Economic Impact - Japan's economy is facing significant challenges, with the Nikkei 225 index dropping over 4,000 points since November, a decline of more than 7% [1] - The tourism sector, a crucial pillar of Japan's economy, has been severely impacted, with 500,000 travel tickets canceled following travel warnings issued to Chinese tourists [2] - The reliance on Chinese tourists is highlighted, as they accounted for 30% of inbound visitors pre-pandemic, with a consumption share of 36.8% in 2019 [2][3] Financial Market Reactions - The Japanese yen has reached a 10-month low against the US dollar, trading at over 156 yen per dollar [2] - The bond market is experiencing turmoil reminiscent of the 2008 financial crisis, with 10-year government bond yields surpassing 1.8%, the highest since 2007 [1] Dependency on China - Over 1,400 products in Japan have more than half of their supply sourced from China, indicating a dependency level twice that of the US and six times that of Germany [4] - Despite government efforts to subsidize companies to reduce risk, there has been a lack of response, as alternatives like Vietnam do not match China's efficiency and quality [4] Education Sector Challenges - Chinese students represent a significant portion of Japan's international student population, with 123,000 expected in 2024, making up 36.7% of total international students [5] - The potential decline in Chinese students poses a survival threat to Japanese language schools and universities, as they struggle to find alternative sources of students [5] Seafood Export Issues - Japan's seafood exports to China have been halted, leading to a significant loss of revenue, with exports to China amounting to approximately 4 billion yuan in the first half of the year [5] Economic Policy Concerns - The Japanese government has introduced a massive economic stimulus plan worth 21.3 trillion yen, raising concerns about the reliance on debt to fund this initiative [6] - Japan's debt-to-GDP ratio exceeds 260%, the highest among major economies, causing investor anxiety and contributing to capital flight from Japan [6] Public Sentiment and Protests - Public dissatisfaction is growing, with a recent poll showing nearly equal support for and against Prime Minister Kishi's controversial statements regarding Taiwan [7] - Protests have emerged, with citizens demanding the retraction of statements that could harm Japan-China relations and calling for adherence to peace principles [7]