(CNN) China has passed a controversial law imposing new regulations on foreign nongovernmental organizations and charitable groups.
The more than 7,000 foreign NGOs operating in China will have to submit to police supervision and declare their sources of funding.
While Chinese officials say regulation is long overdue in this sector, U.S. officials and human rights groups have criticized the law, saying it amounts to a crackdown on civil society.
"The new law will have severe consequences for freedom of expression, peaceful assembly, and association, which are already sharply curtailed under existing laws and policies," Amnesty International said.
The U.S. National Security Council urged China to respect the rights and freedoms of all those who make up civil society, including protecting the ability of foreign NGOs to operate in China.
"The United States is deeply concerned that China's new Law on the Management of Foreign NGO Activities will further narrow space for civil society in China and constrain contact between individuals and organizations in the United States and China," NSC spokesman Ned Price said in a statement.
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Speaking at a press conference, Chinese officials said the law is aimed at "serving while managing" foreign NGOs.
They denied that such groups would be blacklisted, or that certain fields would be off limits, provided they do not endanger Chinese national interests.
Religious and fund-raising activities are banned under the new law.
"This law authorizes the police to summon NGO representatives, stop their temporary events and declare violators as persona non grata -- but the precondition for such actions is the discovery of suspected illegal activities," said Guo Linmao, a senior official with the National People's Congress, China's legislature.
"We fully approve the positive role that foreign NGOs have played in our reform and opening up process, especially in terms of importing funding, technologies and management experience."
Activists were skeptical, however. Sharon Hom, executive director of Human Rights in China, said in a statement that "ultimately no group will be deemed welcome unless it is willing to work within a constricted civil society space that is securely monitored and controlled by the authorities."
"The authorities -- particularly the police -- will have virtually unchecked powers to target NGOs, restrict their activities, and ultimately stifle civil society," William Nee, China researcher at Amnesty International, said in a statement.
The new law comes amid a growing crackdown on civil society in China.
Dozens of lawyers, activists and their relatives have been taken into custody or questioned by police in cities throughout the country.
Labor organizations have been particularly hard hit amid a huge upsurge in strikes and worker protests in the last year.
In January, Swedish human rights worker Peter Dahlin was expelled from China after being detained for three weeks and making what his organization described as an "apparent forced confession" on state television.