Since the reform and opening-up policy adopted by China，the direct investment from Japan increased rapidly，and has become a major source of foreign investment in China，which has led to the development of trade between China and Japan.In recent years，China’s economy growth slowed down，and labor and other factors of production costs continue to rise，which become negative factors affecting long-term investment of Japan’s companies in China.In September 2012，because of the dispute over the Diaoyu Islands incited unilaterally by Japan，Sino-Japan relations deteriorated sharply，which has brought about some impacts on bilateral economic and trade cooperation and mutual economic development，and also makes the desire to invest in China of Japan’s companies reduced.Japan’s direct investment in Southeast Asia and China will continue to shift in the future，but as an important investment destination of Japan’s companies，the status of China which has a huge market will not change.