Beijing also threatened "effective retaliation" against Washington and condemned its lawmakers" "evil intentions'.
Under US law, Hong Kong receives special treatment in matters of trade, customs, sanctions enforcement, law enforcement cooperation and more.
China's President Xi has warned the world that any attempts to divide the country would end in "crushed bodies and shattered bones".
The policy, in place since the former British colony was returned to Beijing rule, was meant to keep in place freedoms in the city not seen in mainland China, led by the ruling Communist Party. That bill would subject the city's special USA trading status to annual reviews and provides for sanctions against officials deemed responsible for undermining its "fundamental freedoms and autonomy".
In Hong Kong's equivalent of a Parliament, pro-democracy lawmakers had prepared posters, portable speakers and even projectors which they deployed to full effect during Mrs Lam's speech.
Pro-democracy lawmakers and groups are demanding that Lam step down.
Both Lam and Beijing have repeatedly dismissed those demands and say Hong Kong's freedoms are being protected.
He said that the most urgent task was to halt chaos, stop violence, restore social order and safeguard the rule of law.
'If the bill eventually becomes law. the Chinese side will certainly and resolutely take effective countermeasures to firmly protect our sovereignty, security and developmental interests, ' he added. "The Hong Kong bill is not a done deal and there is still room for redemption".
China has vociferously opposed all criticism of the Hong Kong government's handling of the protests as unwarranted interference into its domestic affairs.
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He added that Hong Kong residents had enjoyed "all kinds of rights and freedoms" after its handover from Britain in 1997.
"Every Hong Kong citizen and his family will no longer have to be troubled by, or preoccupied with, the housing problem, and they will be able to have their own home in Hong Kong, a city in which we all have a share", she announced.
Over the weekend, Hong Kong leader Carrie Lam sensationally scrapped talks with the U.S. after a Senator showed up wearing a black outfit in support for furious protesters. Another requires annual reviews by the USA secretary of state of Hong Kong's special economic and trade status.
Over the weekend, U.S. Senator Josh Hawley of the state of Missouri traveled to Hong Kong and met with protesters, urging them to refrain from violence, but slamming Hong Kong police for ramping up their use of force. But the economic sweeteners did little to placate her opponents.
Lam said that in addition to funding and loan support announced over the past couple of months, the government could "introduce other measures to help enterprises and the public tide over hard times".
'And we do not want to lose the soul of our country for commercial interests, whatever those commercial interests may be'.
Hong Kong has been rocked by the worst political unrest in decades.
Senator Roy Blunt, a member of the Senate GOP leadership, said there haven't been any discussions about the timing for a vote on Hong Kong legislation similar to a measure that passed the House Tuesday.
As the protests entered their fifth month, Lam addressed the semi-autonomous Chinese territory as going through a "major crisis", saying, "People are asking: Will Hong Kong return to normal?"