Japanese tourism and retail stocks experienced a significant downturn on Monday following China’s warning to its citizens against traveling to Japan amid escalating tensions regarding Taiwan. Prime Minister Sanae Takaichi of Japan, known for her outspoken stance against China’s military actions, indicated earlier this month that Japan might consider military responses if Beijing were to attack Taiwan.
As a consequence of the ongoing dispute, shares in major Japanese department stores were severely impacted, with the parent company of the Mitsukoshi and Isetan chains witnessing a nearly 12% plunge. Other notable brands, including the cosmetics firm Shiseido, also saw their stock prices decline sharply. The department store chain Takashimaya, along with the operator of global fashion retailer Uniqlo, recorded a drop of over 5% in their shares. Additionally, both Japan Airlines and ANA Holdings faced losses, while shares of Oriental Land, the company behind the Tokyo Disneyland resort, fell by 5.8%.
The tensions between Tokyo and Beijing intensified recently, leading the Chinese government to advise its citizens to reconsider studying in Japan due to potential safety concerns and rising incidents of crime targeting Chinese nationals. Notably, more than 100,000 Chinese students were enrolled in Japanese institutions last year, according to Japanese government data. In a further response to the strained relations, Chinese airlines such as China Southern and China Eastern, along with Air China, began offering refunds for flights bound for Japan.
This downturn in tourism and retail stocks underscores the vulnerabilities in Japan’s economy that can arise from international disputes, particularly with China, which has historically been a significant source of tourists. As the situation evolves, it will be crucial for both nations to navigate these choppy waters and seek diplomatic solutions to foster economic recovery and maintain positive relations.