Japanese tourism and retail shares plummeted Friday after China issued stern warnings against travel and study in Japan, signaling intensifying economic fallout from mounting geopolitical tensions over Taiwan.
The market downturn followed Chinese advisories urging citizens to reconsider travel to Japan, citing ongoing bilateral tensions. Beijing also called on Chinese citizens studying or planning to study in Japan to re-evaluate their choices, citing increased safety risks and rising crime targeting Chinese individuals.
Cosmetics giant Shiseido saw its shares drop nearly 10%, while department store operator Takashimaya and Uniqlo parent company Fast Retailing both experienced declines of over 5% in early trading.
The economic interconnectedness between the two nations makes such warnings impactful. China is Japan’s largest source of tourists, with nearly 7.5 million visitors in recent periods.
Chinese tourists spent approximately $3.9 billion USD (590 billion Japanese yen) in Japan during the third quarter, accounting for about 28% of all foreign tourist spending, according to Japan’s Ministry of Transport.
The Chinese Ministry of Education also instructed its students in Japan to closely monitor their security situation. A Japanese government survey last year indicated over 100,000 Chinese students were enrolled in Japanese educational institutions.
Further highlighting the strain, Chinese airlines, including China Southern Airlines, China Eastern Airlines, and Air China, offered refunds for flights to Japan over the past weekend.
The warnings from Beijing come amidst a series of escalating disputes, particularly following remarks from Japanese Prime Minister Sanae Takaichi earlier this month. Takaichi, an outspoken critic of China’s regional military activities, suggested Japan might consider military action if China were to attack Taiwan.
Speaking in Japan’s parliament on November 7, Prime Minister Takaichi stated that “if there are warships and the use of force, no matter how you look at it, it could be considered a survival-threatening situation.”
The term “survival-threatening situation” is a legal designation under Japan’s 2015 security legislation. It refers to an armed attack on a Japanese ally that poses a direct threat to Japan’s own existence, potentially allowing Japan’s Self-Defense Forces to respond.
Taiwan is situated approximately 60 miles (100 kilometers) from Japan’s southernmost island.
China regards Taiwan as a breakaway province that must eventually reunite with the mainland, asserting its right to use force to achieve this goal. Many Taiwanese, however, view themselves as distinct from mainland China, with most favoring the current status quo rather than formal independence or unification.