The bill, which would have allowed people in the city to be sent to China for trial in courts controlled by the Communist Party, was seen as the latest example of what many residents see as ever-tighter control by Beijing, despite the promise of autonomy.
The former British colony was handed back to China in 1997 under a “one country, two systems” administration which gave the city of more than 7 million people more freedoms than mainland cities, such as an independent judiciary.
China denies meddling in Hong Kong’s affairs and accuses Western countries of fuelling the protests.
Images of some of the fiercest clashes have been beamed live on television screens across the world, sending jitters across the international business community and leading to a large drop in tourism.
The Hong Kong government took out a full-page advert in the Australian Financial Review on Thursday saying it is “determined to achieve a peaceful, rational and reasonable resolution” and is resolutely committed to “One Country, Two Systems”.
It ends the advert by saying: “We will no doubt bounce back. We always do”.
More than 1,100 people have been arrested since the violence escalated in June and Hong Kong is facing its first recession in a decade.
China has strongly denounced the violence and warned it could use force to restore order. Beijing is eager to quell the unrest before the 70th anniversary of the founding of the People’s Republic of China on Oct 1.
Lam, wearing a navy blue blazer and pink top, said in her televised message that her administration would reach out to the community to start a dialogue to address the discontent with the “foremost priority now is to end violence, to safeguard the rule of law and to restore order and safety in society.”