Diplomatic Feud With China Weighs on Japan’s Economy

A diplomatic dispute over Taiwan has led to a steep drop in Chinese visitors to Japan, a country heavily reliant on their spending. The pullback followed November remarks by Prime Minister Sanae Takaichi suggesting Japan would come to Taiwan’s defense in the event of a Chinese invasion.

Arrivals from China fell 45 percent in December from a year earlier. On Monday, government data showed inbound tourist spending declined 2.8 percent to $45.6 billion in the last three months of the year, the first year-on-year drop in more than four years, even as the economy grew 0.2 percent in the quarter.

China has accounted for about a quarter of all foreign visitors, and Chinese tourists spent roughly a fourth more than other visitors last year. They are major spenders at department stores, where several retailers have projected double-digit year-on-year declines in operating profit for the three months through February.

Japan

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