Chief Executive Carrie Lam Cheng Yuet-ngor insisted Hong Kong’s freedoms and fundamentals would remain sound as she welcomed on Friday a tailor-made national security law to be passed by Beijing that would require new institutions to safeguard sovereignty and allow for mainland agencies to operate in the city when needed.

Speaking hours after a resolution on the legislation presented to the country’s top legislative body, the National People’s Congress, fuelled anxiety and fears on its exact remit, Lam sought to assure residents and investors that the law would protect, rather than hurt, their rights.

She maintained that it would not undermine the governing principle of “one country, two systems” for Hong Kong, its high degree of autonomy or the cherished principle of “Hong Kong people administering Hong Kong”.

“It will also provide the best system to ensure prosperity and stability in Hong Kong. It won’t affect the capitalist system and rule of law in Hong Kong. It won’t affect foreign investors’ interests that are legally protected in Hong Kong,” she said.

Instead, it would create a stable environment for everyone without the “threat of terrorism”, she said, recalling how the city had suffered from the protests and petrol bomb attacks over the past year.

But her administration had not been able to enact the law on its own given the “mutual destruction” philosophy of the protesters and opposition politicians determined to paralyse the legislature, she said.

Lam met the press with her full cabinet on hand, in a display of unity against a banner that read “full support” for Beijing’s decision to establish and improve the legal system and enforcement mechanism for Hong Kong to safeguard national security.

According to a seven-point resolution on the law spelt out by Wang Chen, a vice-chairman of the NPC Standing Committee, the city would need to set up institutions to improve its legal system and enforce and safeguard national security.

The law would also authorise relevant national security organs of the central government to set up agencies in Hong Kong to protect national security when needed, Wang revealed at the opening of the NPC session.

The legislation would prohibit “secessionist” and “subversive” activity, as well as “foreign interference” and “organising of terrorist acts” in the city – concerns that had been vexing Beijing for some time, but most urgently over the past year of increasingly violent anti-government protests.

“Since the extradition bill saga erupted in Hong Kong last year, anti-China forces have publicly advocated Hong Kong’s independence,” Wang said. “Such acts threatened national sovereignty … and we must take strong measures to prevent, stop and punish,” he added, to the applause of thousands of parliamentary deputies in the Great Hall of the People.

Wang was speaking soon after Premier Li Keqiang delivered his annual work report, during which the state leader also cited how Beijing would establish a sound legal system and enforcement mechanism for national security in Hong Kong.

As soon as Wang’s session ended, the city’s delegates to the annual parliamentary sessions confessed to having more questions than answers about how the law could be enforced.

Along with analysts, they were left asking, among other things, how the central and local government’s national security agencies could operate in the city and how enforcement would be carried out without triggering a constitutional gridlock or crisis because of conflicts arising between national and common law.

Many also noted that Wang, Lam and other mainland institutions overseeing the city’s affairs said that even with the passing of the law, Hong Kong still had a constitutional responsibility to enact local legislation on national security.

“I’m concerned about the execution details, how the law will be enforced in Hong Kong. The standing committee will have to release more information and address the worries of Hong Kong people,” said NPC delegate and a member of Lam’s Executive Council or cabinet, Bernard Chan, adding he supported the broad direction of the legislation. “At the moment, delegates were given little information.”

Asked about the enforcement mechanisms at her press conference, Lam herself said: “You have asked about the details. Today I am unable to give you all the details.”

Amid the uncertainty, the Hang Seng Index on Friday plunged 1,349.89 points, or 5.56 per cent, to 22,930.14, as investors grew jittery over the city’s business prospects.

The American Chamber of Commerce in Hong Kong, in a strongly worded statement, warned that the law would undermine the city’s status as a business hub and worsen the risks it faced being caught in the trade war between Beijing and Washington.

The city also braced for more protests as activists began airdropping pamphlets on residents’ mobile phones about planned demonstrations over the weekend, reminiscent of the flurry of canvassing activity at the height of the social unrest in 2019.

Police sources said about 6,000 riot officers would be on standby to deal with any flare-ups.

Hong Kong’s opposition camp denounced Beijing’s latest move, calling it a violation of one country, two systems. Jimmy Sham Tsz-kit, convenor of the Civil Human Rights Front, said it would rally its supporters against the new law.

“With more than 2 million people, we will see hope, we need to save Hong Kong together,” Sham said.

