The United States, Britain and the European Union have also expressed concern about the security legislation and its implications for China’s freest city.
U.S. Secretary of State Mike Pompeo said on Wednesday Hong Kong no longer qualified for special treatment under U.S. law, potentially dealing a crushing blow to its status as a major financial hub.
The proposed security law was “only the latest in a series of actions” undermining Hong Kong freedoms, he told Congress.
“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” he said.
The security law could see Chinese intelligence agencies set up bases in the city.
Relations between the two countries have been tense over China’s claims in the South China Sea and trade, with the coronavirus pandemic adding to the acrimony.
“Already, international business is facing the pressure of increased tension between the U.S. and China, but the enactment of China’s security law for Hong Kong could take the tension to a whole new level,” said Tara Joseph, president of the American Chamber of Commerce in Hong Kong.
“This is show time for Hong Kong,” she said in a commentary in the South China Morning Post.
U.S. President Donald Trump has promised action over Hong Kong, with an announcement at the end of the week. More than 1,300 U.S. companies have offices in the city, providing about 100,000 jobs.
China said it would take necessary countermeasures against foreign interference in what it insists are its internal affairs.
Hong Kong stocks underperformed most of Asia, closing down 0.7%.
Trump’s possible response could include visa and economic sanctions, David Stilwell, the State Department’s assistant secretary for East Asia, told reporters.