Crisis Management for a Conflict with North Korea

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Japan-China dispute over Taiwan sinks travel stocks

Taipei Times | English | News | Nov. 19, 2025 | Geopolitical Conflict and Disputes

Japanese tourism and retail stocks plummeted following China's warning to its citizens to avoid travel to Japan amid a diplomatic dispute over Prime Minister Sanae Takaichi’s remarks on potential Japanese military intervention in Taiwan. The tensions led to a significant selloff in companies reliant on Chinese tourists, with Shiseido's market value dropping 9 percent, Isetan Mitsukoshi Holdings down 11.3 percent, Pan Pacific International Holdings falling 5.3 percent, and Fast Retailing (Uniqlo's owner) losing 4.8 percent. Despite these declines, Japan Airlines reported no major cancellations on flights to and from China.

Chinese tourists have been a critical driver of Japan's tourism sector, accounting for nearly 7.5 million visitors in the first nine months of 2025 and representing almost 30 percent of tourist spending, exceeding US$1 billion monthly in the third quarter. Japan remains a top destination for Chinese travelers, helping set new records for foreign arrivals.

The dispute emerges as Japan's economy contracted by 0.4 percent in the third quarter, marking its first decline in six quarters. There are concerns that the diplomatic tensions might escalate into a broader trade conflict, potentially involving China restricting rare earth exports or imposing trade barriers on Japanese goods. Analysts highlight the vulnerability of Japan's carmakers amid these tensions, especially given the competitive pressure from Chinese electric vehicle manufacturers.

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