New Zealand officials rejected on Wednesday an application to install a statue commemorating so-called “comfort women” enslaved by Japan before and during World War II after Tokyo suggested it could harm diplomatic relations.

Japan forced up to 200,000 women from Korea, China and Southeast Asia into sexual slavery from 1932 until 1945 and the issue remains a sore point in Tokyo’s relations with its neighbours.

The Korean Garden Trust had sought to install a statue honouring the survivors at...