Japan Braces for Continued Economic Strain as China Targets Tourism and Trade, Here’s All You Need to Know

Published on November 26, 2025

The recent travel advisory China issued about Japan has had severe consequences within the tourism industry. The travel advisories are in direct response to China’s actions towards Taiwan in the political arena. This has had an effect on several industries, including travel and tourism. Many Chinese tourists are now actively cancelling their holidays and businesses that rely on the Chinese tourists are starting to feel the pressure.

To illustrate the point, Rie Takeda, the owner of a traditional tea ceremony class in Asakusa, in the heart of Tokyo, has received about 200 cancellations to date, some reservations had been made as far as January. Although Takeda is optimistic that Chinese tourists will return in time for the Chinese New Year, previous experiences indicate that the recuperation of numbers will take a lot longer. It is the travel and hospitality industries, particularly the Chinese tourist inflow reliant businesses, that are most affected. The Diplomatic Standoff: Taiwan Comments Spark Diplomatic Dispute

China’s economic measures against Japan, including the travel advisory and other retaliatory actions, are part of a long-standing strategy Beijing has used to assert its displeasure with foreign countries’ positions on Taiwan. Similar tactics have been employed in the past, such as the 2012 boycott of Japanese goods and the 2010 tariffs on Australian wines. These moves are seen as an effort by Beijing to exert pressure on Japan while also sending a strong message regarding the importance of Taiwan in Chinese foreign policy.

Impact on Japanese Tourism: A Significant Setback

China has long been a significant source of visitors to Japan, and the recent travel advisory threatens to reverse the gains made in the tourism industry since the easing of pandemic restrictions. In 2025, China was on track to become the top source of foreign tourists to Japan, outpacing South Korea. With more than 8 million Chinese visitors recorded in the first 10 months of the year, their presence accounted for 23% of Japan’s total inbound tourism.

However, the diplomatic spat is already having noticeable effects on the tourism industry. According to estimates by Nomura Research Institute, the travel advisory could cost Japan around 1.8 trillion yen ($11.5 billion) and knock off 0.3 percentage points from the country’s already struggling economic growth. The cancellation of group tours and individual bookings is hitting local businesses, especially those reliant on Chinese tourists for a significant portion of their revenue. Hotels, tour operators, and restaurants are facing steep declines in bookings.

Tourism Cancellations: The Ripple Effect on Japanese Businesses

Many businesses in Japan have already begun to feel the brunt of the reduced tourist numbers. Gamagori Hotel in Aichi prefecture reported the loss of more than 2,000 guests due to the travel advisory. Meanwhile, Nichu Syomu, a Japan-based tour company specializing in Chinese tourists, described the current wave of cancellations as comparable to the impact of the 2012 diplomatic dispute, when group tours to Japan plummeted following protests over disputed islands. The ongoing tension appears to mirror these earlier challenges, but with even more far-reaching consequences due to the dependence on Chinese tourism post-pandemic.

One of the notable impacts is on Japanese attractions, such as tea ceremonies, cultural experiences, and iconic destinations like Tokyo’s Asakusa district, which see a substantial number of Chinese visitors every year. The drop in Chinese tourist arrivals is not only damaging the tourism revenue but also affecting the local economy, where businesses that cater to foreign visitors are beginning to lose their market base.

The Broader Economic Impact: Tourism and Trade Under Pressure

While tourism is feeling the immediate effects of the diplomatic standoff, trade relations between the two nations are also under threat. China has recently delayed the release of two Japanese movies and canceled shows by Japanese entertainment companies at a comedy festival in Shanghai, further underscoring the scope of the economic pressure. Additionally, Japan’s seafood exports to China are in limbo, as Beijing has refused to lift a two-year ban on Japanese seafood, citing Japan’s failure to provide the necessary technical documentation for resuming exports.

Furthermore, China’s restrictions could extend beyond the tourism and entertainment sectors. Beijing has rare earth minerals, which are vital to various industries such as electronics and automobile production, in its arsenal for economic pressure. These minerals are especially significant in sectors like electric car production—a key industry for both China and Japan.

A Wait-and-See Approach: Japanese Tourists Continue to Visit

While Chinese visitors to Japan face delays and cancellations, there are still some tourists willing to go ahead with their trips. However, these travelers remain in the minority, with many still cautious about potential political or economic fallout from the dispute. Kyren Zhu, a Beijing resident who had planned a trip to Japan, ultimately canceled her booking due to family concerns over the diplomatic tensions. Yet, other travelers like Livia Du, who opened a ski lodge in Japan, have seen bookings from Chinese customers continue, albeit with some cancellations.

In addition, there seems to be a shift in the behavior of Chinese tourists, as some are actively waiting to see if the situation improves. There is a “wait-and-see” approach prevailing among many tourists, where they remain unsure about whether to go ahead with their travel plans, reflecting the uncertain atmosphere caused by the ongoing dispute.

Looking Ahead: The Long-Term Impact on Japan-China Relations

The diplomatic and economic tensions between China and Japan could persist for months, if not longer, with both sides maintaining firm positions on Taiwan. Historically, such disputes can last for more than a year, with tensions only easing once new leadership or political changes occur. For example, Australia’s trade with China gradually normalized after Anthony Albanese became Prime Minister in 2022, with the last major step being the reopening of the lobster market. Similarly, Canada is starting to repair its strained relations with China under the leadership of Prime Minister Mark Carney.

For Japan, the immediate future of tourism and trade relations with China will depend largely on the diplomatic resolution of the Taiwan issue. Until then, both nations are likely to continue experiencing tensions that could dampen tourism and affect key sectors of the economy.

Navigating the Economic Fallout

Issues of political diplomacy between Japan and China continues to be of paramount value to both nations. The ongoing standoff will also see disruptions in trade and tourism and will no doubt affect Japan’s economy in the short term. This political stand-off poses the possibility of Japan being politically and economically isolated in the future. Japan’s future tourism economy will be in limbo as the nation will be restricted in trade. Japan will need to carefully maneuver this issue if they are to protect and sustain their tourism China’s tourism.