The United States has called on China to respect Hong Kong's autonomy, in response to an upcoming national security law that would tighten Beijing's control over the territory.
Outraged lawmakers in Washington are lining up legislation that could sanction Chinese officials and banks over the new law.
If Beijing proceeds with its legislation, it could jeopardise Hong Kong's special trade status under American law, the State Department warned.
The national security law, which was on the agenda of China's highest law-making body when the annual meeting started yesterday, will ban seditious activities against the central government.
US Secretary of State Mike Pompeo yesterday called Beijing's decision to bypass Hong Kong's legislative processes "a death knell for the high degree of autonomy" it promised the city under the Sino-British Joint Declaration.
The US stands with Hong Kong and strongly urges Beijing to reconsider its "disastrous proposal", he said in a statement. "Any decision impinging on Hong Kong's autonomy and freedoms as guaranteed under the Sino-British Joint Declaration and the Basic Law would inevitably impact our assessment of one country, two systems and the status of the territory."
The US treats Hong Kong differently from China in matters of trade and commerce, under the 1992 Hong Kong Policy Act.
This exempts Hong Kong exports from tariffs imposed by the US on Chinese goods under the US-China trade war.
But under the Hong Kong Human Rights and Democracy Act introduced by the US last November in support of the city's protest movement, the secretary of state is required to annually re-certify that the territory remains sufficiently autonomous from mainland China to warrant its special status.
Mr Pompeo said on May 6 that this year's review would be postponed, to take into account any actions by Beijing in the lead-up to the annual meeting of the National People's Congress.
US President Donald Trump, when asked by reporters for his reaction to the national security law on Thursday, said: "I don't know what it is because nobody knows yet. If it happens, we'll address that issue very strongly."
US lawmakers took a stronger stance, urging the White House to hold Beijing accountable and act to preserve Hong Kong's autonomy in a rare show of bipartisan unity.
Senate Majority leader Mitch McConnell called the national security law unacceptable, saying: "A further crackdown from Beijing will only intensify the Senate's interest in reexamining the US-China relationship."
On Thursday, Republican Senator Pat Toomey of Pennsylvania and Democratic Senator Chris Van Hollen of Maryland introduced a Bill to sanction those who undermine Hong Kong's autonomy.
This could include police officers who crack down on Hong Kong protests or Chinese Communist Party officials who impose the national security law on Hong Kong.
Banks that transact with such individuals or entities would also be sanctioned under their proposed legislation, titled the Hong Kong Autonomy Act.