China said on Wednesday that it would "have no choice but to take further measures" if Japan does not retract its "wrong remarks" and take concrete actions to "safeguard the political foundation" of bilateral ties.

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.

China’s benchmark bond yield is poised to fall below Japan’s, a historic crossover that may reignite fears the world’s No. 2 economy is sliding into the deflationary spiral that paralyzed its neighbor in the 1990s.

Tension between Japan and China has escalated over the new Japanese leader's suggestion Tokyo could intervene militarily if Beijing attacks Taiwan.

Takaichi, a hardline conservative who was approved by parliament as Japan's first female prime minister last week, is a regular visitor to Tokyo's Yasukuni shrine, which honours Japan's war dead, including soldiers and officials convicted of war crimes by an international tribunal.

An opening attempt to cool tensions between China and Japan appears to have fallen flat, signaling that the diplomatic spat is likely to drag on and stoking concerns about further strain in economic ties.

From China’s point of view, the Japanese Prime Minister’s remarks on Taiwan test a red line - a trigger that sets this dispute apart from past flare-ups, analysts say.