Asian stocks fell on Friday as China moved to strengthen control over Hong Kong with new security laws and U.S. President Donald Trump warned that Washington would react “very strongly” if Beijing follows through on its plans.

A fresh wave of U.S.-China tensions over Beijing’s handling of the coronavirus outbreak also rekindled growth worries.

Chinese shares fell as tensions escalated with the U.S. and the Chinese government abandoned setting an economic growth target for the first time amid uncertainties posed by the coronavirus pandemic.

At the annual session of the National People’s Congress in Beijing, Premier Li Keqiang said the country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.

The benchmark Shanghai Composite Index fell 40.62 points, or 1.4 percent, to 2,827.30. Hong Kong’s Hang Seng Index plunged 1,349.89 points or 5.6 percent to 22,930.14 after China proposed to impose new national security laws on the country.

“Hong Kong is an inseparable part of the People’s Republic of China,” Zhang Yesui, a spokesperson for China’s National People’s Congress, told journalists Thursday night in Beijing.

Japanese shares fell as Hong Kong’s political unrest returned as a flashpoint in fast-deteriorating U.S.-China relations. The Nikkei 225 Index dropped 164.15 points, or 0.8 percent, to 20,388.16 but rose 1.8 percent for the week. The broader Topix closed 0.9 percent lower at 1,477.80.

Market heavyweight SoftBank Group advanced 2.8 percent. The tech conglomerate said it would raise about 310.2 billion yen ($2.9 billion) by selling a 5 percent stake in its Japanese wireless subsidiary this month.

In economic news, the Bank of Japan introduced a new lending program to help small and medium-sized firms after leaving its target for short-term interest rates and the bond yield target unchanged.

A government report showed that consumer prices in Japan were up just 0.1 percent year-on-year in April – matching forecasts and slowing from the 0.4 percent increase in March.

Australian markets fell sharply as escalating U.S.-China tensions outweighed hopes of a swift recovery from the coronavirus crisis. Sentiment was also dampened after rating agency Fitch downgraded the outlook on Australia’s coveted AAA credit rating to “negative” from ‘”stable.”

The benchmark S&P/ASX 200 Index lost 53.40 points, or 1 percent, to finish at 5,497, while the broader All Ordinaries Index ended down 52.10 points, or 0.9 percent, at 5,608.80.

Healthcare stocks declined, with CSL falling 2.4 percent and Cochlear declining 1.4 percent. The big four banks ended down between 0.6 percent and 1.2 percent.

Retail conglomerate Wesfarmers finished marginally lower despite flagging a substantial non-cash impairment charge in its low-priced retail chain, Kmart Group.

Mining heavyweights BHP Group and Rio Tinto dropped 0.6 percent and 2 percent, respectively, while coal miner Whitehaven Coal lost 2.6 percent on news that China may tighten coal import rules in the second half of 2020.

Seoul stocks ended lower to snap a five-day winning streak on concerns that an escalating dispute between the United States and China may further undermine the country’s exports.

The benchmark Kospi ended down 28.18 points, or 1.4 percent, at 1,970.13. Samsung Electronics, SK Hynix and Hyundai Motor fell 2-3 percent.

New Zealand shares ended notably lower, with the benchmark NZX 50 Index ending down 68.92 points, or 0.6 percent, at 10,662.63.

The total volume of retail sales in New Zealand dropped a seasonally adjusted 0.7 percent sequentially in the first quarter, Statistics New Zealand said – following the downwardly revised flat reading in the three months prior.

U.S. stocks fell overnight as tensions rose between America and China and investors digested weak jobless claims and existing home sales data.

Beijing said it would retaliate if Congress passes legislation threatening sanctions against China over the coronavirus pandemic.

The Dow Jones Industrial Average eased 0.4 percent, the tech-heavy Nasdaq Composite declined 1 percent and the S&P 500 gave up 0.8 percent.

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