"We hope both sides' actions will not complicate the process of the six-party talks," said foreign ministry spokesman Liu Jianchao.
North Korea says it would regard any sanctions imposed on it by Japan as a declaration of war and would hit back with an "effective physical" response.
Many Japanese support sanctions after North Korea provided Tokyo with the wrong ashes to support its claim that two Japanese it kidnapped during the Cold War had since died.
Liu indicated China wanted the issue resolved bilaterally.
"As to Japan and North Korea's bilateral issues, we hope they can resolve this issue through dialogue," he told a regular briefing.
China, North Korea's closest ally, is trying to restart six-party talks also involving the two Koreas, Japan, Russia and the United States to halt the Stalinist country's nuclear weapons drive.
Three earlier rounds ended without concrete results.
One of the Japanese citizens kidnapped by North Korea to train spies in Japanese language and culture was Megumi Yokota, abducted in 1977 as a 13-year-old schoolgirl.
Tokyo announced last week that DNA tests showed that charred remains handed to a Japanese delegation last month did not, as Pyongyang claimed, belong to her.
In response Tokyo said it would freeze shipments of food aid to the destitute country.
Japan Thursday promised to be "careful" in how it pressures North Korea in the escalating dispute.