Japan-China Travel Slumps as Taiwan Dispute Hits Airlines, Shops and Tourism

Kansai Traffic Falls as Japan Posts a Tourism Record

Travel from Kansai International Airport to China fell 48 percent during the New Year holiday period, bringing the economic cost of the diplomatic dispute between Tokyo and Beijing into sharper focus. Preliminary figures from the Kansai airport branch of the local immigration office in Osaka show that 55,170 passengers traveled to China between December 26, 2025, and January 4, 2026.

China slipped from the airport's leading destination in 2025 to third place during the holiday period. South Korea ranked first with 127,990 travelers, followed by Taiwan with 59,970. Across all destinations, the number of people entering and leaving Japan through Kansai fell just 2 percent to 747,620, a much smaller decline than the fall in China traffic.

Kansai Airports, the airport operator, reported 2,286 flights to and from China in December, approximately 60 percent of the number a year earlier. Passenger traffic and flight availability were both shrinking as the dispute spread from diplomatic exchanges to travel decisions and business revenue.

Japan's national tourism figures tell a contrasting story. The country welcomed a record 42.7 million foreign visitors in 2025, surpassing the previous record of 36.9 million in 2024. Foreign visitors spent a record 9.5 trillion yen, approximately $60 billion, compared with 8.1 trillion yen the previous year.

Those annual totals include months before relations deteriorated in November. By December, arrivals from China were down 45 percent compared with December 2024. As of January 22, 2026, Japan's tourism industry therefore faced two conditions at once: record annual business and a sudden contraction in a major source of customers.

How Taiwan Became the Flashpoint

Prime Minister Sanae Takaichi set off the dispute on November 7 when she answered questions in Japan's parliament about a possible emergency involving Taiwan. She said a Chinese attempt to seize Taiwan by force could constitute a "survival-threatening situation" for Japan.

Takaichi also said that if American warships intervened to break a Chinese blockade, Japan could be required to defend its ally. Her comments concerned collective self-defense, the ability to use military force to help an ally under circumstances permitted by Japanese law. Beijing interpreted them as suggesting that the Japan Self-Defense Forces could legally take part in a conflict over Taiwan.

Xue Jian, China's consul general in Osaka, responded with a post on X that was subsequently deleted. His words intensified the dispute beyond the disagreement over security policy.

the dirty neck that sticks itself in must be cut off.

Tokyo summoned China's ambassador to protest the "extremely inappropriate" remark. Several Japanese politicians called for Xue's expulsion. China then summoned Japan's ambassador, its first such summons in more than two years, to deliver a "strong protest" over Takaichi's remarks.

On November 15, China's Ministry of Foreign Affairs advised Chinese citizens against traveling to Japan. The ministry claimed that Takaichi's comments had increased risks to their "personal safety and lives." That advisory brought the dispute directly into the tourism market, affecting prospective visitors, airlines and businesses dependent on their spending.

The Dispute and Travel Decline in Sequence

The confrontation developed over several weeks, with the travel warning followed by weaker tourism and retail figures. The main dates show how quickly a political disagreement reached the economy.

• November 7, 2025: Takaichi discussed a Taiwan emergency in parliament and the circumstances in which Japan might defend its American ally.
• November 15: China's Ministry of Foreign Affairs advised citizens against traveling to Japan.
• November: Chinese overnight stays at major Kyoto hotels fell 12.1 percent compared with a year earlier.
• Mid-November through the end of December: Takashimaya's duty-free sales fell 10 percent from the same period a year earlier.
• December: Chinese arrivals in Japan fell 45 percent compared with December 2024, while Kansai's flights to and from China dropped to about 60 percent of their previous year's volume.
• December 26 through January 4: Kansai recorded 55,170 travelers heading to China, down 48 percent from a year earlier.

The next major seasonal concern for retailers was the Lunar New Year holiday in February, usually a peak period for Chinese travel and shopping.

