China has taken initial steps to improve protection of US know-how under the "Phase One" trade pact, but must go further and implement those measures, the top US trade negotiator said Friday.

China also was the source of most counterfeit goods used to combat the Covid-19 pandemic, including masks and sanitizers, the US Trade Representative said in an annual report on intellectual property protections among 100 US trading partners.

The world's two top economic powers signed a pact in January 2020 to end a damaging two-year trade war, that mandated increased enforcement of US technology and patents.

Beijing has approved a dozen of the many new measures proposed to improve protection of intellectual property under the deal, a senior USTR official told reporters.

"However, these steps toward reform require effective implementation and fall short of the full range of fundamental changes needed to improve the IP landscape in China," the official said.

China remains on the USTR's "priority watch list" which mandates more intensive scrutiny, the USTR said in its "Special 301" report, which also name eight others on that list, and names 23 to to its "watch list."

However, the official did not specify the timing for any consultations with Beijing.

US Trade Representative Katherine Tai on Monday said Washington is "scrutinizing all of the aspects" of China's performance under the trade pact, and would enforce the provisions.

However, Tai said the meeting with her Chinese counterpart, which the agreement calls for every six months, has "not yet been scheduled."

Meanwhile the Covid-19 pandemic highlighted that IP protections are a global concern, as the report noted that China was the source of "significant quantities" of counterfeit coronavirus test kits, personal protective equipment (PPE) such as N-95 and equivalent masks, and sanitizers, detergents, and disinfectants.

And the mass movement during the pandemic to online sales exacerbated the "widespread counterfeiting in China's e-commerce markets," USTR said.

Protection of technology and patents is a key priority because IP-intensive industries generated more than 38 percent of US gross domestic product, the report said.

"Failing to adequately and effectively protect those rights in foreign markets hurts the U.S. economy, the dynamism of American innovators and the livelihoods of our workers," Tai said in a statement.

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