The New Jersey congressman behind a landmark anti-human trafficking law is accusing the Obama administration of giving China a pass in its latest report on the global trafficking epidemic that has been likened to slavery.

The State Department report cited nearly two dozen countries for failing to meet basic standards, nearly double the number in the 2010 report. The rating could subject any of them to U.S. sanctions. China, however, was not on the Tier 3 list of severe offenders.

Instead, the country was kept for the seventh year in a row on a separate "watch list." The watch list is the final designation before being placed in Tier 3, which is the worst offenders. Tier 1 is a country in good standing, Tier 2 comprises offenders who do not fully comprise basic standards but are trying to improve.

Rep. Chris Smith, R-N.J., who wrote the original legislation that established the annual reports, accused the administration of testing the limits of the law by keeping China off the Tier 3 list for so many years. A 2008 revision to the law says countries cannot be on the watch list for more than two years absent a special waiver, which was apparently granted for China in this case, three years later.

"This political waiver for China is totally unacceptable," Smith said in a statement. "China is a magnet for trafficking. ... The Obama administration has again abandoned trafficking victims in China, who are predominantly women. It's shameful."

The State Department report acknowledged the law would require a country like China to be moved over to Tier 3, but said the Chinese government has a "written plan" that would "constitute making significant efforts to bring itself into compliance" if implemented. Under the anti-trafficking law, countries can be granted a waiver if they have such written plans.

But Smith spokesman Jeff Sagnip accused the administration of letting China slide by keeping them on the watch list -- rather than making a decision to upgrade or downgrade them.

"The purpose of the watch list ... is to prompt action," he told FoxNews.com. "China has been getting off the hook for years and they either need to make improvements or they need to be graded on how they treat the victims of human trafficking."

Sagnip speculated that the administration was keeping China off the Tier 3 list out of political and economic consideration. "China has become very important to the Obama administration, much to the demise of the human rights situation," he said.

Despite keeping China off the most severe list, the State Department nevertheless cited China for being a "source, transit and destination country" for people subjected to "forced labor and sex trafficking."

The report said trafficking is "most pronounced" in the country's internal migrant population. It praised China for devoting more national attention to the problem, setting up hotlines to report cases and working with foreign governments to combat the problem, but questioned the results of all these activities.

"Despite basic efforts to investigate some cases of forced labor that generated a high degree of media attention and the plans to hire thousands of labor inspectors, the impact of these measures on addressing the full extent of trafficking for forced labor throughout the country remains unclear," the report reads.

The report said the number of prosecuted cases appears to have risen since 2009, though a solid figure is hard to come by. The country's Supreme People's Court reported nearly 2,000 prosecutions in 2010 under a category that includes some trafficking offenses, resulting in convictions for more than 3,000 offenders.