Civic Party lawmaker Tanya Chan said some political groups, such as the Hong Kong Alliance in Support of Patriotic Democratic Movements of China, would have “close to zero” room to live under the proposed law.

“Some slogans, such as ending the one-party rule in China, will be stepping on red lines,” Chan said.

In separate statements, the city’s pro-establishment camp, and Beijing’s three agencies – the Hong Kong and Macau Affairs Office (HKMAO), the foreign ministry’s Hong Kong office and the central government’s liaison office in Hong Kong – welcomed the new law.

A spokesman for the HKMAO said the NPC Standing Committee would only be authorised to create a law to target separatist acts. “It would not affect the various rights and freedoms that Hong Kong residents enjoy under the law … The city’s legal system would not be changed, foreign investors’ interests in Hong Kong will also continue to be protected,” he added.

In her statement soon after Wang’s speech, Lam pledged to fully cooperate with the committee to complete the legislation as soon as possible. “The [resolution] will not affect … the independent judicial power, including that of final adjudication, exercised by the judiciary in Hong Kong,” she said.

Elsie Leung Oi-sie, former vice-chairwoman of the Basic Law Committee under the NPC Standing Committee, said there was a need for the nation’s legislature to enact the law for Hong Kong as it was difficult for the city to do it on its own.

“It would be too late if national security is under genuine threat,” said Leung, who was the first justice minister after the city’s return to China from Britain in 1997.

Beijing’s move comes against the backdrop of rapidly escalating tensions between the United States and China. The US has until the end of this month to decide whether to certify Hong Kong’s degree of autonomy under the Human Rights and Democracy Act of 2019.

Thursday’s announcement of the legislation sparked condemnation from the United States, which accused China of reneging on its promise to keep Hong Kong highly autonomous. US Secretary of State Mike Pompeo warned the plan “would be a death knell” for the city’s autonomy.

On Friday, Wang said a fundamental consideration behind the resolution was that Beijing would not allow Hong Kong to be turned into a base of infiltration. “Using Hong Kong to infiltrate and sabotage the mainland touches on our bottom line. It is absolutely not tolerable,” he said.

He also stressed that by making the new law, Beijing had been trying to protect Hong Kong residents’ legal rights. “To prevent, frustrate and punish the small minority of criminal acts that harm national security is to offer better protection to the safety of life and property of the vast majority of Hong Kong people, as well as their basic rights and freedoms,” he said.

A debate is scheduled for the legislation at the NPC on Tuesday and Thursday, with a vote expected then. The resolution, which will in all likelihood be adopted, will be forwarded to the standing committee to advance the legislation.

Friday’s resolution would authorise the committee to make relevant laws to establish a sound legal system and enforcement mechanism for safeguarding national security in Hong Kong.

“[Such a law] would prevent, frustrate and punish any secessionist or subversive activity, the organising of terrorist acts, and other acts that seriously threatens national security, as well as activities of foreign and external interference in Hong Kong,” it reads. The NPC Standing Committee decided to list the law in Annex III of the Basic Law and it would be announced and implemented in Hong Kong, according to the resolution.

Under Article 18 of the city’s mini-constitution, national laws can only be applied in Hong Kong if they are listed in Annex III and relate to defence, foreign affairs and “other matters outside the limits” of the city’s autonomy.

The responsibility of Hong Kong’s leader was also highlighted in the resolution. “To fulfil his or her responsibility in protecting national security, the chief executive should launch promotion and education [programmes on the matter], frustrate acts that threaten national security and submit reports to the central government regularly.”

While the move by Beijing showed it had reached its limit of tolerance after waiting since 1997 for a national security law to be passed by the Legislative Council, the resolution also stated that it remained Hong Kong’s constitutional responsibility to safeguard the nation’s sovereignty and territorial integrity. “Hong Kong should finish the national security legislation, as stated in the Basic Law, as soon as possible,” it said.

The NPC Standing Committee meets every two months. Tam Yiu-chung, Hong Kong’s sole representative to the committee, said it usually took one to two meetings to pass a law. This could mean Hong Kong would have it in place by August, just a month before the Legislative Council elections are to be held. “It is not a very complicated one. We would consult the Hong Kong government and the Basic Law Committee,” he said.

Ip Kwok-him, a local deputy of the NPC, hoped for a speedy passage for the law. “The foreign interference issue is very serious. The sooner, it passes the better,” he added.