The construction of a new Chinese “mega-embassy” in central London would breach local people’s human rights, the High Court has heard.

The Royal Mint Court Residents’ Association is challenging the plans for the embassy, which is set to be built near the Tower of London.

The group alleges the development could lead to retaliation against critics of China, increase the risk of terrorism and enable the enforcement of “draconian” Chinese laws in the UK.

The human rights risks identified by residents “are real and not illusory”, the court heard.

The government and Tower Hamlets Council, which are defending the legal challenge, said they “conscientiously and carefully had regard” to concerns raised.

Aarif Abraham, for the Royal Mint Court Residents’ Association (RMCRA), told the court: “There is recurrent past unlawful conduct on the part of the People’s Republic of China in the UK, specifically in relation to its use of mission premises, or the related rights to inviolability or immunity afforded to diplomats, for unlawful purposes.”

Abraham also said the residents “have long submitted that they fear reprisals and curtailment of their ability to oppose or protest against the People’s Republic of China”, as their properties are within the same freehold title of the proposed embassy.

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Lord Banner KC, also representing the RMCRA, said the UK government had granted the proposed embassy “inviolability”, giving it “immunity from search, attachment, requisition or execution”.

He added that residents were put at a disadvantage during the planning inquiry because they were not given a “blast assessment” to assess the impact an explosion could have on nearby buildings.

The group, which represents families and businesses in about 100 properties, also raised concerns about fire safety and argues the UK authorities would have no power to enforce safety obligations if China failed to comply with them.

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