Beijing Wednesday expressed "strong dissatisfaction" with Japan's decision to change the name of its de facto embassy in the Republic of China to include the word "Taiwan."
The Japan Interchange Association announced it was changing its name to the Japan-Taiwan Exchange Association, effective Jan. 1, in a move hailed by the Taiwan government as a positive sign for bilateral relations.
"The association will continue to serve as a bridge between Taiwan and Japan to bring bilateral relations into the next stage," it said.
Chinese Ministry of Foreign Affairs spokeswoman Hua Chunying described the change as a "passive measure" by Japan on the Taiwan issue and called on Japan to uphold the "one China" policy.
Hua said Beijing has asked to negotiate with the Japan government over the change.
Welcoming the association's decision, the Ministry of Foreign Affairs (MOFA) said the change exemplified closer two-way ties.
"The name change is meant to reflect the substance of the association's function in Taiwan and is seen as a positive sign in bilateral relations," it said.
MOFA said Japan was Taiwan's third-largest trading partner and Taiwan was Japan's fourth-largest trading partner. Bilateral trade totaled nearly US$57 billion in 2015, MOFA said.
Two-way travel is expected to reach the 6 million mark this year, the ministry said, adding that these numbers exemplified the two countries' close bilateral ties.
The Japan Interchange Association was formed in 1972 and functioned as a de facto embassy in Taiwan after Tokyo broke official diplomatic relations with Taipei in favour of Beijing. It is headquartered in Tokyo and maintains branch offices in Taipei and Kaohsiung.
A source close to the matter told local media that the name "Japan Interchange Association" was confusing because it did not specify the entity with which Japan was interchanging.
The proposal to change the association's name was raised over a year ago and took several months to implement, the source said.
The association's Taiwanese counterpart is the Association of East Asian Relations, a quasi-official organisation set up by MOFA to handle bilateral affairs in the absence of official ties.
Most Taiwanese lawmakers and scholars have said they welcome the upcoming change.
Democratic Progressive Party Legislator Lo Chih-cheng called the change an important and positive step toward "normalizing" Taiwan-Japan relations.
He also called on Beijing not to "overreact" over Japan's decision to include the word "Taiwan" in the title of its representative office.
"The association is private and not a government organisation, so the name change is not that sensitive," he said.
He proposed that Taiwan's Association of East Asian Relations also change its name - to the Taiwan-Japan Exchange Association - so that Japanese people may understand its true function.