In January, the number of Chinese tourists entering Japan fell by 41%, the first monthly decline since the end of COVID-19 restrictions, indicating significant economic repercussions stemming from ongoing tensions between China and Japan. According to the Japan National Tourism Organization (JNTO), arrivals from China plummeted by 61% compared to the previous year, reflecting a worrying trend exacerbated by a later-than-usual Lunar New Year holiday and increased advisories against travel to Japan.

This notable downturn in Chinese visitors is particularly impactful on Japan's retail sector, especially on duty-free sales at major department stores. These drops are symptomatic of the larger economic impact that strained diplomatic relations are having on trade and tourism. With the overall inbound visitor numbers also decreasing by 4.9% in January, the shift highlights a broader concern for the recovery of Japan's tourism industry post-pandemic amidst international political tensions.

The decline in tourism coincides with statements made by Japanese Prime Minister Sanae Takaichi, suggesting that a possible Chinese invasion of Taiwan could be deemed an “existential threat,” further souring relations. Such political rhetoric is likely to deter travel and might influence Japan’s economy by prompting potential travelers from China to reconsider their plans, thus affecting future tourism revenues and retail spending significantly.