China's rubber-stamp parliament will vote next week on the proposal, following massive democracy protests that rocked the city previous year and infuriated Beijing.
It called for a new law in Hong Kong to prevent and punish acts of "secession, subversion or terrorism activities".
Chris Patten, the last governor of the former British colony, said China has betrayed the people of Hong Kong so the West should stop kowtowing to Beijing for an illusory "great pot of gold".
The Communist Party-owned People's Daily newspaper, meanwhile, described the security law as "anti-virus software" for Hong Kong to enhance law and order, and to build a stable foundation for the principle of "one country, two systems".
USA officials have said the Chinese legislation would be bad for both Hong Kong's and China's economies and could jeopardize the territory's special status in US law. Hong Kong benefits from visa-free travel from the United States and lower tariffs than the rest of China. "It is a complete dishonor of promises made under the Sino-British Join Declaration, as well as all the promises made by the Chinese government to us and the world", she said.
White House economic adviser Kevin Hassett said China risked a major flight of capital from Hong Kong that would end the territory's status as the financial hub of Asia.
China's army already has a garrison in Hong Kong but soldiers have not intervened in the protests.
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Local newspaper Mingpao quoted a Hong Kong General Chamber of Commerce statement saying that while more details and explanations were needed to preserve confidence, the chamber "always wanted to see social stability and peaceful business environment, and not violence". But China's latest move is likely to trigger another round of popular protest against Beijing's rule. It secured the "one country, two systems" model of governance for a period of 50 years after handover, with freedom of assembly and speech, the free press, an independent judiciary, and certain democratic rights protected during this period. "Everything is possible, but the objective is clear - to recall mass rally", the 23-year-old designer said.
Hong Kong was rocked by unprecedented, pro-democracy protests previous year which began over the proposed extradition law, which sparked fears that locals would be prosecuted in the Chinese mainland. But the London-trained lawyer also realized that "something fundamental had changed" in the months while Hong Kong protesters had withdrawn from the streets to escape the coronavirus.
Hong Kong is supposed be semiautonomous under the so-called one country, two systems policy.
The proposal, which has been condemned by the United States and Hong Kong pro-democracy figures as an assault on the city's freedoms, was submitted for deliberation on Friday.
"The existing laws are not enough in maintaining national security", he said.
It also said that Hong Kong must introduce national security education.
Civic Party lawmaker Dennis Kwok said, "If this move takes place, "one country, two systems" will be officially erased". "Of course Hong Kong's legislative body will still exercise its function, but I expect more national security regulations from the central government in the future".
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Doug Ducey tweeted that his office was monitoring the situation closely and the state is ready to assist as necessary. Being told not to say anything else about details until I speak to police. "Not sure how many others".