“Despite these modest signs of interest in anti-trafficking reforms, the Chinese government did not demonstrate significant efforts to comprehensively prohibit and punish all forms of trafficking and to prosecute traffickers,” US officials wrote.

The report said China’s one-child policy and preference for sons has led to fewer women in the country, thus increasing demand for women as brides or prostitutes.

In Russia, the government “had not established any concrete system for the identification or care of trafficking victims, lacking any formal victim identification and referral mechanism”, although there were some “ad hoc efforts”, the report said.

The citation is likely to further strain the complicated relations between the United States and the two countries, which already have been strained by the handling of the civil war in Syria and cybersecurity, among other issues.

While it was not immediately clear what the Obama administration might do given the downgrade, human rights advocates and some US lawmakers urged strong steps such as imposing sanctions or withholding foreign aid. They also called on the Chinese and Russian governments to take action.

“China has become the sex and labour trafficking capital of the world,” said US Representative Chris Smith, a New Jersey Republican. “Without serious and sustained action by Beijing, it is only going to get worse.”

Under US law, Tier 3 countries may face sanctions that do not effect trade or humanitarian assistance, such as educational funding or culture programmes.

John Sifton, Asia advocacy director for Human Rights Watch, said China and Russia have been given several chances to improve their effort to combat such trafficking and protect victims.

“The question for the White House is whether they’re prepared to execute the sanctions,” he said. “The question for China, Russia and Uzbekistan is whether they’re prepared to make commitments in the next 90 days to avoid those sanctions.”

Despite pledges to combat such crimes, countries have failed to identify tens of millions of victims, according to the report, which ranked 188 countries and territories based on their efforts.

Just 40,000 victims of so-called modern slavery were identified last year among the estimated 27 million men, women and children who are held against their will globally, the report said.

“Despite a growing body of knowledge about victims and their needs, finding them remains a tremendous challenge,” department officials wrote in their 2013 Trafficking in Persons report.

Among the millions of victims, most are women and girls, although many men and boys are also affected, the report said.

Human trafficking can take many forms – from prostitution to forced labour such as migrant work or domestic servitude – and children also can be victims. Perpetrators are difficult to track and largely circulate in the private economy, although cases can involve rebel groups or national authorities.

Among perpetrators, 7,705 were prosecuted last year, leading to 4,746 convictions, a slight increase from the prior year, US officials said. In 2011, there were 7,206 prosecutions and 4,239 convictions.

Overall, there were far more countries downgraded than cited as improving, Sifton said.

“This is a much more negative report than years past,” he said. “Russia and China rightly deserve attention but many other countries have very serious trafficking and forced labour problems.”

Countries that did show improvement in fighting human trafficking include the Republic of Congo, Iraq and Azerbaijan, Sifton said.