The United States has revoked Hong Kong's special status under US law, opening the way for the city to be stripped of trading privileges, as Washington accused China of trampling on the territory's autonomy.

The decision came as China's rubber-stamp parliament was set to vote Thursday on a new Hong Kong security law, a move that has triggered renewed protests.

Riot police stand guard outside Hong Kong's legislature ahead of Wednesday's debate
Riot police stand guard outside Hong Kong's legislature ahead of Wednesday's debate AFP / Anthony WALLACE

Under legislation passed last year to support Hong Kong's pro-democracy protesters, the US administration must certify that the city still enjoys the freedoms promised by Beijing when it negotiated with Britain to take back the colony.

"No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground," said Secretary of State Mike Pompeo, adding the trade hub "does not continue to warrant" its special status.

Police were taking few chances
Police were taking few chances AFP / Anthony WALLACE

The determination means that Hong Kong could lose trading privileges -- including lower tariffs than the mainland -- with the world's largest economy.

President Donald Trump will ultimately decide which actions to take, said David Stilwell, the top State Department official for East Asia.

"The steps will be considered and they will be as targeted as possible to change behavior," Stilwell told reporters, while acknowledging it was unlikely Beijing would change course.

The protests have been fuelled by years of rising fears that Beijing is eroding Hong Kong's cherished freedoms
The protests have been fuelled by years of rising fears that Beijing is eroding Hong Kong's cherished freedoms AFP / Anthony WALLACE

He said the United States did not want to hurt the people of Hong Kong, adding: "This decision was made by the government in Beijing, and not by the US."

China's National People's Congress is expected Thursday to take another step on the security law that would ban secession, subversion, terrorism and foreign interference -- a step that Hong Kong activists say abolishes basic freedoms.

Confidence ratings in Hong Kong, on the concept of "One Country, Two Systems," which is designed to give the city a high degree of autonomy.
Confidence ratings in Hong Kong, on the concept of "One Country, Two Systems," which is designed to give the city a high degree of autonomy. AFP / Laurence CHU
Hong Kong football fans have long booed China's national anthem
Hong Kong football fans have long booed China's national anthem AFP / Isaac LAWRENCE

China's treatment of Hong Kong has provoked rare bipartisan support during the divisive tumult of the Trump administration and ahead of November's presidential election.

"The United States must take a stand against China's crackdown in Hong Kong," the campaign office for Democratic rival Joe Biden said, welcoming Pompeo's announcement.

Hong Kongers are now waiting to see how the decision will affect the city.

US Secretary of State Mike Pompeo says that he has shared evidence that Iran carried out an attack on Saudi Arabia
US Secretary of State Mike Pompeo says that he has shared evidence that Iran carried out an attack on Saudi Arabia AFP / Bryan R. Smith

The Hang Seng Index on the city's stock exchange was down 1.8 percent around lunchtime.

Joshua Wong, a prominent pro-democracy activist who has lobbied for trade sanctions, said Beijing could not expect foreign countries to ignore what is happening to such an important global trade hub.

Hong Kong riot police stop and search people downtown ahead of a debate at the city's legislature over a law that would ban insulting China's national anthem. "You can see there’s police every corner, it’s like martial law in force", says one person a
Hong Kong riot police stop and search people downtown ahead of a debate at the city's legislature over a law that would ban insulting China's national anthem. "You can see there’s police every corner, it’s like martial law in force", says one person after she was searched. AFPTV / Daniel SUEN

"Hong Kong is not just a Chinese city, it's a global metropolis where the international community is a stakeholder," he told reporters.

But Holden Chow, a pro-Beijing lawmaker, said Beijing's national security laws would make the city safer for businesses after last year's unrest.

"The United States should not intervene in our internal affairs and should stop intimidating us," he said.

Washington's decision came as fresh protests broke out in Hong Kong on Wednesday -- this time over another controversial proposed law that criminalizes insults to the national anthem with up to three years in jail.

Police surrounded the city's legislature where the bill was being debated, fired pepper ball rounds at protesters and arrested more than 300 people, mostly for unlawful assembly.

"It's like a de facto curfew now," Nathan Law, a prominent pro-democracy advocate, told AFP. "I think the government has to understand why people are really angry."

China is determined to avoid a repeat of massive protests last year, triggered by an unsuccessful bid to fast-track extraditions to the mainland, in which the Hong Kong legislature was trashed by demonstrators.

The mini-constitution that has governed Hong Kong's affairs since the handover obliges the territory's authorities to enact national security laws.

But an effort to do so in 2003 was shelved after huge protests by Hong Kongers.

China is motivated by fear of a younger Hong Kong generation that "does not agree with the political system of the Communist Party," said Hua Po, an independent political commentator based in Beijing.

"If they lose control over Hong Kong, the impact on the Chinese mainland will be huge," Hua said.