Yao, who has multimillion dollar endorsement deals and an important season ahead of him with the Rockets, will be replaced in the squad by former Miami Heat player Wang for the 15th Asian Games to be held in Doha from December 1 to 15.
Wang, a 2.14-meter center, is back in the squad after refusing to play for China as he pursued a four-year NBA career with the Dallas Mavericks, Los Angeles Clippers and Miami Heat, which saw him miss the last Asian Games in Busan in 2002.
A public apology from Wang in April this year saw him return to the national team as China seek to regain the Asiad title they lost four years ago in a thrilling final won in overtime by South Korea 102-100.
It was the first time in 20 years that China failed to take basketball gold at the Asian Games.
This time around the core of the team, which won last year's Asian Championships, will be made up of Sun Yue, Liu Wei, Yi Jianlian, Du Feng, Zhu Fangyu, Wang Shipeng, Li Nan, Zhang Jinsong and Mo Ke.
The main title contenders for the basketball gold in Doha are expected to be Lebanon, Japan, host nation Qatar, China and defending champions South Korea.
The basketball competition at the Doha Asiad will be played at the Basketball Indoor Hall, which is the only purpose-built, permanent, single sport venue at the Asian Games.