By Staff, Agencies

Japanese tourism and retail companies experienced significant market losses on Monday after China issued a travel advisory urging its citizens to avoid Japan, with shares of major consumer-facing businesses declining sharply.

The advisory, which also recommended that Chinese students reconsider enrolling in Japanese universities, came in response to comments made by Japanese Prime Minister Sanae Takaichi regarding Taiwan. On November 7, Takaichi told parliament that Japan's Self-Defense Forces could intervene if a Chinese move on Taiwan posed a "survival-threatening situation" to Japan.

The remarks prompted a swift and multifaceted response from Beijing, which considers Taiwan an inseparable part of its territory.

Beyond the travel advisory, China's coast guard conducted a "rights enforcement patrol" in waters surrounding the contested Senkaku Islands, called the Diaoyu Islands by China, further escalating tensions between the two nations.

The economic impact was immediate and substantial. Beauty and personal care company Shiseido saw its stock decline by 9%, while department store group Takashimaya dropped over 5%. Fast Retailing, the parent company of Uniqlo, lost more than 4% of its value.

The losses reflect concerns about the potential damage to Japan's tourism sector, which relies heavily on Chinese visitors. Chinese tourists represent a major source of revenue, spending significantly on cosmetics, apparel, and electronics during their stays in Japan.

To manage the situation, Masaaki Kanai, director general of the Asia and Oceania Bureau at Japan’s Ministry of Foreign Affairs, is scheduled to meet with Chinese official Liu Jinsong. The aim of the meeting is to explain that Takaichi’s remarks do not represent a change in Japan’s security policy and to encourage restraint from Beijing.

According to a 1972 joint communique, Japan "fully understands and respects" China’s position that Taiwan is part of the People’s Republic of China. Despite this, unofficial relations between Japan and Taiwan have continued, and recent years have seen closer engagement.

Just before her Taiwan-related comments, Takaichi met Chinese President Xi Jinping during the APEC summit in South Korea. Despite the seemingly cordial exchange, her remarks signaled a deterioration in bilateral ties.

China and Japan's $292.6 billion trade in 2024 highlights their deep economic ties, with both benefiting from imports, manufacturing, and technology. Despite occasional diplomatic tensions, trade and investment remain strong.