Western governments and critics have warned the new law will curb the city's freedoms and undermine its "One Country, Two Systems" governance scheme, which technically allows freedoms unseen on the mainland.
Meanwhile, residents of Hong Kong marched silently through the financial hub's streets in protest of the planned national security legislation.
Authorities banned an application for a Mother's Day march so small groups of masked protesters instead played cat and mouse with police in different shopping centres.
Smaller crowds of protesters in the Mong Kok district set fire to barricades and riot police unleashed 2020's first volleys of tear gas in response.
Police will deploy more than 6,000 officers to deal with potential unrest over the New Year's period, according to the South China Morning Post newspaper, citing unnamed sources.
Thousands of protesters, many wearing masks and reindeer horns, gathered on the streets after scuffles in shopping malls on Christmas Eve. The protests against China's control over the territory are now in their seventh month.
Sanctions will apply to NGOs that had acted "badly" over the recent unrest in Hong Kong, China's foreign ministry spokeswoman Hua Chunying said, including the National Endowment for Democracy, Human Rights Watch and Freedom House.
The Polytechnic University stand-off is one of the more dramatic episodes in six months of unrest that began in June with protests over an extradition bill seen by many in Hong Kong as an erosion of freedoms.
Protests against the government switched from violent to peaceful as the city prepared for local elections. Protesters are now weighing their next move as city leader Carrie Lam refuses to compromise.
US President Trump, speaking on Fox News Channel's "Fox & Friends," says he had saved the restive autonomous city from being destroyed by persuading Chinese president against troop deployment there.
At least a few dozen were believed to still be at Hong Kong Polytechnic University on Thursday morning. Meanwhile, US President Donald Trump is expected to sign legislation in support of the protesters.
Dozens of students still remain holed up in the besieged Hong Kong Polytechnic University, while the US Senate voted to back Hong Kong.
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