The "worst is behind" for Japan's once moribund economy, but neighboring China must do more to balance its breakneck growth rate and allow its currency to become more flexible, U.S. Treasury Undersecretary Tim Adams warned Wednesday.

Asia's two biggest economies are making a larger contribution to global economic growth, serving as engines of that growth, along with the United States, Adams said.

In Japan, the world's second-largest economy after the U.S., fundamentals are "stronger than they have been for some time" and the country seems to be staging "a very strong and sustainable" recovery, Adams said. The "worst is behind" for deflation, the crippling decline in prices that has undercut corporate profits and workers' wages for several years, he added.