A Record Year With a Growing Gap

Japan's 42.7 million foreign arrivals in 2025 brought it closer to its target of 60 million visitors by 2030. Tourism has become an important growth driver for the world's fourth-largest economy, providing income for accommodation, transport, shops and attractions.

Arrivals rose by 5.8 million from the 36.9 million recorded in 2024, an increase of approximately 15.7 percent. Visitor spending rose by 1.4 trillion yen from 8.1 trillion yen, approximately 17.3 percent. Both comparisons show the strength of the year before the late decline in Chinese travel became fully visible.

Visitors from Europe, the United States and Australia increased by a combined 22 percent in 2025. Growth outside China helped Japan reach its annual record and gives businesses other markets to pursue as Chinese demand weakens.

Chinese travelers nevertheless remained Japan's largest foreign visitor group in 2025, with about 9.1 million arrivals, according to Japan's National Tourism Organisation. The figures described their share as nearly 23 percent; dividing 9.1 million by the stated national total of 42.7 million gives approximately 21 percent. Either measure places China at more than one in five foreign arrivals.

December's 45 percent decline arrived during a holiday period normally associated with tourism, shopping and family visits. Businesses that had prepared for strong seasonal demand instead faced a much smaller flow of Chinese customers. The annual tourism record offered little comfort to individual companies whose revenue depended heavily on that market.

Department Stores and Attractions Feel the Loss

Takashimaya illustrates how a fall in visitors can quickly affect sales. Chinese shoppers account for just over 50 percent of the department store chain's duty-free sales, making their purchases especially important to its foreign customer business.

A Takashimaya official described the change in customer traffic.

It feels like the number of Chinese customers visiting our stores is decreasing,

The company's duty-free sales fell 10 percent from mid-November to the end of December compared with the same period a year earlier. Takashimaya feared that continued Chinese government advice against visiting Japan would weaken business during February's Lunar New Year holidays.

Daimaru Matsuzakaya Department Stores recorded a 16.6 percent annual decline in duty-free sales in December. Isetan Mitsukoshi Holdings reported a 14.2 percent fall. Duty-free sales are purchases made under tax exemptions available to eligible foreign visitors, so changes in tourist shopping can directly affect this part of a retailer's revenue.

Kyoto's accommodation sector was also affected. Overnight stays by Chinese visitors at major hotels fell 12.1 percent in November compared with the same month a year earlier. The city is a popular destination for Chinese travelers, and fewer overnight stays mean less business for hotels and the services visitors use around them.

Kirin Brewery's factory tours show the same contrast between a strong year and a weaker Chinese market toward its end. Government figures put visits to the company's nine domestic factories at around 250,000 in 2025. About 45,000 visitors were foreigners, nearly 20 percent of the total and the highest foreign attendance since records began in 2016.

A Kirin Brewery staff member nevertheless said Chinese visitor numbers had declined since November. The brewery provided informational booklets in English, Chinese and Korean, but its efforts to serve international visitors were taking place alongside a diplomatic dispute affecting travel demand.

Companies and Financial Markets Register the Shock

A December survey by Teikoku Databank found that 42.8 percent of Japanese companies considered the Chinese government's travel advisory to be having "a negative impact" on Japan's economy. The highest share, 53.8 percent, was in transportation and warehousing, a category that includes the travel industry.

The survey's transportation figure was 11 percentage points above the figure for companies across the economy. Airlines and other travel businesses face a direct loss when fewer passengers book journeys, while retailers and attractions lose spending after visitors arrive.

Japanese shares connected to tourism fell sharply following China's warning. Isetan Mitsukoshi dropped more than 11 percent, and Takashimaya fell about 5 percent. Japan Airlines lost approximately 4 percent, Uniqlo owner Fast Retailing declined about 5 percent, and cosmetics company Shiseido fell roughly 9.5 percent.

The market reaction spread across transport, department stores, clothing and cosmetics. Investors were responding to the prospect of weaker Chinese visitor spending across several categories, rather than a problem confined to airport traffic.

