By Jerome Taylor and Su Xinqi

HONG KONG, May 27 (AFP) — Hong Kong police placed a dragnet around the financial hub's legislature on Wednesday and fired pepper-ball rounds in the commercial district as they tried to stamp out protests against a bill banning insults to China's national anthem.

The latest unrest comes days after China announced separate plans to impose a sweeping national security law on Hong Kong following last year's huge and often violent pro-democracy rallies.

That move has prompted US President Donald Trump to warn that Hong Kong might lose its status as a global financial centre if the city's freedoms and vaunted judicial independence are swept aside.

Wednesday's protests were sparked by a planned afternoon debate among lawmakers to criminalise insults to the national anthem with up to three years in jail, the latest measure activists say is eroding freedoms in the city.

Police surrounded the legislature with water-filled barriers and fanned out across the city to conduct widespread stop-and-search operations in a bid to deter mass gatherings.

A few hundred protesters held brief lunchtime rallies in Causeway Bay and Central districts, the latter broken up by officers firing crowd-control rounds filled with a pepper-based irritant.

"It's like a de facto curfew now," Nathan Law, a prominent pro-democracy advocate told AFP.

"I think the government has to understand why people are really angry," he added.

Gas masks and Molotovs

Gatherings of more than eight people in public are currently banned in Hong Kong under emergency anti-coronavirus measures, although the city has halted its outbreak.

Under the "one country, two systems" model agreed before the city's return from Britain to China, Hong Kong is supposed to be guaranteed certain liberties until 2047 that are denied to those on the mainland.

The deal fuelled the city's rise as a world-class financial hub and gave Chinese companies a crucial channel to raise capital.

But in recent years political unrest has swept through the city, something Beijing's communist rulers are determined to end.

The legislature was blockaded and later trashed by demonstrators during last year's protests as authorities tried to fast-track an eventually scrapped bill allowing extraditions to the authoritarian mainland.

Police said officers uncovered some Molotov cocktails as well as other "illegal" items such as gas masks, hammers and pliers during stop-and-search operations Wednesday.

Anthem booed

Hong Kong's pro-Beijing government has vowed to pass the national anthem law as soon as possible.

"As Hong Kongers, we have a moral responsibility to respect the national anthem," Matthew Cheung, Hong Kong's de facto deputy leader, told reporters ahead of the debate.

Addressing concerns that the law would damage free speech, Cheung used a Chinese idiom often translated as "making a mountain out of a molehill".

Beijing has been infuriated by Hong Kongers — especially football fans — booing the national anthem to signal dissatisfaction with China. 

The city's pro-democracy opposition say the bill is a fresh attempt to criminalise dissent.

Fights have broken out between rival lawmakers over the legislation. 

Pro-democracy politicians are prevented from holding a majority in the legislature, only some of whose members are elected by popular vote. 

But for months they used filibustering within a legislative committee to stop the bill reaching the floor for a vote.

The city's pro-Beijing faction seized control of the committee earlier this month — a move opponents said was unconstitutional.

Wednesday's session is the bill's second reading. A third reading is likely to come next week, after which it will become law if approved.

Security law

Beijing portrays Hong Kong's democracy protests as a foreign-backed plot to destabilise the motherland.

Activists say their rallies, which have been attended by millions, are the only way to voice opposition in a city without fully free elections.

Last week Beijing announced plans to enact legislation banning secession, subversion, terrorism and foreign interference.

That law, which has yet to be published in full, will bypass the legislature and be drawn up directly by Beijing.

One measure announced includes plans to allow China's security agencies and secret police to openly set up shop in Hong Kong for the first time.

The move has alarmed investors and some western governments, with the stock market suffering its biggest drop in five years last week.