The Japanese word youkai and the Chinese word yaoguai are written with the same characters - 妖怪:
妖 (yō / yāo) – the strange, seductive, or supernatural
怪 (kai / guài) – the mysterious, monstrous, or uncanny
Both terms share linguistic origins, and refer to supernatural beings.
Yet in meaning, the terms have semantically diverged:
The youkai of Japan now refer to diverse creatures with playful/eerie traits.
The yaoguai of China remain closer to the classical interpretation of demons.
Youkai, in the Japanese context, range from natural and regional spirits, to ghosts, animated household objects (tsukumogami), shapeshifting animals, etc.
Sure, there are a few genuinely terrifying youkai (e.g. the kuchi-sake onna).
But otherwise the youkai are more often treated with fascination rather than fear: as the subject of serious cultural studies, as antagonists/villains/do-gooders in urban legends/folklore, and as sympathetic personifications of human figures.
This has led - as one would surmise of Japanese cutesy tendencies - to a funny bulk of moe-ification. My attempt at one such kawaii reproduction here:
But yaoguai, in the Chinese context, seem more restrained to cosmological interpretations (Daoist/Buddhist).
Yaoguai serve as metaphors for chaos, temptation, and karmic deviation; they are mainly malevolent forces, representing spiritual corruption. They tempt, deceive, or consume human beings to further their power or defy heaven.
I love this discovery! It means more cross-cultural history to explore. And I finally understand why wuxia in media often features monks/gods hunting down yaoguai for righteous justice.