How Much Could Japan's Economy Lose?

Takahide Kiuchi, executive economist at Nomura Research Institute, estimated that tensions between Japan and China could reduce Japan's gross domestic product by 1.79 trillion yen over one year, equivalent to a 0.29 percent decline. Gross domestic product, or GDP, measures the value of goods and services produced in an economy.

Tourism's contribution matters because Japan's recent economic growth has been weak. The Mastercard Economics Institute estimated that inbound tourism contributed 0.4 percentage point to Japan's 0.1 percent annual GDP growth last year. In other words, tourism supported growth while the combined contribution from other parts of the economy was weaker.

Stefan Angrick, head of Japan at Moody's Analytics, said "a sharp drop in Chinese travel to Japan would sting." He projected that halving Chinese arrivals could reduce Japan's GDP growth by 0.2 percentage points. He described that scenario in measured terms.

hardly catastrophic, but an unwelcome drag for an economy already struggling to find traction.

Japan's economy had already contracted 0.4 percent in the third quarter compared with the preceding quarter, its first contraction in six quarters. On an annualized basis, the decline was 1.8 percent. An annualized rate expresses what the change would look like if that quarter's pace continued for a full year.

Ryota Abe, an economist at Sumitomo Mitsui Banking Corporation, estimated that Japan's GDP could shrink about 0.5 percent if Chinese arrivals collapsed entirely. A decline of about one-third could reduce GDP by approximately 0.1 to 0.2 percent. He also placed the effect of a 30 percent decline caused by heightened tensions at around 0.1 to 0.2 percent.

These estimates describe scenarios with different assumptions about how far travel falls and how long the disruption lasts. The losses expected by each economist depend on the scale of the eventual decline, while the airport, hotel and retail figures already show where business has weakened.

Why a Diplomatic Settlement Is Difficult

Masaaki Kanai, the Japanese foreign ministry official responsible for Asia and Oceania affairs, traveled to Beijing to meet his counterpart, Liu Jinsong. Kanai was expected to explain that Japan's security policy had not changed and urge China to avoid actions that damaged relations.

Japan's chief cabinet secretary said various communication channels remained open and that Tokyo had firmly requested appropriate steps from China. Those diplomatic contacts accompanied Takaichi's insistence that her parliamentary statement represented no change in Japan's stance.

Beijing continued to demand a retraction. During the November exchanges, China's foreign ministry said Premier Li Qiang had no plans to meet Takaichi on the sidelines of the G20 summit in South Africa. Ministry spokesperson Mao Ning said Japan should withdraw its "wrongful" remarks.

Tobias Harris, founder and principal of political risk advisory firm Japan Foresight, argued that the dispute could last longer than expected because neither government could easily retreat. Taiwan's importance to Beijing makes it difficult for China to accept what appears to be a Japanese policy change.

Takaichi faces a different political constraint. Although she says Japan's position has not changed, withdrawing her comments under Chinese pressure could make her appear weak. The disagreement therefore combines a dispute over security policy with domestic political costs for both governments.

Earlier Crises Shape Expectations

Japan and China have experienced similar confrontations before. In 2010, a Chinese fishing boat rammed two Japanese Coast Guard vessels near disputed islands known as the Senkaku in Japan and the Diaoyu in China. China sought to punish Japan through a rare-earths export ban and other measures.

The islands, described as lying off western Japan, became the focus of another dispute in 2012. Mainland Chinese tourism to Japan fell nearly 8 percent around that confrontation. The earlier episodes show how political conflict can reach trade and travel.

Relations stabilized after those crises but did not fully return to their earlier levels. That pattern raises the possibility that the current dispute could also leave Japan and China with a less cooperative relationship even after the immediate confrontation eases.

China is stronger diplomatically, economically and militarily than it was a decade ago. Beijing regards Taiwan as the "core of core interests," making a firm response more likely than in previous disputes. In Japan, concern among political leaders and citizens about China's assertiveness makes a complete retreat by Tokyo unlikely.

