A prosperous and stable Hong Kong is in the interests of both China and Britain, Chinese Ambassador to Britain Liu Xiaoming has said.

The national security legislation is necessary for the Hong Kong Special Administrative Region (SAR), home to more than 300,000 British citizens and over 700 British firms, Liu said Tuesday at the British Parliament's All Party Parliamentary China Group webinar.

He said that in the past 23 years since the handover, "One Country, Two Systems" has achieved tremendous success in the Hong Kong SAR.

"However, this great city has been 'defenseless' in terms of national security," he said. "This is caused by severe stigmatization and demonization of Article 23 of the Basic Law, which provides for the making of a national security law for the SAR."

As a result, no such a law has been enacted, making the SAR a risk and a loophole for China's national security, according to Liu.

He said that since the turbulence over the proposed amendment bill in 2019, anti-China elements seeking to disrupt Hong Kong have clamoured for "Hong Kong independence" and "self determination."

"They have been engaged in separatist activities that threaten national unity and created terror in the city through violence, including beating, smashing, looting and arson," he said.

These activities have gravely undermined the social stability, economic prosperity and public safety in Hong Kong, landing the region in the gravest situation since the handover, he added.

"As is in all countries, safeguarding national security is the primary responsibility of the Central Government and falls within the power of the Central Government," Liu said.

He noted that in Britain, it is the Central Government and Parliament that are responsible for matters relating to national security in England, Scotland, Northern Ireland and Wales.

"Therefore, it is within the power of the National People's Congress to plug the loophole that compromises national security in Hong Kong through legislation in accordance with the Constitution and the Basic Law," Liu said. "This is entirely reasonable and lawful. This is something that must be done."

This legislation targets only the few actions and activities that gravely jeopardize national security, Liu added.