Japan’s tourism sector is bracing for heavy economic fallout after China warned its citizens against visiting, setting off a wave of cancellations that analysts estimate could cost the economy more than $14.23 billion a year.

The travel warning came after Japanese Prime Minister Sanae Takaichi told lawmakers that a Chinese attack on Taiwan threatening Japan's survival could trigger a military response. Beijing has demanded Takaichi retract her remarks. However, Tokyo has said they are in line with the government's position.

Since then small and mid-sized operators, many of which cater largely to Chinese group tours, are among the first to feel the impact. Within days, Tokyo-based tour operator East Japan International Travel Service says it lost 80% of its bookings for the remainder of the year, highlighting how quickly the sector has been hit.

Tourism-related stocks have also slid sharply since Friday, reflecting concerns of a broader slump.

More than 10 Chinese airlines have already offered refunds on Japan-bound routes through to 31 December, and one airline analyst estimates that around 500,000 tickets have been cancelled.

Analysts warn that if the freeze on travel continues, the losses could deepen well into next year, threatening the broader recovery of Japan’s tourism-dependent regions.

China and Hong Kong together account for around one-fifth of all tourist arrivals in Japan, according to official data.

Tourism makes up roughly 7% of Japan’s GDP, the World Travel & Tourism Council says, and has been a key driver of post-pandemic growth.

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Imports of seafood

Meanwhile, the escalataing diplomatic dispute between Asia's top two economies has meant China is now banning all imports of Japanese seafood according to reports on Wednesday.

Asked about the reports at a press conference, China's Foreign Ministry Spokesperson Mao Ning said, "Under the current circumstances, even if Japanese seafood were to be exported to China, it would find no market."

China had said in June that it would resume importing Japanese seafood products from all but 10 of Japan's 47 prefectures.

The re-imposition will be a painful blow for many companies eager to re-enter a market that previously accounted for more than a fifth of all Japan's seafood exports.

Nearly 700 Japanese exporters had applied to re-register for shipments to China, Japanese Agriculture Minister Norikazu Suzuki told reporters on Tuesday. However, only three had been approved to date.

Before the 2023 ban, China was Japan's top scallop buyer and a major importer of sea cucumbers.

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