Japan’s tourism and retail stocks drop amid China–Taiwan diplomatic dispute

Japanese tourism and retail stocks dropped on Monday after China warned its citizens against traveling to Japan amid an escalating dispute between Tokyo and Beijing over Taiwan.

Prime Minister Sanae Takaichi—an outspoken critic of China’s regional military activity—suggested earlier this month that Japan could respond militarily if Beijing attacked Taiwan.

The market reaction was swift. Shares in major department store operators were among the hardest hit: the parent company of Mitsukoshi and Isetan plunged nearly 12%, while cosmetics giant Shiseido also posted steep losses.

China has long been one of Japan’s largest sources of inbound tourists, making the sector particularly sensitive to diplomatic tensions.

Takashimaya shares and those of Fast Retailing, the owner of Uniqlo, both closed more than 5% lower. Japan Airlines and ANA Holdings also declined, and Oriental Land—the operator of Tokyo Disney Resort—fell 5.8%.

The sell-off followed a deepening rift between the two countries in recent days. On Sunday, Beijing urged citizens to reconsider studying in Japan, citing rising safety concerns and an increase in incidents targeting Chinese nationals. China’s Education Ministry advised students already in Japan to monitor the situation closely.

A Japanese government survey shows that more than 100,000 Chinese students were enrolled in Japanese institutions last year.

Over the weekend, several Chinese carriers—including China Southern Airlines, China Eastern Airlines, and Air China—began offering refunds for flights to Japan.