The United States is preparing to impose sanctions on Friday on a number of Chinese officials over Beijing's crackdown on democracy in Hong Kong, as well as a warning to international businesses operating there about deteriorating conditions, two people with knowledge of the situation told Reuters.

The sources said the financial sanctions would target seven officials from China's Hong Kong liaison office, the official platform which projects Beijing's influence into the Chinese territory.

A separate updated business advisory issued by the State Department would highlight US government concerns about the impact...