WASHINGTON (REUTERS) - The US Chamber of Commerce said on Tuesday (May 26) it was deeply concerned that China's proposed national security legislation on Hong Kong could undermine its autonomy under the "one country, two systems" framework, and urged Beijing to de-escalate the situation.

In a statement, the largest US business group said it would be "a serious mistake" to jeopardise Hong Kong's special status, which was fundamental to its role as an attractive investment destination and financial hub.

It also urged the US government to maintain constructive ties with Hong Kong, and said far-reaching changes to Hong Kong's status as a separate territory under US law would have serious implications for US businesses that operate there.

Chinese Premier Li Keqiang has proposed a security law that would reduce Hong Kong's separate legal status, a move that business leaders and diplomats say could mark a turning point for China's freest city. It is expected to be discussed by China's National People's Congress and approved on Thursday.

The US Chamber, which represents US companies with a large presence and long-standing interests in both Hong Kong and China, urged Beijing to peacefully defuse the situation.

"It would be a serious mistake on many levels to jeopardise Hong Kong's special status, which is fundamental to its role as an attractive investment destination and international financial hub," the group said.

It urged the Trump administration to continue to prioritise maintenance of a positive and constructive relationship between the United States and Hong Kong.

Revising Hong Kong's status under US law as a separate territory would have "serious implications for Hong Kong and for US business, particularly those with business operations located there who exercise a positive influence in favour of Hong Kong's core values," it said.