Takaichi's approval ratings remained around 75 percent despite the dispute. A November poll by Nikkei and TV Tokyo found that 55 percent considered her statement appropriate, compared with 30 percent who did not. A recent Kyodo News survey found that 48.8 percent supported exercising collective self-defense in a Taiwan contingency.

Those figures indicate a shift in Japanese public attitudes toward security policy and help explain why the economic pressure has not translated into an easy political route to withdrawing the remarks.

Taiwan, Washington and Seoul Respond

Taiwan President Lai Ching-te accused China of carrying out a "multifaceted attack" on Japan. He urged the international community to keep paying close attention and called on China to exercise restraint.

Lai said China should demonstrate conduct befitting a major power rather than become a "troublemaker for regional peace and stability." His intervention placed Taiwan's own concerns alongside Japan's diplomatic dispute with Beijing.

George Glass, the United States ambassador to Japan, criticized Xue's inflammatory comments on X. After the Chinese diplomat called Takaichi an "evil witch," Glass said it was time to move on and added a brief response.

Halloween has been and gone,

The American intervention reflected the role of the United States-Japan alliance in the disagreement. Takaichi's original comments had specifically addressed a situation in which Japan might defend American forces responding to a Chinese blockade of Taiwan.

South Korea sought to maintain good relations with both Japan and China. President Lee Jae-myung engaged in shuttle diplomacy, meeting President Xi Jinping in Beijing and Takaichi in Japan.

China sought to create divisions between Seoul and Tokyo, while Japan and South Korea appeared committed to strengthening their relationship and cooperation with the United States. The dispute therefore reached beyond bilateral tourism into the relationships among several governments in the region.

Businesses Shift Markets as JTB Predicts Fewer Visitors

Sogo and Seibu began adjusting their advertising in November. The department store company redirected social media advertisements previously aimed at China toward Southeast Asia, Europe and the United States.

The change reflects a practical response to weaker Chinese demand: seek customers in other markets and reduce dependence on a single country. Japan's growth in visitors from Europe, the United States and Australia provides a basis for that strategy, although companies differ in how heavily they depend on Chinese shoppers.

JTB forecasts 41.4 million foreign visitors to Japan in 2026, about 3 percent fewer than the 42.7 million recorded in 2025. It attributes the expected decline primarily to fewer tourists from China. The forecast implies approximately 1.3 million fewer arrivals across the year.

JTB nevertheless expects tourist spending to exceed the 9.5 trillion yen recorded in 2025. Its forecast rests on continued growth in visitors from Europe, the United States and Australia, who tend to stay longer. Longer visits can bring more spending even when the total number of visitors falls.

As of January 22, no end date for the dispute or withdrawal of China's travel advice had been given. February's Lunar New Year holidays were the next immediate concern for retailers, while JTB's annual forecast suggested a broader adjustment in Japan's tourism market.

Japan's record year demonstrates the industry's ability to attract visitors from many countries. The sharp losses in Chinese travel, flights and shopping show why that national success can coexist with serious pressure on particular airports, stores and destinations.

Key Points

• Kansai recorded 55,170 travelers heading to China between December 26 and January 4, down 48 percent from a year earlier.
• China fell behind South Korea and Taiwan in Kansai's destination rankings, while total international passenger traffic declined just 2 percent.
• The dispute began with Takaichi's November 7 remarks about a Taiwan emergency. China issued its travel advisory on November 15.
• Chinese arrivals in Japan fell 45 percent in December 2025 compared with December 2024.
• Japan welcomed a record 42.7 million foreign visitors and recorded 9.5 trillion yen in visitor spending in 2025.
• Department stores, Kyoto hotels and airlines faced losses, while economists projected reductions in GDP under several travel scenarios.
• JTB forecasts 41.4 million visitors in 2026, about 3 percent fewer, but expects visitor spending to rise.
• Businesses are targeting other markets, diplomatic contacts remain open, and Takaichi retains strong domestic support.