Japan is finally feeling the pain: Chinese tourists to Japan have plummeted by 60%, and Europe and the Middle East are following suit, causing Japan's service balance surplus to flip directly into a deficit.
The Japanese Ministry of Finance released its May financial report on July 8, which looked rather grim—service trade recorded a deficit of 10.3 billion yen, compared to a surplus of 130.9 billion yen at the same time last year. The shift in direction within just one year is striking.
What’s the root cause? Tourists visiting Japan.
In May, total inbound visitors amounted to 3.55 million—seemingly acceptable, but actually down 3.6% year-on-year. Once we break down the structure, the truth becomes clear: mainland Chinese tourists dropped to 310,000, a sharp 60% decline from last year. Just this single factor pushed Japan’s tourism balance surplus for May from 527.9 billion yen to 438.7 billion yen—a reduction of 16.9%.
For years, Japan has relied on tourism surpluses to offset its “digital trade deficit” in overseas IT services. Now that its largest source of visitors has suddenly vanished, the gap can no longer be filled.
Since Prime Minister Sata Asahi made her erroneous statement equating “Taiwan being in crisis” with “Japan being in crisis,” the momentum of Chinese tourists traveling to Japan has been declining steadily. By May, this trend had continued for six consecutive months. In Fukuoka, sales at three major department stores under the duty-free scheme declined by 20% overall for FY2025, with Hakata Marui alone dropping 39%, plunging into losses.
It’s not just China—the downturn is spreading across Europe and the Middle East. The Middle East saw a year-on-year drop of 21.4%, while Italy, Spain, and Germany experienced declines of 34.2%, 21.6%, and 15.2% respectively. Flight reductions and soaring airfares mean no region is spared.
Meanwhile, Japan is taking counterproductive measures: starting July 1, single-entry visa fees increased from 3,000 yen to 15,000 yen—the first time in nearly 50 years that visa fees have been raised. Departure taxes also rose from 1,000 yen to 3,000 yen.
Prime Minister Sata likely never anticipated that one comment would trigger six consecutive months of declining Chinese tourism, department store losses, a reversal in the service balance, and now an additional visa fee hike. This move epitomizes the absurdity of “people already left, yet they locked the door even tighter.” Japan’s long-standing strategy of using tourism to cover its digital trade deficit has now been exposed—and dismantled—by its own words.
Original article: toutiao.com/article/1870244169127939/
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