The man, an employee of the Japanese pharmaceutical company Astellas, was detained in March 2023 and placed under formal arrest in October.
He was "sentenced to three years and six months in prison for espionage activities", Kenji Kanasugi, Japanese ambassador to China, told Japanese media after the trial in Beijing.
"It is extremely regrettable that such a guilty verdict was issued," he said.
A foreign ministry spokesman in Beijing said China's judicial organs "handle cases in strict accordance with the law".
"As long as foreign personnel in China and coming to China abide by the law... there is nothing to be worried or anxious about," spokesman Lin Jian told a regular news conference when asked about the Japanese businessman's case.
Five Japanese nationals, including the Astellas official, are in custody or serving prison terms in China, according to Japanese public broadcaster NHK.
Tokyo has repeatedly called on Beijing to release them and Wednesday's sentence deals a blow to ties, long frayed over territorial disputes, Japan's colonial history and other flashpoints.
"In light of the sentence, we have once again strongly urged the Chinese side for the early release of the Japanese national concerned in this case as well as others detained," Tokyo's embassy in Beijing said in a statement.
It also urged China "to ensure their legitimate rights and humane treatment during detention, and to improve the transparency of the judicial process".
Beijing's foreign ministry said it would provide Japan the ability to "perform consular duties".
The detained man had reportedly worked in China for two decades and was previously a senior executive at a major Japanese business lobby in the country.
He was planning to return home before his sudden detention, according to Japan's Kyodo News Agency.
hih-mya/pbt/mtp
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