"I think the Hong Kong government is trying very hard to put the situation under control," Liu Xiaoming told a London press conference, as fresh violence erupts after months of protests.
"But if the situation becomes uncontrollable, the central government would certainly not sit on our hands and watch. We have enough resolution and power to end the unrest."
His comments come after a brief and rare deployment of Chinese troops in Hong Kong over the weekend to clean up streets.
The Chinese People's Liberation Army has a barracks in an upper-class district of Hong Kong.
Asked about a possible intervention, the envoy said: "They are there to show Chinese sovereignty and they are there for defence purposes."
Liu Xiaoming also warned against "external interference" in internal Chinese affairs, singling out Britain and the United States.
Britain, the former colonial power in Hong Kong, on Monday said it was "seriously concerned" about the latest outbreak of violence.
Riot police sought to dislodge several hundred pro-democracy protesters who occupied a university and set fire to its main entrance.
Police -- who have been attacked with arrows in recent days -- used tear gas and fired live rounds.
"It is vital that those who are injured are able to receive appropriate medical treatment, and that safe passage is made available for all those who wish to leave the area," the Foreign Office said.
It called for an end to the violence, "and for all sides to engage in meaningful political dialogue ahead of the District Council elections on Sunday".
Liu Xiaoming accused the protesters of trying to destabilise and paralyse Hong Kong to "seize power".
"Hong Kong citizens live under black terror created by violent extremism with their life and property under severe threat," he said.
He warned that Hong Kong was "sliding into the abyss" and if the violence continues, "the future will be unimaginably dreadful".
"The once Oriental star is turning into the Oriental scar," he told reporters. (AFP)