The Law on Promoting Ethnic Unity and Progress aims to forge a "shared" national identity among ethnic groups, for example by strengthening the status of Mandarin as the official language.
But overseas campaigners have argued that it will further degrade the rights of ethnic minorities, like Uyghurs and Tibetans, that Beijing is accused of persecuting.
They also point to a clause stating that people can be held liable for violating the law even when outside China, saying it gives the Chinese government more justification for targeting its opponents abroad.
The law will require "political and ideological alignment with the Chinese Communist Party" and "further institutionalise... policies of forced assimilation", Amnesty International's Deputy Regional Director Sarah Brooks said Tuesday.
"Chinese authorities have human rights obligations requiring them to protect minority communities and their cultures, but this law does the opposite," Brooks said.
Amnesty has warned the legislation is pushing ethnic groups to "adopt a single, state-defined national identity dominated by Han Chinese culture", referring to the nation's ethnic majority.
Beijing consistently denies that it engages in rights abuses against any ethnic group and maintains that they all benefit from its policies of internal security and economic development.
Taiwan expressed "strong condemnation" of the law on Wednesday, saying it expanded "threats and intimidation against the people of our country and other nations".
"In the future, individuals from any country whose words or actions are not acceptable to China may become targets of the law or be pursued under it," its foreign ministry said.
China claims Taiwan is part of its territory and has threatened to use force to annex the self-ruled, democratic island.
- Calls for repeal -
The law formalises long-standing policies to promote Mandarin as the language of education, official business and public spaces, and also contains provisions on social cohesion and preventing terrorism and separatism.
Several ethnic groups in China, particularly in its border regions, have their own languages, and have historically been permitted to use them alongside Mandarin in schools.
Beijing has also justified sweeping campaigns in areas with large minority populations as legitimate efforts to prevent the spread of terrorism and extremism.
A senior Chinese judicial official defended the law last week, saying it would target "illegal acts" that "undermine ethnic unity and progress or incite ethnic separatism".
Hu Weilie said the clause allowing overseas enforcement was "legitimate, lawful (and) necessary".
But UN rights chief Volker Turk has called for the law to be repealed, saying it risks "deepening restrictions on freedoms of language, education, practice of religion, culture, expression and assembly".
Uyghur and Tibetan advocates have urged countries to push China to strike it down, saying it aims to erase minority communities.
Taiwan's Mainland Affairs Council (MAC) said Taiwanese people already faced high risks travelling to China and warned Beijing now had "yet another law to fabricate charges".
"A closer examination reveals that the law is riddled with highly ambiguous legal concepts that leave room for subjective interpretation -- a consistent characteristic of the CCP's legal system," the MAC said in a statement, attributing the remarks to Deputy Minister Liang Wen-chieh.
The MAC said Beijing will use the law "as a legal basis to further suppress and persecute human rights in Xinjiang and Tibet, or to expand its threats against voices internationally that support or are friendly towards Taiwan".
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