Its move to block two pro-independence lawmakers from taking office has ignited concerns that have simmered since the massive "Umbrella Revolution" pro-democracy protests of 2014 failed to win political reforms.
Hong Kong's faith in rule of law shaken by China ruling
Hong Kong has regarded China with apprehension since its 1997 handover, but Beijing's latest intervention has shaken faith in the city's cherished rule of law, and its status as a place to do business in Asia.
A protester holds a yellow umbrella as she protests in Hong Kong, early on November 7, 2016
The dispute flared after the young lawmakers -- whose calls for a split are seen as treasonous -- deliberately misread their oaths of office, inserting expletives and draping themselves with "Hong Kong is not China" flags.
It was not the first time Beijing has waded into the affairs of the semi-autonomous city, but it made clearer the lines in the sand of China's tolerance for freedoms not seen on the mainland.
The disappearance last year of five booksellers known for publishing salacious titles about Chinese political leaders earned international condemnation and realised many residents' worst fears when they resurfaced in detention on the mainland.
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But Monday's move has struck a stunning blow to the city's identity as a rules-based business hub -- its major draw over mainland rivals like Shanghai -- and to those who fear the way of life they hold dear is gradually disappearing.
The ruling to stop Yau Wai-ching and Baggio Leung from taking office preempted a judgement from Hong Kong's High Court over whether they should be disqualified.
Although China has given "interpretations" of Hong Kong's constitution before, this was the first time it has stepped in ahead of a court judgement, imposing its own rules in an apparent effort to avoid any unpredictability.
"Hong Kong people feel that interferences of this kind have an adverse impact on the core values and lifestyle that we cherish," said political analyst Joseph Cheng.
While only a minority of Hong Kong residents support independence, and the lawmaker duo have alienated some supporters with their rebellious behaviour, many are deeply worried about where Hong Kong is headed.
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Liza Wong, a theatre worker in her 30s who joined rallies against Beijing's intervention, said she feared the city's "economy and confidence" could evaporate.
"Lots of investors are in the city because of its system, but if this goes on then everyone will be afraid," she told AFP.
Weekend clashes between protesters and police outside China's liaison office in Hong Kong, reminiscent of 2014's demonstrations, could be a taste of things to come as young activists become increasingly frustrated.
Slippery slope
Hong Kong was handed back by colonial ruler Britain to China in 1997 under a handover agreement safeguarding its freedoms and way of life for 50 years, and securing its semi-autonomous status.
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But there are growing concerns that those liberties are now under serious threat.
Unilateral decisions by China chip away at Hong Kong's semi-autonomous status, says governance activist David Webb.
That could affect its reputation as a trusted gateway to China.
Webb said it was unlikely that the National People's Congress Standing Committee (NPCSC), China's top legislative body which intervened in the oath dispute, would step into a court case involving private business affairs.
"But the more often they intervene, the more likely it becomes," he told AFP.
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"In the meantime, by interfering with the wishes of the people in electing their legislature and by preempting the interpretation of the courts on matters within (Hong Kong's) autonomy, the NPCSC is undermining the legislative and judicial processes, and that does indirectly affect business confidence."
However, others said Beijing's decision would steady the ship. The city's stock exchange rose on Monday despite the intervention.
"The unstable situation is coming from within Hong Kong, in particular the two young legislators," said Terence Chong, economics professor at the Chinese University of Hong Kong.
"So what China did is to make Hong Kong more stable."
Pro-democracy lawmakers argue the city is instead on a slippery slope to more restrictions and interventions. The legal community, which shares those concerns, is to hold a silent march through the city Tuesday in protest.
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"People are getting used to it, this is the scary part," said Michelle Ng, a 27-year-old university researcher.
"We need to let them know that this is not the right thing to do."
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