The US has accused China of genocide in its repression of the predominantly Muslim Uyghur minority there – a charge that China has repeatedly rejected.
The bill had been criticised by major companies that do business in the area, including Coca-Cola, Nike and Apple.
Its passage also overcame initial lack of support from the White House.
It was approved by the Senate on Thursday with the vote of every member of Congress except one.
The Uyghur Forced Labor Prevention Act, as the bill is formally known, now heads to the desk of President Joe Biden to be signed into law.
The US accuses China of employing slavery and genocide in China’s resource-rich western region. US and multinational corporations, which are already facing shortages over supply chain issues, had lobbied against it out of concern over how it would affect business.
“Many companies have already taken steps to clean up their supply chains. And, frankly, they should have no concerns about this law,” said Florida Senator Marco Rubio, after the bill passed the upper chamber of Congress.
“For those who have not done that, they’ll no longer be able to continue to make Americans – every one of us, frankly – unwitting accomplices in the atrocities, in the genocide.”
Lawmakers in both chambers struck an agreement this week on the final text of the bill after earlier versions passed the House and the Senate.
The measure also removes a Republican blockade that prevented Mr Biden’s nominated ambassador to China, Nicholas Burns, from being approved.
Earlier on Thursday, the US Commerce Department announced sanctions on over 30 Chinese technology companies and research institutes that are accused of working in support of the Chinese military.
The newest rule bans American companies from selling goods to the sanctioned companies and entities without a special licence.
The agency also accused China’s Academy of Military Medical Sciences of using biotechnology “to support Chinese military end uses”, including “purported brain-control weaponry”.
China “is choosing to use these technologies to pursue control over its people and its repression of members of ethnic and religious minority groups”, Commerce Secretary Gina Raimondo said in a statement.
Also on Thursday, the US treasury department announced an investment blacklist of eight Chinese companies that it accuses of biometric surveillance and tracking of Uyghurs – including DJI, the world’s largest maker of small drones frequently used by amateur hobbyists.
Asked about the possibility of new US sanctions at a briefing on Wednesday, Beijing foreign ministry spokesperson Zhao Lijian responded: “By overstretching the concept of national security, certain US politicians politicise and instrumentalise science and technology and economic and trade issues based on ideology.
“This runs counter to the principle of market economy and fair competition. It will only threaten and hurt the security of global industrial and supply chains and undermine international trade rules.”
The moves comes amid rising tensions between China and several primarily Western nations.
The UK, Australia, the US and Canada have announced that they will not send diplomats to the 2022 Beijing Winter Olympics – due to be held in February 2022 – in protest against alleged Chinese human rights abuse.