Palau saw a 16 percent drop in arrivals from China in the last quarter of 2017, presumably as a result of the Chinese government's cancellation of the country's approved destination status.
China instructed its tourist agencies in November to stop flights to Palau in protest over its diplomatic relations with Taiwan, reinforced by Taiwan President Tsai Ing-wen's visit.
Despite the last-quarter drop in arrivals, China continues to be the major source market for Palau, with a nearly 48 percent share according to the latest figures from the South Pacific Tourism Organisation.
The share was nearly 52 percent in the prior quarter.
Japan was second highest accounting for 23.7 percent of visitors, followed by Taiwan at 8 percent.
The organisation says the drop in Chinese arrivals also reflected a drastic reduction in scheduled and chartered flights to Palau. 63.9 percent and 17.4 percent, respectively.
