US Secretary of State Mike Pompeo has said that Washington is imposing visa restrictions on Chinese Communist Party officials believed to be responsible for undermining freedoms in Hong Kong.
Mr Pompeo said the sanctions targeted "current and former" party officials.
He said the move followed President Donald Trump's promise to punish Beijing over a proposed security law that could erode Hong Kong's autonomy.
China said the US decision was a "mistake" that should be withdrawn.
It comes just days ahead of a meeting of China's parliament.
The Standing Committee of the National People's Congress will discuss the new law at its meeting, which starts on Sunday.
China has proposed security legislation that would make it a crime to undermine Beijing's authority in Hong Kong, and could also see China installing its own security agencies in the territory for the first time.
The move has sparked a new wave of anti-mainland protests in Hong Kong.
Mr Pompeo's statement on Friday, which did not name the Chinese officials affected by the US visa restrictions, followed a recent vote by the US Senate to impose sanctions on individuals who undermine Hong Kong's autonomy and the banks that do business with them.
Responding to the move, the Chinese embassy in Washington said it "firmly opposes the US side's wrongful decisions".
In a statement posted on Twitter, the embassy added: "We urge the US side to immediately correct its mistakes, withdraw the decision and stop interfering in China's domestic affairs."
Last month, Mr Trump also said that he would start to end preferential treatment for Hong Kong in trade and travel, in response to China's plans.
The US president said Beijing was replacing "its promised formula of One Country, Two Systems with One Country, One System".
"This is a tragedy for Hong Kong... China has smothered Hong Kong's freedom," he added.
Media caption"China has replaced One Country, Two Systems with One Country, One System," said Mr Trump in May
China's parliament has already backed the resolution for the new legislation, which now passes to the country's senior leadership.
Hong Kong was always meant to have a security law, but could never pass one because it was so unpopular.
China is now stepping in to ensure the city definitely has a legal framework to deal with what it sees as serious challenges to its authority.