Foreign Ministry spokesperson Wang Wenbin said the measure approved Thursday “indicates that the U.S. has no scruples about smearing China by every means."

“The relevant actions seriously undermine the principles of market economy and international economic and trade rules, and seriously damage the interests of Chinese institutions and enterprises," Wang told reporters at a daily briefing.

“China strongly deplores and rejects that and urges the U.S. to immediately correct its mistake. China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese institutions and enterprises," Wang said.

The law is the latest in a series intensifying U.S. penalties over China's alleged systemic and widespread abuse of ethnic and religious minorities in the western region, especially Xinjiang's predominantly Muslim Uyghurs, that the administration terms genocide.

President Joe Biden, who is expected to sign the law after overcoming initial hesitation from the White House and what supporters said was opposition from corporations, also announced new sanctions Thursday. Those target several Chinese biotech and surveillance companies, a leading drone manufacturer and government entities for their actions in Xinjiang.

Despite numerous independent investigations finding forced sterilisation and large detention camps where many Uyghurs allegedly are compelled to work in factories, China has denounced all such claims as the “lie of the century.”

It portrays them as part of an effort to stifle China's growth and smear its reputation. While at first denying the existence of the prison-like camps, China later said they were voluntary centers for job training and de-radicalisation, and now says all “students” have graduated.

“The U.S. government is trying to strangle the economy of Xinjiang through its industrial and supply chains under the false pretexts of forced labour' and violations of human rights,' the official Xinhua News Agency said Friday, citing a report by the Institute for Central Asia Studies under Lanzhou University in northwestern Gansu province.

The U.S. says raw cotton, gloves, tomato products, silicon and viscose, fishing gear and a range of components in solar energy are among goods alleged to have been produced with the help of the forced labour.

Xinjiang is a resource-rich mining region, important for agricultural production, and home to a booming industrial sector. Detainees also are moved outside Xinjiang and put to work in factories, including those in the apparel and textiles, electronics, solar energy and automotive sectors, the U.S. says.

The legislation requires government agencies to expand their monitoring of the use of forced labour by China's ethnic minorities. Crucially, it creates a presumption that goods coming from Xinjiang are made with forced labor. Businesses will have to prove that forced labour, including by workers transferred from Xinjiang, played no part in a product to bring it into the United States.

Meanwhile, the Commerce Department announced new penalties targeting China's Academy of Military Medical Sciences and its 11 research institutes that focus on using biotechnology to support the Chinese military.

The move bars American companies from selling goods and technologies to the entities without a license.

Separately, the Treasury Department announced it was placing DJI, the world's largest drone manufacturer, and seven other Chinese companies on an investment blacklist over their alleged involvement in biometric surveillance and tracking of Uyghurs.

The measure means individuals in the U.S. will be prohibited from purchasing or selling publicly traded securities connected with the companies.

DJI dominates the global market for the small, low-altitude drones used by hobbyists, photographers and many businesses and governments.

The White House announced last week it would stage a diplomatic boycott of the upcoming Winter Olympics in Beijing, citing China's “egregious human rights abuses and atrocities in Xinjiang.” U.S. athletes will compete but Biden will not send the usual contingent of dignitaries..

Rights groups note prison labour has long been a part of the U.S. economy, with inmates producing goods and providing services such as call centers for what is typically reduced pay. Opponents say the system disproportionately profits off the labour of incarcerated Black Americans.