Chinese tourists have abandoned Japan, down 55 percent this year, yet foreigners are spending more than ever: the weak yen paradox

Are Chinese tourists still visiting Japan? Far fewer than before. Arrivals from China fell 55.5 percent in the first nine months of 2026 compared with a year earlier, according to Japan National Tourism Organization data reported by The Herald Business. In September alone, Chinese visitors fell 44.5 percent to 430,800, the 10th straight monthly decline, as a diplomatic chill between Beijing and Tokyo kept travellers away.

Yet Japan's tourism industry is not collapsing. South Koreans and Taiwanese have surged in to fill the gap, and foreign visitors spent a record 7.06 trillion yen in the first nine months, helped by a weak yen that makes Japan cheap for foreigners. The shift shows how geopolitics can reshape tourism flows almost overnight, and how currency weakness can cushion the blow. For Southeast Asian destinations competing for Chinese tourists, it also raises a question: where are those travellers going instead?

Why Chinese tourists stopped coming

Analysts attribute the drop to a cooling in relations between China and Japan after Prime Minister Sanae Takaichi signalled last November that Japan could intervene in a Taiwan contingency, The Herald Business reported. Beijing reacted strongly, and travel from China to Japan has fallen steadily since, with September marking the 10th consecutive monthly decline.

Chinese tourists were once Japan's largest and highest spending visitor group, filling department stores, hotels and tourist sites. Their absence is most visible in places that relied heavily on Chinese tour groups and shoppers, such as luxury retail and some regional destinations.

Political tensions affect tourism in several ways. Governments can issue travel advisories, airlines can reduce flights, tour operators can cancel packages, and travellers themselves may avoid destinations where they fear an unfriendly reception. Together, those effects can cut visitor numbers far faster than economic factors alone.

The decline has been steep and sustained. Chinese arrivals fell 59 percent year on year in August, according to the Global Times, and the January to September decline of 55.5 percent means Japan has lost more than half of what was once its largest visitor market. Air capacity between China and Japan has also been cut, making a quick recovery harder even if relations improve.

Koreans and Taiwanese fill the gap

While Chinese arrivals fell, visitors from elsewhere rose. South Koreans became Japan's top foreign visitors in September, with 842,300 arrivals, up 25.6 percent, the highest of any country or region. Taiwanese visitors came second at 595,600, up 13 percent. Arrivals from South Korea, Taiwan and five other countries and regions reached all time highs for the month.

The weak yen is a big draw. The won fell to 840.2 won per 100 yen on 20 October, its weakest level against the yen since December 2007, about 18 years and 10 months, making Japan cheaper than ever for Korean travellers. Short flights, cultural ties and low cost airlines also make Japan an easy weekend destination for Koreans and Taiwanese.

Japan lost its biggest group of tourists and still set a spending record. That is what a weak yen does: it turns every visitor into a bigger shopper.

Despite strong growth from these markets, total foreign arrivals fell 2.9 percent to about 30.73 million in the first nine months. September alone saw about 3.1 million visitors, down 5 percent, the second consecutive month below the previous year's level.

Taiwan's growth is notable given the political backdrop. The Taiwan issue that cooled relations between Tokyo and Beijing has, if anything, strengthened ties between Japan and Taiwan, and Taiwanese travellers have continued to visit Japan in large numbers, reaching record levels for September.

Record spending despite fewer visitors

Even with fewer visitors, spending rose. Foreign tourists spent 7.06 trillion yen, about 44.6 billion dollars, in Japan from January to September, up 1.9 percent from a year earlier, a record. The weak yen lowered the relative cost of shopping and accommodation for overseas travellers, encouraging them to spend more per trip.

The yen has been weak for much of the year, trading at levels that have worried Japanese officials, as we covered in our report on the yen near 158 and intervention warnings. For tourists, that weakness is a bargain. For Japanese households, it raises the cost of imported food and energy. The Bank of Japan's policy stance is a key factor in the yen's path, as covered in our report on the Bank of Japan's October meeting.

Local media said that if the decline in Chinese visitors continues, total foreign arrivals for 2026 could fall short of last year's record of about 42.68 million. Spending, however, could still set a new high if the yen stays weak.

Spending per visitor is rising for another reason too. Visitors from Korea and Taiwan tend to make repeat trips and explore beyond Tokyo and Osaka, spending on food, hotels and experiences across regional Japan. That spreads tourism income more widely, even as luxury retailers in major cities miss Chinese shoppers.

What it means for Southeast Asia

The drop in Chinese travel to Japan matters for Southeast Asian tourism too. Chinese tourists who avoid Japan may choose other destinations, potentially benefiting countries such as Thailand, Vietnam and Malaysia. But Southeast Asia faces its own challenges, from safety concerns to new fees, as we covered in our report on Thailand's delayed departure tax.

Japan's experience also shows the risk of depending too heavily on one source market. Destinations that diversified their visitor base, attracting tourists from many countries, are better able to absorb a sudden drop from any single market. The key forces reshaping Asian tourism include:

• Geopolitical tensions affecting Chinese outbound travel
• Currency moves making some destinations cheaper
• Growth in Korean and Taiwanese outbound tourism
• Low cost airlines expanding short haul routes
• Competition among Asian destinations for Chinese tourists

Southeast Asian airlines and hotels are already competing for Chinese travellers, offering promotions and visa conveniences. Thailand, Malaysia and Vietnam have all introduced visa free or simplified entry for Chinese visitors in recent years. Whether they capture tourists diverted from Japan depends on price, safety perceptions and flight availability.

What it means for investors

For Japanese retailers, department stores and hotels, the shift from Chinese to Korean and Taiwanese visitors changes the customer mix. Spending patterns differ by nationality, so businesses that relied on Chinese luxury shoppers may see weaker sales even as overall tourist spending holds up.

For airlines, routes between Japan and Korea and Taiwan are benefiting, while China routes have been cut. If Sino-Japanese relations improve, Chinese tourists could return quickly, but there is no sign of that yet. Investors in Japanese tourism stocks should watch monthly arrival data from China and the yen's direction.

Japan's tourism story in 2026 is one of loss and resilience: Chinese visitors have fallen by more than half, yet spending has hit a record. Koreans and Taiwanese, drawn by a weak yen, are filling hotels and shops. The episode shows how quickly politics can redirect tourism, and how currencies can soften the blow.