Escalating tensions over Taiwan have triggered a sharp drop in Chinese tourism to Japan and a sell-off across major Japanese consumer and travel stocks. Beijing’s travel advisory urging citizens to avoid Japan dealt an immediate blow to an industry heavily dependent on Chinese visitors.
The shift came after Japanese Prime Minister Sanae Takaichi suggested that Tokyo might intervene in the event of a Taiwan emergency — remarks interpreted in China as a signal of potential military involvement.
Market fallout and tourism slump
Shares of Shiseido, Takashimaya, Fast Retailing (Uniqlo) and Japan Airlines fell as investors reacted to the risk of prolonged diplomatic friction. China is Japan’s largest source of inbound tourism, making the sector particularly sensitive to political shocks.
The situation worsened after a Chinese consul in Osaka posted — and later deleted — a sharply worded comment targeting Takaichi on X (formerly Twitter), prompting a formal protest from Tokyo.
Diplomatic talks underway
A senior Japanese foreign ministry official has travelled to Beijing to meet with Chinese counterpart Liu Jinsong. Japan is expected to reaffirm its stance on the Taiwan issue and lodge an official complaint regarding the diplomat’s online comment.
Rising risk of a trade conflict
Analysts warn that the standoff could escalate into a trade dispute reminiscent of the early 2010s. Potential Chinese restrictions on rare-earth exports — or on Japanese goods — could hit key industries. The automotive sector is viewed as especially vulnerable amid fierce competition from China’s electric vehicle manufacturers.