Japan Faces Economic Concerns as China Issues Travel Advisory Amid Tensions, Here’s All You Need to Know

Published on November 19, 2025

Japan’s tourist industry is in turmoil as one of Japan’s largest tourist sources—China—has issued a new travel advisory due to Japan’s recent diplomatic escalations. Japan’s recent diplomatic tensions include Prime Minister Sanae Takaci’s comments suggesting Japan might join a military coalition in a Taiwan crisis; a development that certainly raises the geopolitical tensions between Japan and China.

In 2024, approximately 21 percent of all foreign tourist spending in Japan is attributed to Chinese visitors, thanks to the approximately 8.1 trillion yen (around $52.1 billion) in foreign tourist spending in Japan, according to the Japan Tourism Agency. Due to Chinese tourist spending being such a pivotal element to Japan’s tourist market, the travel advisory has rattled Chinese tourist dependent businesses like hotels, department stores and high-end retailers.

Tourism Businesses Brace for Potential Decline in Chinese Visitors

Japan’s hospitality industry, in particular, is already feeling the pressure. The Richmond Hotel chain, operated by Royal Holdings Co., has so far reported no major cancellations from Chinese travelers. However, the company’s president, Masataka Abe, expressed growing concerns, especially as half of the chain’s international customers are Chinese.

“If the current situation persists, travel to Japan during the Chinese New Year in February could be severely affected,” Abe said, underscoring the vulnerability of the hotel and tourism industry to political tensions. The Chinese New Year holiday is typically a peak period for inbound tourism from China, and any decline in Chinese visitors would have significant economic repercussions for the region, especially in major tourist hubs like Tokyo and Kyoto.

Similarly, department store chains such as Daimaru Matsuzakaya, which rely heavily on Chinese shoppers for their duty-free sales, are monitoring the situation closely. Chinese nationals make up about 60 percent of the retailer’s duty-free sales, and any sustained decrease in Chinese tourists could affect not only the retail sector but also the broader consumer economy. Retailers fear that the ongoing travel advisory could result in less spending by Chinese tourists during key shopping seasons, which would lead to considerable financial losses.

Wider Economic Implications for Japan’s Supply Chains

While the tourism industry faces immediate challenges, Japanese officials are also concerned about the broader economic impact of China’s actions. One of the biggest concerns is China’s potential to use its control over critical global supply chains as leverage in response to the diplomatic tensions. China dominates the refining of rare earth elements, which are crucial for a wide range of industries, including electronics, automotive manufacturing, and renewable energy production.

Japanese officials have long been aware of the risks of overreliance on China for essential materials, and the latest geopolitical developments have brought these vulnerabilities into sharper focus. China controls over 90 percent of the world’s refining capacity for rare earth elements, and a disruption in exports could severely affect Japan’s manufacturing sector.

Trade Ministry Warns of Escalating Tensions and Uncertainty

A senior official from Japan’s trade ministry warned that the situation could escalate at any time. “Anything could happen at any time,” the official said, highlighting the unpredictability of China’s actions and the potential for further economic retaliation. The possibility of China restricting exports of critical materials could disrupt not only the Japanese economy but also the global supply chain for industries reliant on these materials.

The warning signals the growing realization that economic coercion has become an increasingly common tool in the diplomatic playbook. Japan’s economy has become deeply integrated with China’s, but this dependence also leaves Japan exposed to sudden disruptions in both trade and tourism, especially when political tensions rise.

Japan’s Response: Navigating the Risk of Economic Coercion

In response to the escalating situation, Kimi Onoda, Japan’s Economic Security Minister, expressed frustration with China’s approach, criticizing the country’s tendency to resort to economic coercion when faced with disagreements. “If something displeases them, they immediately resort to economic coercion,” Onoda said, adding that Japan must reduce its vulnerabilities to such tactics.

Onoda’s comments reflect Japan’s growing determination to mitigate risks in its economic relationship with China while maintaining its commitment to a stable, peaceful international environment. She stressed the importance of ensuring that Japan’s economy can remain resilient, even in the face of external pressures. This includes finding alternative sources for critical materials and expanding economic partnerships with other countries to reduce overdependence on any one nation.

At the same time, Onoda emphasized that Japan must continue to focus on maintaining its strong economic performance, which is heavily tied to its tourism sector. As tensions between Japan and China continue to unfold, Japan’s tourism industry will need to find ways to adapt to changes in visitor patterns, with a growing focus on diversifying its market base and strengthening relationships with tourists from other countries.

Tensions in Diplomacy: China’s Response and Japan’s Position

Despite ongoing diplomatic efforts, the situation between Japan and China remains tense. Senior officials from both countries held talks on November 18 in an attempt to ease tensions, but the discussions failed to yield any significant breakthrough. Both sides reiterated their respective positions, signaling that the diplomatic standoff may continue for the foreseeable future.

Additionally, Japan has expressed strong disapproval of inflammatory comments made by China’s consul general in Osaka, who used online platforms to react negatively to Prime Minister Takaichi’s remarks on Taiwan. “If someone is here for friendship, threatening our citizens is not acceptable,” Onoda asserted, emphasizing that such behavior is incompatible with constructive diplomatic engagement. The heightened rhetoric surrounding these comments only adds to the already strained relationship between the two countries.

The Future of Japan-China Relations: Economic and Tourism Impacts

Japan’s economy and, importantly, tourism face headwinds. More diplomatic tensions between Japan and China create additional hurdles, not only for tourism, but for any cross-border relationships. Japan, temporarily, faces trade-off between reducing its trade relations with China and growing travel-related and manufacturing opportunities.

Japan’s tourism industry operates in a single market. Japan could achieve closer alignment with other countries in Southeast Asia and Europe to replace the loss of travel from China. Japan also needs tourism travel, economic growth, and diplomatic relations to succeed to be cooperative and flexible.

Japan’s tourism industry and economy face headwinds. Trade relations with China could diminish, but travel from China to Japan is, in all likelihood, not going to happen. The diplomatic and economic balance Japan is going to face is going to be critical with the tourism industry and trade in China.