Japan’s tourism sector, which had been steadily recovering from the pandemic, is facing a new headwind as a diplomatic dispute with China chills travel from one of its most important source markets. While Japan welcomed a record with arrivals surpassing 42.7 million, a significant drop in Chinese tourists is threatening to undermine that progress, particularly as the Lunar New Year approaches.
The shift in travel patterns comes after the Chinese government advised its citizens against traveling to Japan in November , following comments by Japanese Prime Minister Sanae Takaichi regarding potential Japanese involvement in a Taiwan contingency. This advisory has already had a tangible impact, with Chinese tourist arrivals falling by 45% in December , according to reports. The situation is further complicated by reductions in flights between the two countries and the cancellation of Japanese port calls by cruise ships.
The impact is being felt across the Japanese tourism industry. Hotels, particularly in popular destinations like Kyoto, are reporting cancellations and are being forced to lower accommodation rates – some by as much as 10% compared to the same period last year – for the first time in a while. One hotel operator in Kyoto expressed concern that the situation could worsen if it persists through the Lunar New Year holiday in February . Previously, hotel rates in Kyoto had been steadily increasing as the city benefited from a rebound in tourism and preparations for the Osaka-Kansai Expo.
The retail sector is also suffering. Duty-free sales at Takashimaya department stores declined between December 1st and 14th, signaling a broader slowdown in consumer spending by Chinese tourists. This is particularly concerning given that visitors from mainland China and Hong Kong accounted for 28% of all tourists to Japan from January to November .
Despite the recent downturn, Chinese tourism had been on a strong upward trajectory earlier in . The number of Chinese tourists surged by 37.5% between January and November compared to the same period in . However, this growth slowed dramatically to just 3% in November , highlighting the immediate effect of the diplomatic tensions and subsequent travel advisory.
In , Japan welcomed nearly 7 million Chinese visitors, who spent ¥1.7 trillion. Through January to October , that number rose to 8.2 million, exceeding the total for all of . Chinese visitor spending from January to September accounted for 24% of the total for all international visitors, amounting to ¥1.6 trillion.
The overall number of foreign tourists to Japan reached a record 42.7 million in , injecting ¥9.5 trillion into the economy, up from ¥8.1 trillion in . This suggests that while the loss of Chinese tourists is significant, Japan’s tourism sector is benefiting from increased travel from other regions. Tourism minister Yasushi Kaneko stated that the country is on track to achieve its target of 60 million visitors annually by .
However, the current situation is prompting a reassessment of inbound tourism strategies. Some businesses, like those in the city of Tokoname in Aichi Prefecture, are shifting their focus to attract tourists from Taiwan as a potential alternative market. This reflects a broader trend of diversification as Japanese tourism operators seek to reduce their reliance on the Chinese market.
The timing of this downturn is particularly sensitive, coinciding with the Chinese Spring Festival, a major travel period. The impact of the travel advisory on Lunar New Year bookings will be a key indicator of the long-term consequences of the diplomatic rift. The situation remains “murky,” with no clear indication of when – or if – the Chinese government will lift its travel advisory.
