inconsistent with mutually beneficial relations” and urged Beijing to take “appropriate steps” to de-escalate tensions.
Japan’s top Asia-Pacific affairs official, Masaaki Kanai, departed for Beijing on Monday to meet his counterpart Liu Jinsong. Kanai is expected to reaffirm that Japan has made no change to its security policy, despite Takaichi’s earlier remarks.
Market Reactions Reflect Broader Concerns
Investors fear that prolonged diplomatic friction could weaken Japan’s post-pandemic tourism recovery, which has been one of the few bright spots in an economy struggling with stagnant growth.
Japan’s GDP contracted 0.4% in the July-September quarter — the first decline in six quarters — underscoring the economy’s sensitivity to external shocks. Analysts say another slowdown could follow if Chinese visitor numbers fall sharply.
Regional Context And Long-Term Outlook
China views Taiwan as part of its territory and has vowed to pursue reunification “by force if necessary.” Japan, which recognizes Beijing diplomatically but maintains informal ties with Taipei, has long expressed concern about rising cross-strait tensions.
Economists warn that any sustained drop in Chinese tourism could ripple across aviation, retail, and hospitality sectors, erasing recent gains from inbound travel. However, officials in Tokyo remain hopeful that ongoing dialogue can restore confidence and normalize bilateral relations in the coming months.
