Japanese tourism and retail shares dived yesterday after China warned its citizens to avoid the tourist hot spot in a spat over Japanese Prime Minister Sanae Takaichi’s comments on Taiwan.
A senior Japanese official arrived in China, reports said, seeking to defuse the row sparked by Takaichi’s suggestion that Tokyo could intervene militarily in any attack on Taiwan.
Asia’s two top economies are closely entwined, with China being the biggest source of tourists — almost 7.5 million visitors in the first nine months of this year — coming to Japan.
Photo: AFP
Drawn by a weak yen making shopping cheaper, they collectively splurged more than US$1 billion a month in the third quarter, accounting for almost 30 percent of all tourist spending.
Japan was also the fourth-most popular destination for Chinese tourists last year, helping the land of Mount Fuji, sushi and geishas set new records for foreign arrivals.
However, in fears that this might stop, investors yesterday wiped 9 percent off Japanese cosmetics firm Shiseido Co’s market value.
Department store group Isetan Mitsukoshi Holdings Ltd fell 11.3 percent, Pan Pacific International Holdings Corp, behind discount retail chain and tourist magnet Don Quijote, slid 5.3 percent, and Fast Retailing Co — the owner of Uniqlo — shed 4.8 percent.
Japan Airlines Co, whose shares nosedived 3.4 percent, has not seen any major cancelations on flights to and from China, a spokesperson said.
In Tokyo, the Nikkei 225 closed down 0.1 percent at 50,323.91.
The diplomatic spat could spell further bad news for Japan’s economy, which shrank by 0.4 percent quarter-on-quarter in the third quarter, the first contraction in six quarters, official data showed.
Capital Economics Ltd senior Japan economist Marcel Thieliant warned that the tensions risked escalating “into a full-blown trade spat,” similar to a previous episode in the early 2010s.
That could include China restricting exports of rare earths or imposing restrictions on Japanese exports.
“Carmakers look particularly vulnerable as they are already under enormous pressure from the ascent of Chinese electric vehicle manufacturers,” Thieliant added.
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