Many inbound tourists from China and elsewhere crowd Osaka's Dotonbori commercial area as the Chinese New Year begins. January 28, 2025 (©Sankei by Miyako Nagumo)
In a recent move, China has imposed a slew of economic measures targeting Japan. Tensions have been escalating between China and Japan since early November, when Japanese Prime Minister Sanae Takaichi suggested that a conflict in the Taiwan Strait could trigger Japan's involvement as a matter of defense of its own islands.
The spat has led China to exert economic pressure on Japan across several areas, from fisheries to pop culture. It has also reimposed its ban on Japanese seafood imports. This move was after partially lifting the ban earlier in 2025, then-signaling the warming ties.
Soft-power outreach on both sides has suffered a significant blow. Several Japanese artists reportedly had their upcoming concerts in Beijing abruptly canceled or postponed. In terms of economic investment, some businesses with investments in China, like Toyota and Sony, also fear direct blowback on their China plants and supply chains. This has severely damaged trade cooperation between the two countries.
However, the tourism sector has suffered the biggest blow, especially retail shops, hotels, and restaurants. People-to-people ties and reputational interests have been damaged in both countries.
This article explores the trajectory of China-Japan relations from a tourism perspective.
The China-Japan Tourism Tango
In recent years, Japan has seen an influx of Chinese tourists, and this could be largely attributed to former Prime Minister Shinzo Abe. He oversaw an effort to increase inbound tourism. His reforms, including relaxed visa requirements, helped to almost quadruple the number of foreign visitors, to nearly 32 million a year.
After COVID-19 restrictions eased, Chinese tourism to Japan bounced back in 2024, when nearly 7 million Chinese visitors spent ¥1.7 trillion JPY ($11 billion USD). In 2025, from January to October, the number of Chinese visitors rose further, up 40.7% year-on-year to 8.2 million. This surpassed the total for the whole of the previous year, 2024.
In the third quarter of 2025, Chinese travelers in Japan spent an average of $1,622 per person. This is higher than the average per capita spend of $1,488 for all international tourists visiting the country. It was driven by a weaker yen and more attractive prices in Japan. Therefore, Chinese visitor's spending accounted for 24% of total spending by all international visitors. It amounted to ¥1.6 trillion in total ー approximately a quarter of annual visitors and nearly a third of total inbound consumption.
As the China-Japan spat grows, it is estimated that approximately 30% of the 1.44 million trips from China to Japan were canceled by the end of December. Several Chinese airlines also offered customers free cancellations and full refunds for any Japan-bound flights until the end of 2025. That included other changes on their itineraries. Some even reduced the number of flights going to Japan.
Cancellations, Welcome or Not
Chinese airlines had received 491,000 cancellations on flights to Japan as of mid-November. In November, several media reported a Nomura Research Institute analysis that suggested the steep drop in Chinese tourists, especially tour groups, could cost the Japanese economy about ¥1.49 trillion ($9.59 billion) over 12 months, and from $500 million to $1.2 billion by the end of 2026.
Adding to the pressure against Chinese traveling to Japan, China also cited an unconfirmed rise in sinophobic attacks and crime. Regardless of China's reasons, Japan needs to reevaluate and develop alternative options.
Meanwhile, the Japanese public has had a mixed reaction to these deteriorating relations. In a general trend, the Japanese masses seem indifferent or even welcoming of fewer Chinese visitors. Bluntly stated, the record levels of inbound Chinese had also taken a toll on the Japanese public. Complaints included the rising costs of living, overcrowded streets and misbehavior by foreigners, stirring up xenophobic sentiments.
However, for many Japanese businesses serving the inbound population, the loss of high-spending Chinese visitors hit the local economies harshly. For some, it was the opportunities for jobs and revenues that outweighed any benefits from having fewer Chinese tour groups. This also includes the airport duty-free shops and large department stores, which will be directly affected.
A Future in Haze
Chinese tourists have been Japan's largest source of overseas visitors, as well as higher-than-average spenders. They were considered essential to the retail and hospitality industries, spending heavily on products and experiences in Japan.
At the same time, in the short term, Japan's tourism industry found limited alternatives to fill the gap left by Chinese tourists. However, a sustained drop-off in Chinese visitor numbers could significantly impact Japan's retail and tourism industries in the future. The longer the dispute continues, the more negative perceptions it creates among the general public, motivating Japan to de-risk. These fears further push down Japan's economic ties with China.
A Measured Reaction
Overall, Japan's reaction has been measured. It has protested diplomatically, while seeking to resolve the dispute through back-channel diplomacy to avoid further escalation. Nevertheless, at the same time, it is accelerating efforts to diversify away from dependence on China.
In the medium to long term, Japan might be able to partly offset the decline in Chinese tourism with incremental domestic demand and visitors from South Korea, Taiwan, the United States, Australia, and Southeast Asia. It might also pivot further into the orbit of US-led economic and security coalitions.
For now, Local shoppers have also stepped in to fill the gap, with businesses reporting strong performance driven by domestic demand. Also, Japanese consumers continue to support stores, particularly in high-traffic tourist areas. This shift highlights the resilience of Japan's retail sector.
What Lies Ahead?
The global tourism industry can be sensitive to geopolitical issues, as culture, politics, and tourism, are deeply interconnected. The relationship between Japan and China has always been complex, with trade, tourism, and cultural exchanges frequently caught in the crossfire of political tensions. However, the sustainable solution does not lie in de-hyphenation and de-linking.
It is inevitable that both countries reach a mutually acceptable solution through negotiations and multi-level coordination. They must move beyond diplomatic gestures that serve only a limited purpose. The stakes are high on both sides, and China and Japan need to maneuver past direct confrontation.
Japan-China relations are drifting away from the old pattern of cold-war politics and hot economics, toward something closer to cold-war politics, cooler economics. There is a need to reverse this trend. Particularly given Japan's strong appeal as a destination for shopping, culture, and luxury goods.
Tokyo and Beijing are expected to look beyond the immediate friction. And this demands sustainable diplomatic outreach, resilience, and acceptable solutions.
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Author: Varuna Shankar
Associate Fellow, India's World Magazine, Non-Resident Vasey Fellow, Pacific Forum
