diff --git a/Lib/test/test_codecencodings_cn.py b/Lib/test/test_codecencodings_cn.py
index fdae538973d36aa..a1049373a450c85 100644
--- a/Lib/test/test_codecencodings_cn.py
+++ b/Lib/test/test_codecencodings_cn.py
@@ -82,6 +82,10 @@ class Test_HZ(test_multibytecodec_support.TestBase, unittest.TestCase):
         (b'ab~cd', 'replace', u'ab\uFFFDd'),
         (b'ab\xffcd', 'replace', u'ab\uFFFDcd'),
         (b'ab~{\x81\x81\x41\x44~}cd', 'replace', u'ab\uFFFD\uFFFD\u804Acd'),
+        # issue 30003
+        (u'ab~cd', 'strict',  b'ab~~cd'), # escape ~
+        (b'~{Dc~~:C~}', 'strict', None),  # ~~ only in ASCII mode
+        (b'~{Dc~\n:C~}', 'strict', None), # ~\n only in ASCII mode
     )
 
 def test_main():
diff --git a/Misc/NEWS b/Misc/NEWS
index 254bb52f9778d91..938a02955a5470d 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -49,6 +49,9 @@ Extension Modules
 Library
 -------
 
+- bpo-30003: Fix handling escape characters in HZ codec.  Based on patch
+  by Ma Lin.
+
 - bpo-30375: Warnings emitted when compile a regular expression now always
   point to the line in the user code.  Previously they could point into inners
   of the re module if emitted from inside of groups or conditionals.
diff --git a/Modules/cjkcodecs/_codecs_cn.c b/Modules/cjkcodecs/_codecs_cn.c
index 3bc652fefffb910..92cf06d5ffd3535 100644
--- a/Modules/cjkcodecs/_codecs_cn.c
+++ b/Modules/cjkcodecs/_codecs_cn.c
@@ -335,15 +335,17 @@ ENCODER(hz)
         DBCHAR code;
 
         if (c < 0x80) {
-            if (state->i == 0) {
-                WRITE1((unsigned char)c)
-                NEXT(1, 1)
-            }
-            else {
-                WRITE3('~', '}', (unsigned char)c)
-                NEXT(1, 3)
+            if (state->i) {
+                WRITE2('~', '}')
+                NEXT_OUT(2)
                 state->i = 0;
             }
+            WRITE1((unsigned char)c)
+            NEXT(1, 1)
+            if (c == '~') {
+                WRITE1('~')
+                NEXT_OUT(1)
+            }
             continue;
         }
 
@@ -390,20 +392,19 @@ DECODER(hz)
             unsigned char c2 = IN2;
 
             REQUIRE_INBUF(2)
-            if (c2 == '~') {
+            if (c2 == '~' && state->i == 0) {
                 WRITE1('~')
-                NEXT(2, 1)
-                continue;
+                NEXT_OUT(1)
             }
             else if (c2 == '{' && state->i == 0)
                 state->i = 1; /* set GB */
+            else if (c2 == '\n' && state->i == 0)
+                ; /* line-continuation */
             else if (c2 == '}' && state->i == 1)
                 state->i = 0; /* set ASCII */
-            else if (c2 == '\n')
-                ; /* line-continuation */
             else
                 return 2;
-            NEXT(2, 0);
+            NEXT_IN(2)
             continue;
         }