User blog comment:Watermint/Human names v. Country names (Wiki)/@comment-1271618-20100708233921

There have been a few guesses at that from what I've seen:

1. DEEN thought it made Japan look too horrible of a character. Alternatively, they did not want to admit that Japan did bad things (of course then again, some fans don't want to admit that either)

2. They cut it for possible controversy with China. Could also be related to the above. The relations between the two countries...well yeah.

DEEN did alter Japan a bit in the episode anyway before that, which annoyed some fans (and made me :/ ): In the webcomic, he flat-out denies to Tibet that he's China's brother. In the anime, he hesitates and then agrees, but China gets mad anyway because Japan hesitated. They also took out some stuff early on with Japan that presumably made him seem "too strange" (from volume 1), like him seeing the world in RPG mode. It could have also been for time, but there hasn't really been confirmation. All 2ch and others on this end can do is speculate.