China's proposed new legislation for Hong Kong could lead to new US sanctions and compromise the semi-autonomous city's position as a financial hub, a top US official said Sunday.

The national security law, proposed by Beijing on Thursday, would ban sedition, secession and subversion against China. Pro-democracy activists in Hong Kong have publicly protested for increased liberty and freedom from Beijing rule for almost a year.

Read more: Hong Kong: Tear gas fired as thousands protest new security law

"It looks like with this national security law they're going to basically take over Hong Kong," White House National Security Adviser Robert O'Brien told US broadcaster NBC's TV show "Meet the Press."

"And if they do, Secretary [of State Mike] Pompeo will likely be unable to certify that Hong Kong maintains a high degree of autonomy and if that happens there will be sanctions that will be imposed on Hong Kong and China," he said.

Thousands took to the street in Hong Kong to protest the new security law in the city's biggest protest since the COVID-19 lockdown began.

Hong Kong's status as financial hub under threat

O'Brien also joined other US officials in questioning the repercussions for China's and Hong Kong's economies.

Read more: Beijing says US is pushing China to 'brink of a new Cold War'

"It's hard to see how Hong Kong could remain the Asian financial center that it's become if China takes over," O'Brien said.

"One reason that they came to Hong Kong is because there was the rule of law, there was a free enterprise system, there was a capitalist system, there was democracy and local legislative elections," the adviser continued. "If all those things go away, I'm not sure how the financial community can stay there."

Subscribe to Corona Compact — DW's newsletter tracking coronavirus in Asia