I think the average Japanese will welcome the Chinese decision.
The main problem with the Chinese is the sheer number of tourists in the same place at the same time. It is simply overwhelming.
Imagine trying to catch the bus or train to work, only to find it is full and you have to wait until the next one. Or going to your favourite restaurant during your lunch break, only to have to line up for an hour to get in. Or having to take the stairs because there is a long line waiting for a lift (elevator). Or being unable to move around in a convenience store (or worse still, a pharmacy) because the aisles are packed with tourists, many just standing there on their phones.
This is what the Japanese face on a daily basis, and it is intolerable.
I've spoken to a lot of staff in craft stores selling ceramics, lacquerwork and other traditional high-value products. (I'm a collector). They dread the Chinese tour groups because they storm into the shop, mishandle the goods and rarely buy anything. When they leave, the store looks as though it has been hit by a hurricane and the staff are left to clean up the mess in readiness for the next busload.
I've heard some horror stories about their general behaviour - littering, spitting, shitting in public etc - but have never witnessed this myself. I just wish they wouldn't be so loud!
I've been to China a couple of times and I find them very polite, helpful and friendly.
I don't think retailers will be too worried about a decrease in the number of Chinese tourists. Many shops were struggling to serve them all, and there are still plenty of tourists about. I think the government can probably handle the financial hit to the economy.
Chinese tour buses near Kiyomizudera temple in Kyoto. Count them - there's over 50! And the tourists are all heading to the one temple!