The Trump administration has lashed out at China saying it has committed "genocide and crimes against humanity" in its treatment of Uighur Muslims in Xinjiang.
The incoming president's team has not yet responded, but several members have been sympathetic to such a designation in the past.
It means the US must take Pompeo's determination into account in formulating policy toward China and new measures against the country will be easier to impose.
The Xinjiang region is a major global supplier of cotton, so Pompeo's order could have significant effects on international commerce.
John Bolton speaks about Mike Pompeo's order against China's treatment of Uighur Muslims in Xinjiang
China has imprisoned more than one million people in concentration camps, including Uighurs and other mostly Muslim ethnic groups, according to US officials and human rights groups.
There are reports that people have been subjected to torture, sterilisation, political indoctrination and forced labour as part of an assimilation campaign.
But China has denied the charges, and says its policies in Xinjiang aim only to promote economic and social development in the region and stamp out radicalism.
Mr Pompeo said in his statement: “After careful examination of the available facts, I have determined that since at least March 2017, the People’s Republic of China, under the direction and control of the Chinese Communist Party, has committed crimes against humanity against the predominantly Muslim Uyghurs and other members of ethnic and religious minority groups in Xinjiang.
“In addition, after careful examination of the available facts, I have determined that the PRC, under the direction and control of the CCP, has committed genocide against the predominantly Muslim Uyghurs and other ethnic and religious minority groups in Xinjiang.
"I believe this genocide is ongoing, and that we are witnessing the systematic attempt to destroy Uyghurs by the Chinese party-state.”
Emma Murphy's video report in September 2020 on the missing Uighurs in China
Since last year, the Trump administration has blocked imports from companies and imposed sanctions on Communist Party officials linked to forced labour in Xinjiang.
Penalties have become harsher as Donald Trump and Pompeo accused China of trying to cover up the Covid-19 pandemic.
Five days ago, the US announced it would halt imports of cotton and tomatoes from Xinjiang.
Customs and Border Protection officials also said they would block products from the region suspected of being produced with forced labour.
On Saturday, Mr Pompeo angered China by lifting restrictions on US diplomatic contacts with Taiwanese officials. China considers Taiwan as a renegade province.