Nobutaka Tsutsui, a senior vice minister of agriculture, told reporters that he met the Chinese first secretary in his office, but denied any "close ties" with the diplomat who disappeared from his post here, Kyodo reported.
But his admission triggered a fury among opposition lawmakers who said they would closely question him in Parliament.
Prime Minister Yoshihiko Noda may sack the minister amid claims that the Chinese agent could have seen classified information on agricultural exports, Yomiuri Shimbun a Japanese newspaper reported.
Police are probing claims that the diplomat also had contact with defence firm employees and research and development organisation officials in a bid to obtain information about military technology, the newspaper said.
Earlier reports said that the diplomat Li Chunguang, who is fluent in Japanese, fled the country before police could question him.
Beijing yesterday dismissed claims that 45-year-old spy as "totally groundless" and said he has left Japan after completing his tenure at the embassy.
Agriculture, Forestry and Fisheries Minister Michihiko Kano said he has issued an order to set up an investigative team to find out if there were any leakages of classified information, Kyodo reported.