The proposal, which has been condemned by the United States and Hong Kong pro-democracy figures as an assault on the city's freedoms, was submitted for deliberation on Friday.
Why has China moved to impose the law?
Article 23 of Hong Kong's mini-constitution, known as the Basic Law, says the city must enact national security legislation to prohibit "treason, secession, sedition (and) subversion" against the Chinese government.
Hong Kong has been trying to introduce a law for years but pro-democracy demonstrations that paralysed the city last year have pushed the issue up the agenda and galvanised Beijing.
Last month, Beijing's top official in Hong Kong, Liaison Office director Luo Huining, said the city urgently needed a new national security law to combat violent protesters and independence advocates.
On Friday Wang Chen, vice chairman of the National People's Congress's (NPC) Standing Committee, its actual law-making organ, warned "powerful measures" were needed to curb the city's pro-democracy movement.
How do people in Hong Kong feel about it?
Article 23 has never been implemented due to public fears it would curtail Hong Kong's cherished rights, such as freedom of expression and the press.
Those liberties are unseen on the mainland and are protected by an agreement made before Britain handed Hong Kong back to China in 1997.
An attempt to enact the clause in 2003 was shelved after half a million people took to the streets in protest against it. Then security chief Regina Ip had to resign following the failure.
China's move would authorise its lawmakers to circumvent Hong Kong's legislature and directly enact the legislation at a future date.
What will happen next?
China's legislature is expected to rubber-stamp the draft resolution on Thursday, the last day of the annual parliamentary gathering, before the details are fleshed out next month at another meeting of the NPC's Standing Committee.
Wang said the law would then be implemented locally, an unprecedented move that could spark a further wave of protests.
In a statement Friday, Hong Kong's leader Carrie Lam vowed to "fully cooperate" with Beijing over the law.
The Hong Kong government will "complete the legislation as soon as possible to discharge its responsibility of safeguarding national security," said Lam, who is attending the NPC.
Jimmy Sham, leader of the Civil Human Rights Front, which organised the million-person rally that kicked off last year's unrest, appealed Friday for millions to come out on the streets once again.
What does this mean for 'One country, Two systems'?
Pro-democracy lawmakers have said the legislation marks the end of 'One country, Two systems' -- a reference to the handover agreement that has given Hong Kong a limited form of autonomy since returning from British to Chinese rule in 1997.
Even before the proposed security law, there were fears that Beijing was steadily eroding those freedoms.
"This is the end of Hong Kong, this is the end of One Country, Two Systems, make no mistake about it," said Civic Party lawmaker Dennis Kwok.
"They (Beijing) are now completely walking back on their obligation owed to the Hong Kong people."
Amnesty International warned the legislation posed "a quasi-existential threat to the rule of law in Hong Kong".