The controversial legislation requires Hong Kong administrators to use local laws to arrest and prosecute individuals for "any act of treason, secession, sedition, subversion against the Central People's Government".
Pro-democracy activists descended on China's Liaison Office in Hong Kong as the government said it would cooperate to enact the law, claiming it would not affect the city's freedoms. Following the harsh police crackdown on protests against a planned extradition law, Hong Kong democracy activists view the new plans as renewed repression.
Lawmakers are anxious the new security law could remove the protection of the city's civil liberties against the communist regime and end the city's long upheld "one country, two systems" formula.
The proposal was raised at China's National Congress and follows the widespread protests by Hong Kong residents concerned Beijing was undermining the freedoms promised when the city was handed back to China by the United Kingdom in 1997.
While the Chinese government controls China's judiciary, Hong Kong has its own legal system, and the courts have always been regarded as independent and highly professional.
"We're absolutely not going to give China a pass", Hassett said, "It's a very hard, scary move".
A number of pro-democracy figures in Hong Kong, including Democratic Party leader Wu Chi-wai, said the announcement was the death of "one country, two systems".
The US is now considering whether to extend Hong Kong's preferential trading and investment privileges.
The new law would enforce punishment for "subversion" and other perceived offenses in the city, which was swept by months of massive and occasionally violent pro-democracy protests a year ago.
President Trump has also weighed in, saying the USA would react strongly if it went through - without giving details.
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The security legislation is expected to be voted upon next week, with lawmakers having yet to flesh out an actual law.
The practice of "one country, two systems" has achieved unprecedented success in Hong Kong, according to an explanatory document delivered by Wang, state-run Xinhua news agency reported.
He nevertheless cautioned of the risks of the United States revoking the city's trading status, while acknowledging that many in Hong Kong were angry and would back the move.
Pompeo has called the proposal a "decision to bypass Hong Kong's well-established legislative processes and ignore the will of the people of Hong Kong".
The move, one of the most controversial items on the agenda of the National People's Congress in years, drew strong rebukes from the USA government and rights groups. "It was never clear what exactly the allegations and the evidence are, and the term national security is so vague that it could cover nearly anything", Professor Johannes Chan, a legal scholar at the University of Hong Kong, says.
"I deeply believe that the national law to be enacted by the Standing Committee of the NPC will seek to practically and effectively prevent and curb acts and activities that seriously undermine national security, as well as sanction those who undermine national security by advocating "Hong Kong independence" and resorting to violence", Lam said.
People are concerned this affect free speech their right to protest - which is now legal in Hong Kong. "It (the Chinese government) can not be trusted".
Hong Kong was under British control for more than 150 years up to 1997. "The British government should make it clear that what we are seeing is a complete destruction of the Joint Declaration".
It "seems to be increasingly the case that Beijing can treat and interpret the Basic Law in whatever way it likes", he continues.