"In both law and practice, the Chinese government continued to violate the rights of its citizens to religious freedom," the report said, noting the state has "broad discretion over religious practice, internal affairs, and interpretations of faith, which is often exercised based on Party and government policy interests."
Party officials warned at April's National Conference on Religious Work that religious groups must be loyal to the state and signaled that they will exercise tighter control on religion in the future to guard against the supposed infiltration of foreign powers through religion.
When the party released its religious regulations on Friday, Rep. Smith called it "stunning, but not surprising."
"Religious practice is exploding in China, particularly among Christians, and the religious life of Tibetan Buddhist, Uyghur Muslim, and Falun Gong practitioners persist despite decades of the worst abuses," he said.
However, religious groups must register with the government, and in China there is a state Catholic Church and an "underground" Catholic Church. Local and national officials have harassed or persecuted Catholics who are not part of the state Catholic Church, destroying churches and detaining or harassing bishops and priests.
They have also refused to recognize some bishops appointed by the Vatican because they require that bishops be appointed by state religious groups, a conflict that is in the long process of being resolved.
"After Pope Francis assumed the papacy in 2013, the Holy See and the Chinese government reportedly began a series of discussions regarding the system of bishop appointments in China," the report noted.
"In April 2016, Chinese and Holy See representatives formed a working group to discuss the selection and ordination of bishops in China; as of July 2016, both sides reportedly acknowledged that talks were continuing," the report added.
The country also keeps thousands of political or religious prisoners and uses "black jails" to "arbitrarily detain" people outside the justice system.
According to the commission's Political Prisoner Database, there were over 8,000 "cases of political or religious imprisonment in China" with 1,383 of those current cases of imprisonment; the remaining 7,000 cases involved prisoners who "have been released, or executed, who died while imprisoned or soon after release, or who escaped."