The European Union is working on a “comprehensive and coordinated” response to Beijing’s imposition of a national security law on Hong Kong, its foreign affairs chief says, while an annual report by the bloc has highlighted growing concerns over the city’s autonomy.

The 2019 report on Hong Kong, released on Wednesday, cited as examples democracy activist Joshua Wong Chi-fung being banned from standing for district council elections and Beijing’s criticisms of a High Court ruling last November on the unconstitutionality of an anti-mask law.

“The annual report takes stock of the serious challenges to Hong Kong’s autonomy, stability and guaranteed freedoms in 2019. These challenges have significantly mounted in 2020,” the EU’s high representative for foreign affairs and security policy, Josep Borrell, said in a statement.

“As the European Union, we will not simply stand back and watch as China attempts to curtail these freedoms even more, with its imposition of the draconian national security law. We are working on a comprehensive and coordinated EU response.”

Borrell’s statement did not mention what the EU response might entail.

While in general the report by the European Commission – the EU’s executive branch – was satisfied that key freedoms continued to be upheld and the rule of law and judicial independence remained as key safeguards, it noted that concerns had intensified about the erosion of the “one country, two systems” principle and the city’s autonomy.

The report came days after Britain announced the immediate suspension of its extradition treaty with Hong Kong over the national security law, which criminalises secession, subversion, terrorism and collusion with external forces in Hong Kong and came into effect on June 30.

Last week, US President Donald Trump also signed an executive order ending the city’s preferential trading status and a law to penalise mainland Chinese and local officials deemed to have trampled on Hongkongers’ rights in the wake of the controversial legislation.

“It is in the whole world’s interest that Hong Kong can thrive both as a part of China and as a vibrant and unique international business centre and crossroad of cultures based on its high degree of autonomy as enshrined in the Basic Law,” Borrell said, referring to the city’s mini-constitution.

The report noted that 2019 was an exceptionally challenging year for the city, pointing to the sustained social unrest sparked by a now-withdrawn extradition bill.

The resulting divisions in society had also put pressure on the business community, it said.

“Growing political pressure and interference in the conduct of normal business were new elements in Hong Kong in 2019,” the report said, adding that employees of some companies were penalised through measures including dismissal for joining demonstrations, and for pro-protest comments on social media.

“The companies themselves have come under pressure, resulting in well-publicised cases of business leaders resigning and public apologies being issued over the political views and actions of their staff,” the report noted, without naming names.

Cathay Pacific CEO Rupert Hogg quit last August after the airline was rebuked by Beijing over the participation of some of its employees in the anti-government protests.

“Businesses perceived as pro-China have been extensively targeted by those sympathetic to the protests. This has taken the form of boycott in some cases, but also violent actions, in particular vandalism of their premises,” the report said.

It added: “As the unrest unfolded, European companies unequivocally condemned violence, while expressing their serious concern at the political impasse and how it affected the business climate in Hong Kong.”

Regarding political development, the report noted the record turnout at last November’s district council elections and the opposition camp’s landslide victory.

Joshua Wong, the only election candidate barred over his political stance, was disqualified from running after the government said he had not changed his views on Hong Kong independence.

“The EU continues to encourage the [Hong Kong and Beijing] authorities to resume electoral reform as enshrined in the Basic Law, and to reach agreement on an electoral system that is democratic, fair, open and transparent,” it said.

“Universal suffrage would give the Hong Kong government greater public support and legitimacy, which would help in attaining Hong Kong’s economic objectives and tackling its socioeconomic challenges.

“A convincing response is needed to the grievances expressed through the ongoing protests in order to secure Hong Kong’s stability in the longer term.”