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Japan has dispatched a senior envoy to try to ease tensions with China as stock markets in both countries fell after Beijing issued a travel warning to its citizens over the weekend.

The share sell-off, which ripped through stocks in Japan’s retail and transport sectors, was fuelled by a warning from a leading economic think-tank that a sharp drop in Chinese visitors could reduce overall tourism spending by an annual ¥2.2tn ($14bn).

Tokyo on Monday sent Masaaki Kanai, head of the Japan foreign ministry’s Asian and Oceanian affairs bureau, to Beijing for talks, according to officials.

Kanai will seek to convince Beijing that Prime Minister Sanae Takaichi’s comments this month that Tokyo could consider a Chinese attack on Taiwan as an “existential threat” to Japan — and order its military to intervene — did not represent a departure from previous policy.

Beijing has reacted furiously to those remarks, which it said represented a military threat, conducting coastguard patrols near a group of disputed islands administered by Tokyo on Sunday and issuing a travel warning to its citizens against visiting Japan.

Chinese airlines have begun offering free refunds to citizens who cancel flights to or from Japan before December 31, while state media has warned that it was not safe to travel to the country, claiming a risk of attacks in Japan on Chinese people.

Shares in Japanese companies plunged on the prospect of a sudden decline in the number of Chinese tourists, among the largest sources of foreign visitors, and whose spending patterns have reshaped the country’s retail sector.

Cosmetics firm Shiseido shares fell as much as 11 per cent, the most since April, before paring losses to 9 per cent. Pan Pacific International Holdings, which operates the Don Quijote and Don Don Donki retail stores, dropped as much as 9.3 per cent, the most since August last year. The shares clawed back some of those losses and were recently down 5.3 per cent.

Department store operator Isetan Mitsukoshi Holdings, whose earnings have been driven by sales of luxury goods to Chinese visitors, fell 12 per cent, while J Front Retailing and Takashimaya each shed about 6 per cent.

Tokyo Disney Resort operator Oriental Land declined 5.7 per cent and Uniqlo parent Fast Retailing lost 6.5 per cent.

Chinese travel platform Trip.com was down nearly 6 per cent before edging back for a 3.4 per cent decline. Airline stocks listed in Shanghai were also hit, with Spring Airlines falling 5 per cent.

Equity traders in Tokyo said that the intensity of the spat recalled a 2012 dispute over a small archipelago that triggered widespread protests in China, a boycott of Japanese goods and a 25 per cent drop in Chinese tourist arrivals.

Takahide Kiuchi, executive economist at the Nomura Research Institute, wrote in a paper on Monday that an equivalent outpouring of anti-Japan sentiment today could reduce visitor spending by ¥2.2tn, or 0.36 percentage points of GDP.

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China’s foreign ministry said last week it had summoned Japan’s ambassador to demand that Takaichi retract her comments on Taiwan, over which Beijing claims sovereignty.

Takaichi’s comments suggested that a military attack on Taiwan could reach the threshold for Japan to exercise its right to self-defence under its pacifist constitution.

Japan, meanwhile, has lodged a protest against a Chinese diplomat in Osaka, who posted a since-deleted post on social media platform X. The post said that “if a filthy neck sticks itself in uninvited, we will cut it off without a moment’s hesitation”, in an apparent reference to Takaichi.

Anti-Japan rhetoric also dominated Chinese social media platform Weibo on Monday, with five of the top 10 trending topics mirroring the official line on the dispute, including one claiming: “Japan dragged into national crisis by prime minister.”