Japanese Prime Minister Sanae Takaichi's remarks suggesting intervention in a Taiwan contingency have struck Japan's tourism market. With Chinese tourists falling by more than half, the number of foreigners visiting Japan in the first half of this year declined for the first time in five years.
According to figures compiled by the Japan National Tourism Organization (JNTO) on the 16th, 21,084,800 foreigners visited Japan from January to June this year, down 2% from the same period last year. It marks the first decline in first-half visitors to Japan in five years since the COVID-19 pandemic.
China led the drop. Chinese visitors to Japan in the first half numbered 2,058,200, a sharp 56.4% decline from 4,718,540 in the same period last year. For June alone, the figure fell 57.3% to 340,700, continuing a downward trend for seven consecutive months. Total visitors to Japan in June also came in at 3,148,600 (-6.8%), declining for three straight months.
Koreans filled the space vacated by the Chinese. Korean visitors to Japan in the first half numbered 5,675,100, up 18.6% from 4,783,598 last year, ranking first by nationality. Taiwan, which recorded 3,972,200, followed in second place.
The root of the sharp drop in tourists lies in Prime Minister Takaichi's National Assembly response last November. On November 7 last year, at the House of Representatives Budget Committee, Takaichi responded to a question on a Taiwan contingency from Constitutional Democratic Party lawmaker Katsuya Okada, saying, "If an armed attack involving warships were to take place, it could by any measure become a survival-threatening situation (in which the right of collective self-defense can be exercised)."
China reacted fiercely. Demanding a retraction of the remarks, it advised its citizens to refrain from traveling to Japan on November 14 last year, and soon followed with a series of retaliatory measures including a warning against studying abroad and a suspension of imports of Japanese marine products. The measures targeted the fact that Chinese nationals make up the largest share of tourists and international students visiting Japan. Nevertheless, Takaichi did not withdraw the remarks, saying they "did not deviate from the existing government position."
When the conflict flared up last November, overseas investment banks and research institutions successively estimated the blow that a tourism slump would deal to the Japanese economy. Goldman Sachs projected that if tourists from mainland China and Hong Kong were halved, Japan's gross domestic product (GDP) growth rate would be cut by 0.2 percentage points, and even if tourists from other countries and domestic tourism partly compensated, the net effect would be a decline of about 0.1 percentage points.
It based this on China's retaliation against Korea over the deployment of THAAD in 2016-2017. Nomura Research Institute analyzed that if China were to fully ban travel to Japan, it could result in an annual loss of about 2.2 trillion yen (about 14.2 billion dollars) along with a 0.36% decline in GDP. The Sankei Shimbun forecast that spending could fall by 1.8 trillion yen, while Bloomberg projected that cancellations could cause tourism losses of 1.2 billion dollars.
