Japan is bracing for economic fallout after the Chinese government urged its citizens to refrain from traveling to Japan, a move that threatens both the tourism sector and broader supply chains.

By Joseph Campbell and John Geddie TOKYO (Reuters) -Within days of China urging its citizens not to travel to Japan due to a diplomatic dispute, Tokyo-based tour operator East Japan International Travel Service had lost 80% of its bookings for the remainder of the year.

Japan has warned its citizens in China to step up safety precautions and avoid crowded places amid a deepening dispute between Asia's two largest economies over Japanese Prime Minister Sanae Takaichi's comments on Taiwan.

China has intensified its economic pressure on Japan, with state-owned enterprises banning employees from travelling to its Asian neighbour, tour groups and a flagship forum being cancelled and Japanese film releases suspended.

The cancellations amount to roughly 32 per cent of Chinese airlines' total bookings to Japan, said a veteran aviation analyst.

A sharp drop in Chinese visitors after Beijing’s travel warning is hitting Japan’s tourism sector hard, with mass flight cancellations and plunging bookings threatening a multitrillion-yen economic blow.

China has informed Japan that it will ban all imports of Japanese seafood, media outlets reported on Wednesday, in what appeared to be the latest salvo in an escalating diplomatic dispute between Asia's top two economies.