Shares in Japanese tourism and retail firms plunged on Monday after China warned its citizens not to travel to Japan due to a fresh dispute spurred by comments by new Japanese Prime Minister Sanae Takaichi about Taiwan.
In morning trade, shares in cosmetics firm Shiseido dived 9%, department store group Takashimaya by more than 5% and Fast Retailing, the owner of Uniqlo, by more than 4%.
China is the biggest source of tourists to Japan.
Before taking power last month, Takaichi, an acolyte of ex-premier Shinzo Abe, was a vocal critic of China and its military build-up in the Asia-Pacific.
Her comments on Nov. 7 were widely interpreted as implying that an attack on Taiwan, which is just some 100 kilometres (60 miles) from the nearest Japanese island, could warrant Tokyo's military support.
If a Taiwan emergency entails "battleships and the use of force, then that could constitute a situation threatening the survival (of Japan), any way you slice it," Takaichi told parliament.
Japan's self-imposed rules say that it can only act militarily under certain conditions, including an existential threat.
The comments came just days after Takaichi met Chinese President Xi Jinping for an apparently cordial first meeting on the sidelines of an APEC summit in South Korea.
Takaichi, who has visited Taiwan in the past and called for closer cooperation, also met separately with Taipei's representative at the summit.
China and Japan last week summoned each other's ambassadors, with Beijing then advising its citizens to avoid travelling to Japan.
In a now-removed post on X, the Chinese consul general in Osaka, Xue Jian, threatened to "cut off that dirty neck," apparently referring to Takaichi.
Beijing insists Taiwan, which Japan occupied for decades until 1945, is part of its territory and has not ruled out the use of force to seize control.
China and Japan are key trading partners, but historical mistrust and friction over territorial rivalries and military spending often test those ties.
Japanese media reports said that the top official in the foreign ministry for Asia-Pacific affairs headed to China on Monday.
Masaaki Kanai, director general of the Asian and Oceanian Affairs Bureau at the ministry, was due to hold talks with his Chinese counterpart Liu Jinsong, the reports said.
Kanai was expected to reiterate Japan's position that Takaichi's remarks do not change Japan's traditional position and also lodge a protest over the Chinese diplomat's social media posts, they added.
