The US state department has released its annual report on human rights around the world, detailing abuses in China, Russia, Syria and Zimbabwe.
The US said China had not undertaken democratic reform
Unlike in previous years, China is not listed as one of the world's most systematic human rights violators.
But it is described as an authoritarian regime that denies its people basic human rights and freedoms, tortures prisoners and restricts the media.
The report tracks changes in the past year, but has no binding consequences.
It is compiled with the help of US embassies, using information from governments, NGOs, academics and the media.
Unlike in previous years, China, which will be hosting this summer's Olympic Games, was not grouped with the world's most systematic human rights violators.
Instead, it was described as an authoritarian regime undergoing rapid economic and social change, which had "not undertaken democratic political reform".
"The government continued to monitor, harass, detain, arrest and imprison journalists, writers, activists and defence lawyers and their families, many of whom were seeking to exercise their rights under law," the report said.
A state department official said there was no back-pedalling on China's record.
She said the new categorisation was meant to counter the argument that economic progress leads to improved human rights and freedom.
Countries listed as the most systematic human rights violators with power "concentrated in the hands of unaccountable rulers" included North Korea, which was called an absolute dictatorship with repressive policies.
Burma was also criticised for having an "abysmal" record.
Iran, Zimbabwe, Cuba, Belarus, Sudan and Uzbekistan remained on the list, while Syria was added because of its worsening record.
Amnesty International welcomed the publication but said that words alone were not enough.
The human rights group also called on the Bush administration to hold people accountable in its "war on terror".