Japan's Strength in Tourism is a Source of Diplomatic Leverage...and a Domestic Vulnerability

It was bound to happen sooner or later. That seems to be the unanimous verdict among Asia-watchers as another bout of Sino-Japanese conflict flared up recently. The statement from Prime Minister Sanae Takaichi, unequivocally calling Japanese military to aid Taiwan in case of a mainland invasion, unsurprisingly triggered a negative reaction from the Chinese government. In the face of criticism even among the more moderate members of her own party, notably her predecessor Shigeru Ishiba, Takaichi has refused to back down, showing no indication that a retraction or apology is forthcoming.

And just as the case in previous conflicts, the major worry is economic. Here, Chinese countermeasures have been swift. Bans were announced on Japanese seafood imports. Experts worry about rare-earth metal export bans. And the Chinese government has warned citizens to not visit Japan, while stepping up efforts to cancel direct flights. In response, the Japanese government has warned citizens in China to stay vigilant, potentially dampening the people-to-people exchange that underpins a bilateral economic relationship that often trudged on despite the fragility of the political and diplomatic one.

Among all the potential economic damages, it is the potential decrease in travel that has grabbed the most attention. China represents the largest source of inbound travelers for Japan, and as tourists cancel their trips, some industry watchers predict upwards of a 1% hit to the Japanese GDP and billions in lost revenues. Japanese tourism-related firms have seen their listed shares tank in the aftermath of the Chinese government's hardline stance. While many Japanese netizens cheer the prospects of fewer Chinese to share their streets, many may fear for their livelihoods.

But with the Japanese tourist industry growing fast and increasingly attracting travelers from farther afield, it begs the question of how the country can adapt should the Chinese tourists really stop showing up in large numbers. On this point, I am hopeful, after working on a pet project recently that tried to connect Japanese travel agencies with counterparts across a multitude of English-speaking countries in Africa and the Americas. While numbers are hard to come by, the Japanese agencies are actively hunting for high spenders from any country.

One source of optimism for Japan's ability to attract more diverse travelers, I found, was a lax attitude toward how these travelers get into Japan in the first place. When speaking to Africans and Caribbean islanders with weak passports, Chinese travel agencies tend to back off, fearing legal consequences should these travelers overstay their visas. Japanese agencies do not even mention visas in conversations. It is as if what happens after the tours finish is no longer their business, and the consequences of illegal immigration do not factor into their business models.

The lax attitude of the Japanese agencies is all the more ironic given the country's increasingly hostile attitude toward foreigners visiting and living in the country. With right-wing parties calling for stricter monitoring of foreigners' illegal and ill-mannered behaviors, the government has set up a dedicated office to rein them in, no doubt to appease public anxiety. But in the depths of the Japanese tourist industry, making money by bringing in any foreigners willing to come is a much greater priority. It almost makes one wonder whether enthusiasm for business is attracting the "low-quality" visitors.

Yet, the fact that Japanese tourist agencies seem to be unconcerned with policies to crack down on foreigners shows a quiet desperation. People may not be publicly lamenting the loss of Chinese tourists, but the reality is that a vast swath of the country's service sector, even beyond the tourist agencies, has become more dependent on foreigners' money. Whether or not the Chinese show up, they need to find people, from any country, who will show up to help keep their business afloat. As long as outright bans on entry come into force, they will gladly turn a blind eye to ill behavior for revenue.

This economic development buttresses Japan's defiance against Chinese economic pressure. Disappearing Chinese travelers may cause short-term pain, but in the long run, alternatives can be and are being found. But paradoxically, that diversification also creates new vulnerabilities. More people visiting from more countries with little background knowledge of Japan means more headaches for those enforcing Japanese cultural and legal norms. Takaichi might have shored up public support for her toughness on China, but as the de-Sinification of the Japanese economy continues, people might not like the results.