Copies of the book asserting that the 1937 massacre by Japanese soldiers in the Chinese city of Nanjing did not occur have been placed in hundreds of rooms operated by the APA hotel group, angering Beijing.
APA has so far refused to remove copies of the book, written under a pen name by its CEO Toshio Motoya, despite Chinese criticism.
"Seeing that Japan's APA hotels is continuing with its erroneous ways, the China National Tourism Administration... demands that all businesses involved in overseas tourism and Internet travel-industry platforms stop all cooperation with these hotels," said the tourism authority's spokesman Zhang Lizhong.
China says 300,000 people died in Nanjing in a six-week orgy of killing, rape and destruction by the Japanese military, and accuses Tokyo of failing to fully atone for the episode.
The revelation of the book's existence caused outrage on China's social media.
Last week a Chinese foreign ministry spokeswoman lambasted Motoya and complained that the book underlined the refusal of some in Japan to "squarely face history."
The book, written in Japanese and English, said the Nanjing incident was fabricated.
Motoya said the killing of 300,000 people was impossible because the city's population at the time was only 200,000.
Some respected foreign academics estimate a lower number than China contends were killed in the massacre, but there is no mainstream scholarship doubting that it took place.
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