Japanese tourism and retail shares dived on Monday after China warned its citizens to avoid the tourist hotspot in a spat over Prime Minister Sanae Takaichi’s comments on Taiwan.<\/p>\n
A senior Japanese official meanwhile arrived in China seeking to defuse the row sparked by Takaichi’s suggestion that Tokyo could intervene militarily in any attack on the self-ruled island.<\/p>\n
Asia’s two top economies are closely entwined, with China the biggest source of tourists — almost 7.5 million visitors in the first nine months of 2025 — coming to Japan.<\/p>\n
Drawn by a weak yen making shopping cheaper, they collectively splurged more than a billion dollars a month in the third quarter, accounting for almost 30 percent of all tourist spending.<\/p>\n
Japan was also the fourth-most popular destination for Chinese tourists last year, helping the land of Mount Fuji, sushi and geishas set new records for foreign arrivals.<\/p>\n
But in fears that this may now stop, investors wiped nine percent off Japanese cosmetics firm Shiseido’s market value on Monday.<\/p>\n
Department store group Mitsukoshi fell 11.3 percent and Pan Pacific, behind discount retail chain and tourist magnet Don Quijote, slid 5.3 percent.<\/p>\n
Japan Airlines, whose shares nosedived 3.4 percent, has not seen any major cancellations on flights to and from China, a spokesperson told AFP.<\/p>\n
Before taking power last month, Takaichi was a vocal critic of China and its military build-up in the Asia-Pacific.<\/p>\n
If a Taiwan emergency entails “battleships and the use of force, then that could constitute a situation threatening the survival (of Japan)”, Takaichi, 64, told parliament on November 7.<\/p>\n
Under Japan’s self-imposed rules, an existential threat is one of the few cases where it can act militarily. Taiwan sits around 100 kilometres (60 miles) from the nearest Japanese island.<\/p>\n
– ‘Troublemaker’ –<\/p>\n
Japan said Monday it scrambled aircraft after detecting a suspected Chinese drone near its southern island of Yonaguni, which is close to Taiwan, on Saturday.<\/p>\n
Beijing insists Taiwan — which Japan occupied for decades until 1945 — is part of its territory, and the prime minister’s comments have sparked a furore.<\/p>\n
This has included a Chinese diplomat stationed in Japan threatening to “cut off that dirty neck”, apparently referring to Takaichi, and China and Japan have summoned each other’s ambassadors.<\/p>\n
Beijing also advised its citizens to avoid travelling to the country and warned the roughly 100,000 Chinese students in Japan that there were risks to their safety.<\/p>\n
Japan’s Chief Cabinet Secretary Minoru Kihara told reporters on Monday that the announcements were “incompatible with the broader direction agreed upon by the leaders of the two nations”.<\/p>\n
On Sunday, Chinese coast guard vessels spent several hours in Japan’s territorial waters around the disputed Senkaku Islands, known as the Diaoyu in China and a frequent flashpoint, Kihara said.<\/p>\n
In Beijing, tech worker Daniel Feng called the Chinese government’s responses “very restrained” given Takaichi’s “extremely unreasonable” remarks.<\/p>\n
“If she spouts words, that’s not a problem… but if they take real action, our country’s military will definitely defeat them,” the 40-year-old told AFP.<\/p>\n
Taiwanese President Lai Ching-te called on Beijing on Monday to “show restraint, act like a major power, and not become the troublemaker” in the Asia-Pacific region, where peace and stability have been “severely impacted”.<\/p>\n
“China should return to the path of a rules-based international order, which would help maintain peace, stability and prosperity in the region,” Lai told reporters.<\/p>\n
– Economic hit –<\/p>\n
Beijing meanwhile said than Chinese premier Li Qiang has no plans to meet with Takaichi in a G20 summit in South Africa later this week which they are both set to attend.<\/p>\n
A Japanese government official told AFP that Masaaki Kanai, the top foreign ministry official for Asia-Pacific affairs, arrived in China on Monday.<\/p>\n
“We are trying not to escalate the situation,” the official told AFP.<\/p>\n
Kanai is expected to hold talks with his Chinese counterpart Liu Jinsong on Tuesday, according to media reports.<\/p>\n
The diplomatic spat could spell further bad news for Japan’s economy, which shrank by 0.4 percent in the third quarter, official data showed on Monday.<\/p>\n
Marcel Thieliant at Capital Economics warned that the tensions risked escalating “into a full-blown trade spat” similar to a previous episode in the early 2010s.<\/p>\n
This could include China restricting exports of rare earths or imposing restrictions on Japanese exports.<\/p>\n
“Carmakers look particularly vulnerable as they are already under enormous pressure from the ascent of Chinese electric vehicle manufacturers,” Thieliant added.<\/p>\n
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