Former NSW treasurer Michael Costa says the recent arrest of Hong Kong democracy activist Jimmy Lai is very serious but reaffirms that Hong Kong as an "independent political entity, is over.”

China has recently arrested Hong Kong newspaper owner and democracy activist Jimmy Lai for allegedly breaking China’s new national security law.

“It’s a matter of time before (Hong Kong is) fully integrated into mainland Chinese authoritarian structures in breach of all international treaties that China has had,” Mr Costa told Sky News. Mr Costa said the integration of Hong Kong would be a “short term victory for China.”

“Across the globe, everybody is now very aware of the Chinese menace,” he said. “Even in the South China Sea and across regional Asia you already see alliances forming against this Chinese expansionism.

“It’s very serious, it’s tragic, but think it may prove the undoing of the imperialist strategy that the Chinese communist party is pursuing.”