US President Donald Trump has announced that his country will impose sanctions on officials in China and Hong Kong for their role in what he described as the undermining of autonomy in the city, and announced the suspension of Chinese entry that he said posed a potential threat to security in America.
The move comes after the Chinese parliament adopted - on Thursday - a decision to press ahead with national security legislation in Hong Kong, democracy activists and Western countries fear that it will undermine the freedoms the city enjoys and spoil its role as a global financial center.
The Chinese parliament has also agreed to enact laws to curb incitement, separation, terrorism and outside interference in the city, and Chinese security and intelligence agents may be stationed for the first time, in a move that critics say threatens the great freedoms it enjoys.
In one of his toughest comments yet, Trump said that China had broken its promises of autonomy in Hong Kong by proposing legislation related to national security, and that the city no longer had American economic benefits.
"We will take action to abolish the preferential treatment of Hong Kong as a region separate from the rest of China in terms of customs and travel," he said, noting that Washington may impose sanctions on individuals it considers responsible for "completely strangling Hong Kong's freedom."
During his remarks to reporters at the White House, Trump described China's actions on Hong Kong as a tragedy for the world, but he did not specify a date to start implementing the American steps.
Senior officials in the Hong Kong government today criticized the US president's moves to deny the city special treatment.
City Security Minister John Lee told reporters that the Hong Kong government is not under threat and will press ahead with the implementation of the new laws.
"I don't think they will succeed in using any means to threaten the government, because we believe that what we are doing is right," he added.
Justice Minister Teresa Cheng said that Trump's basis was "totally wrong and incorrect", adding that the need for national security laws is a legitimate and necessary issue.
In Hong Kong, there are offices for more than 1,300 US companies, and about 100,000 employees.
Hong Kong is a vital hub for Chinese companies seeking access to foreign currencies and international banks.
The abolition of the special status could affect prosperity and prosperity in the city, which for decades has played the role of a global economic gateway to China.
In the period before China restored Hong Kong from Britain in 1997, a "one country, two systems" agreement was concluded, allowing the former colony to maintain a margin of independence and freedoms for the next 50 years.
These freedoms include free economy, an independent judiciary, freedom of expression and legislative independence.
As a result, many countries - including the United States - have enacted laws that allow them to treat Hong Kong as a commercial entity separate from the economically and politically restricted mainland China.
This arrangement allowed Hong Kong to become a global financial center equivalent to financial centers the size of London and New York.
Mutual travel agreements without visas and currency pegs to the US dollar and the possession of the world's fourth largest stock exchange, as well as laws that facilitate business and tax and legal protections, have led to the island's prosperity and the spinning of the trade wheel.
Robert Spalding, an expert on American and Chinese affairs at the Hudson Institute, said that if Washington chooses to take tough measures, it would risk "all of China's financial ties to the free market."
"If these links are absent, then stocks, securities, transfers, SWIFT and others will become threatened," he added.
The Capital Economics center said Hong Kong’s short-term economic damage “can be controlled”, but if the United States abolishes its special status, this will speed up eroding the city's status as an international trade center.