Japan could suffer a $1.2 billion loss in visitor spending over China feud

The Japan-China row is now spilling over to new aspects of people-to-people exchange, with Japanese tourism expected to lose $1.2 billion as the feud over Taiwan escalates.

Last week, China advised its citizens against travelling to Japan and offered full refunds to people who had already booked their tickets to fly down to the country.

So far, around 30 per cent of the 1.44 million trips to Japan from China planned for next month have been cancelled, according to data from China Trading Desk. About 70 per cent of this drop comes from near-term departures being cancelled or delayed.

Subramania Bhatt, chief executive of China Trading Desk, estimates that the shift will cut at least $500 million in spending from Japan, with the potential for losses reaching up to $1.2 billion. His assessment draws on data showing that Chinese tourists typically spend more than $900 million each month, along with overseas expenditure figures from UnionPay and other financial services providers.

The development comes as a diplomatic row between China and Japan continues to simmer after Prime Minister Sanae Takaichi commented on Taiwan, seen as an interference by China as it considers the island-nation part of its own territory.

China and Japan are key trading partners, but historical mistrust and friction over territorial rivalries and military spending often test those ties.

Takaichi, a conservative and China hawk, has toned down her rhetoric since assuming office last month.

Chinese travellers reroute their trips

While some are cancelling their vacation plans altogether, others have rerouted their destinations to other Asian countries. For instance, South Korea and Singapore have seen an uptick in bookings over the last few days. Thailand, Malaysia and Vietnam are also receiving 11 per cent more bookings than before.

Tour operators have begun responding to the recommendation to avoid Japan, pulling back trips at a rapid pace. According to China Trading Desk, group and package tours make up as much as half of the decline in travel, while individual leisure trips may account for another 22 per cent.

Most Chinese carriers, along with Cathay Pacific Airways, are now waiving cancellation fees for Japan-bound flights, further speeding up the wave of cancellations.

Taiwan backs Japan

In the midst of it all is Taiwan, which has offered its support to Japan. Images of Taiwanese President Lai Ching-te holding a plate of sushi were posted on social media on Thursday in a show of support for Tokyo after reports that China will halt Japanese seafood imports.

Lai, an outspoken defender of Taiwan’s sovereignty and detested by China, has accused Beijing of “severely” affecting regional peace in the escalating spat.