China's downgrade is to be announced Tuesday at the State Department when Secretary of State Rex Tillerson unveils the annual Trafficking in Persons Report to Congress, said the officials, who weren't authorised to comment publicly ahead of the announcement and demanded anonymity.
Ivanka Trump, the president's daughter and senior adviser, planned to attend the ceremony.
The determination marks the first major, public rebuke of China's human rights record by the Trump administration, which has generally avoided direct, public criticism of Beijing while seeking its cooperation in combatting North Korea's nuclear and missile threats. The report is likely to draw strong protest from China's communist government.
Other countries that have recently been on that list include Sudan, Iran and Haiti. In last year's annual report, the US placed China on its "watch list" of countries that aren't meeting minimum standards and could be downgraded to the lowest classification.
The US described China as devoting "sufficient resources" to a written plan for addressing trafficking. But it said that the Asian power hadn't increased its anti-trafficking efforts from the previous year.
In the 2016 report, the US called China a "source, destination and transit country" for forced labor and sex trafficking. That report described internal migrants in China as particularly vulnerable, with some forced to work with little government oversight in factories and coal mines. It said men, women and children from other Asian countries and from Africa also are exploited.
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