"Hong Kong will now be treated the same as mainland China – no special privilege," US President Donald Trump earlier said in a statement, authorising sanctions on banks over China's clampdown in the financial hub.

This file photo shows a promenade on the Kowloon side of Victoria Harbour, which faces the skyline of Hong Kong Island. July 13, 2020.
This file photo shows a promenade on the Kowloon side of Victoria Harbour, which faces the skyline of Hong Kong Island. July 13, 2020. (AFP)

China has vowed to retaliate after US President Donald Trump stripped Hong Kong of preferential trade treatment and authorised sanctions on banks over China's clampdown in the financial hub.

"China will make necessary responses to protect its legitimate interests, and impose sanctions on relevant US personnel and entities," the Chinese foreign ministry said on Wednesday.

President Trump earlier announced on Tuesday that he had issued an executive order on Hong Kong as he predicted decline for the restless city, on which Beijing recently imposed a tough new security law.

Trump said the Hong Kong Autonomy Act "maliciously slanders" its legislation in Hong Kong.

"Hong Kong will now be treated the same as mainland China – no special privileges, no special economic treatment and no export of sensitive technologies," Trump said in the White House Rose Garden.

"Their freedom has been taken away; their rights have been taken away," Trump added.

"And with it goes Hong Kong, in my opinion, because it will no longer be able to compete with free markets. A lot of people will be leaving Hong Kong."

READ MORE: Trump ends Hong Kong trade preferences to punish China

US-China ties

The new security law punishes what Beijing broadly defines as secession, subversion, terrorism and collusion with foreign forces with up to life in prison and sees Chinese intelligence agents operating officially in the city for the first time.

Critics fear it will crush wide-ranging freedoms promised to Hong Kong when it returned to Chinese rule in 1997, while supporters say it will bring stability after a year of often violent anti-government protests.

Relations between China and the US have recently come under stress over a range of issues including the South China Sea dispute, treatment of Muslim Uighur minority in Xinjiang, espionage and trade frictions.

In another sign of the impact of the law, former pro-democracy lawmaker Au Nok-sin said on Wednesday he was stepping down due to Beijing's accusation that a primary election he helped organise for Hong Kong's anti-China camp was illegal and could amount to subversion.

New York Times moves to Seoul

The New York Times will shift part of its Hong Kong office to Seoul, the latest sign of the chill Beijing's new national security law is having on the global financial centre just two weeks after the legislation was imposed.

The Times said its employees have faced challenges securing work permits and it would move its digital team of journalists, roughly a third of its Hong Kong staff, to the South Korean capital over the next year.

The move delivers a blow to the city's status as a hub for journalism in Asia, and comes as China and the United States have clashed over journalists working in each other's countries. Earlier this year, Beijing said journalists no longer allowed to work in mainland China could not work in Hong Kong either.

"Given the uncertainty of the moment, we are making plans to geographically diversify our editing staff," a spokeswoman for The Times told Reuters.

"We will maintain a large presence in Hong Kong and have every intention of maintaining our coverage of Hong Kong and China."

Other international media outlets including the Wall Street Journal, Financial Times and Agence France-Presse also have their Asia headquarters in Hong Kong. Reuters moved its Asia headquarters to Singapore in 1997, the year Britain handed Hong Kong back to China.

Hong Kong leader Carrie Lam has said reporters can report freely in the city if they do not violate the security law. Her office did not immediately respond to a request for comment.

Earlier this year, Washington began treating five major Chinese state-run media entities the same as foreign embassies, then slashed the number of journalists allowed to work for Chinese state media to 100 from 160, previously.

In retaliation, China said it was revoking the accreditations of American correspondents with the New York Times, News Corp's Wall Street Journal and the Washington Post, whose credentials expire by the end of 2020.

Beijing has also expelled three Wall Street Journal correspondents, two Americans and an Australian, following an opinion column by the newspaper that called China the "real sick man of Asia".

READ MORE: China opens Hong Kong headquarters for its secret police