Core Points - Recent remarks by Japanese Prime Minister Sanna Takashi regarding Taiwan have significantly impacted Japan-China cultural and tourism exchanges [1] - Investors are concerned about the deterioration of Japan-China relations, leading to a decline in Japan's stock market related to inbound tourism [1] - Nomura Research Institute predicts that Chinese government travel advisories may reduce Japan's tourism revenue by approximately 1.79 trillion yen (about 11.4 billion USD) over the next year, resulting in a 0.29% decrease in Japan's actual GDP [1][6] Tourism Impact - Hokkaido officials and the tourism industry are worried about the upcoming winter sports season, as cancellations of bookings from Chinese tourists have already begun [3][4] - In 2022, Hokkaido attracted over 2.8 million foreign tourists, with 460,000 from mainland China and 176,000 from Hong Kong [3] - Hotel operators in Hokkaido report cancellations of bookings, with one hotel noting that since November 14, cancellations have affected about 20 nights of accommodation [3][4] Broader Economic Effects - The sudden drop in tourism demand may reverse the recovery momentum of Japan's tourism industry, which has been a key driver of economic recovery post-pandemic [6] - Chinese tourists accounted for about 25% of Japan's annual inbound visitors, contributing approximately 27% of inbound consumption from July to September [6] - The luxury goods sector in Japan may face significant pressure due to the decline in Chinese tourist spending, with potential losses estimated at up to 600 million USD [6][7] Long-term Projections - If the current situation persists until 2026, cumulative losses for Japan could reach up to 9 billion USD [7] - The ongoing decline in Chinese tourist visits is expected to have long-term economic implications, affecting various sectors including hospitality and retail [7][8] - Recent developments indicate that China has suspended imports of Japanese seafood, further straining economic ties and impacting businesses reliant on cross-border trade [8]