FIFA said the group would now be contested by three teams with the winners progressing to the next stage of qualifying.
Bahamas beat Turks and Caicos Islands 10-0 on aggregate in a two-leg preliminary tie, Lesly St Fleur scoring five goals in a 6-0 first-leg win.
They were the biggest risers in last month's FIFA rankings, leaping from 197th place to 152nd.
The Bahamas Tribune said the withdrawal was caused by the unavailability of a new Chinese-built 23,000 capacity stadium which the federation had planned to use for home games.
It added that although the stadium was handed over by the Chinese government in June, approach roads, car parks, landscaping and sewerage had not been completed.
The report said the alternative would have been to play home matches at neutral venues but the cost would have been prohibitive.
(Writing by Brian Homewood, editing by Tony Jimenez)