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Drop in Chinese tourists following travel warning could cost Japan $14.2B a year

Samira Vishwas | November 20, 2025 12:24 PM CST

People walk and take photos under cherry trees at Ueno Park in Tokyo, Japan, March 21, 2023. Photo by Reuters

The small firm, which specializes in group tours largely for Chinese clients, is at the sharp end of a backlash that threatens to deal a sizeable blow to Japan’s economy, the world’s fourth largest.

The travel warning – triggered by Japanese Prime Minister Sanae Takaichi’s remarks about Taiwan – has seen a wave of flight cancellations and battered tourism- stocks in Japan.

“This is a huge loss for us,” said East Japan International Travel Service vice-president Yu Jinxin.

Tourism accounts for around 7% of Japan’s overall gross domestic product, according to the World Travel & Tourism Council, and has been a major driver of growth in recent years.

Visitors from mainland China and Hong Kong account for around a fifth of all arrivals, official figures show.

The boycott could result in a loss of around 2.2 trillion yen ( US$14.23 billion) annually, Nomura Research Institute estimates.

Tourism- stocks in Japan have sunk since the warning was issued on Nov 14.

Already more than 10 Chinese airlines have offered refunds on Japan-bound routes until Dec. 31, with one airline analyst estimating around 500,000 tickets have already been canceled.

No signs of imminent breakthrough

Takaichi sparked the most serious diplomatic dispute in years between Asia’s top two economies when she told Japanese lawmakers in November that a Chinese attack on Taiwan threatening Japan’s survival could trigger a military response.

A wave of vitriolic responses by a Chinese diplomat in Japan and Chinese state media aimed at Takaichi prompted Japan to warn its citizens in China on Nov. 17 to step up safety precautions and avoid crowded places.

Beijing has demanded Takaichi retract her remarks, though Tokyo has said they are in line with the government’s position, suggesting no breakthrough is imminent.

Tour operator Yu says her company has been able to weather past flare-ups between the neighbors.

But a protracted crisis this time could be devastating, she said.

“If this lasts for one or two months, we can manage. But if the situation continues to worsen, it will obviously have a major impact on our business.”