Japan Tourism Industry Reels as Chinese Visitors Vanish After PM's Taiwan Remarks

Japan's tourism and retail industries are suffering mounting economic damage from deteriorating diplomatic relations with China, triggered by Prime Minister Sanae Takaichi's comments suggesting Japan could intervene in a Taiwan contingency.

The Kansai region, which has relatively high dependence on Chinese tourists, is experiencing a marked decline in tourism and department store sales, Japan's Nikkei reported Wednesday.

The region encompassing Osaka, Kyoto and other cities in west-central Honshu has been hit hardest. Some businesses said conditions feel like "a return to COVID-19 levels."

Flights on China routes from Kansai International Airport fell 10% in December from the previous month, with a steeper decline expected this month. Chinese routes account for 34% of Kansai Airport's international winter flight schedule, making the impact significant, Nikkei noted.

The hotel industry is also taking direct hits. One Osaka hotel expects revenue to drop about 20% year-on-year in December as both room bookings and average spending per customer decline.

Department store sales have fallen as well. Hankyu Department Store's Umeda flagship location saw Chinese customer sales drop about 20% year-on-year since late last month. Daimaru Shinsaibashi expects duty-free sales this month to fall below year-ago levels, a sharp reversal from December when sales rose 20% year-on-year.

The Tohoku region, popular among Chinese tourists as a winter destination, is also affected. Air China will suspend twice-weekly regular service on the Sendai-Shanghai route from January 16 through March, with no decision yet on resumption.

Major Chinese carriers including Air China, China Eastern Airlines and China Southern Airlines have extended free cancellation and rebooking policies for Japan flights from year-end through March 28, according to Chinese and Japanese media reports. The extension suggests the frosty relations between China and Japan will be prolonged.