Japan’s tourism industry is on high alert after diplomatic tensions with the Chinese mainland triggered a sudden decline in visitor numbers. Economists warn that a prolonged chill in relations could wipe out more than 2 trillion yen in spending, delivering a heavy blow to local economies across the country.
Hideo Kumano, chief economist at the Dai-ichi Life Research Institute in Tokyo, told China Media Group in a recent interview that cancellations from the Chinese mainland have already reached at least 491,000 air tickets. “If the current tension persists beyond a year, we’ll see a massive shortfall in tourism revenue,” he said, highlighting risks for hotels, restaurants and regional businesses that rely on inbound travel.
Stimulus Plan May Stoke Inflation
On November 21, Japan’s government approved a 21.3-trillion-yen stimulus package aimed at offsetting stubborn inflation and U.S. tariffs. However, Kumano cautioned that injecting new fiscal spending amid rising prices could backfire. “This is fiscal stimulus during inflation, not deflation. It will weaken the yen further and push up costs for consumers,” he explained.
With tax revenues falling short of funding needs, the government plans to issue additional bonds. Kumano warned that higher bond issuance could drive up long-term interest rates, cooling the economy even more.
As Japan navigates these headwinds, business leaders and policymakers are watching closely to see if diplomatic efforts can ease cross-border strains and if fiscal measures can be recalibrated to support growth without stoking inflation.
Reference(s):
cgtn.com
