Hong Kong has a strong competitive edge over China's other cities, a study by the China Institute of City Competitiveness reveals.

The institute notes that Hong Kong maintains its traditional strengths but Shanghai and Beijing are making great forward strides and are narrowing the gap with Hong Kong.

As Hong Kong encounters increasing global competition, it needs to raise its competitiveness, the report suggests. This may be achieved through the development of the value-added, knowledge-based economy and the high-end service industry and financial industry.

The institute released its 2011 competitiveness ranking of Chinese cities on Thursday.

With Hong Kong topping the list, Shanghai comes next. Beijing holds down third place. Shenzhen and Guangzhou are fourth and fifth, while Taipei is ranked ninth and Macao thirteenth.

Compared with mainland cities, Hong Kong maintains its edge in productivity, efficiency and talent for the short-term, said Gui Qiangfang, president of the institute.

At the same time, Hong Kong excels in competitiveness in terms of talent, business environment and social environment over other mainland cities.

But Gui noted Shanghai's total economic output exceeded that of Hong Kong in 2010.

The total economic output of Beijing, Shenzhen or Guangzhou will all surpass that of Hong Kong by 2013.

One of the adjudicators Victor Sit said Hong Kong enjoys a leading edge in the financial industry and also in the free flow of information.

Sit, who is director of Advanced Institute for Contemporary China Studies of the Hong Kong Baptist University, said Hong Kong has greater potential than mainland cities to develop headquarters economy as a gateway for multinational corporations to the immense China market.

However, given that Hong Kong is a densely populated city, he said the government needs to increase land supply so as to regulate housing prices and rents for both commercial and residential properties and not let big property developers dominate economic development in Hong Kong.

He also suggested the local housing market be divided into two parts, with the government responsible for planning and building 70 percent of the housing units on a non-profit basis.

Hong Kong is a world-class city but the per capita living space is small compared to other cities, said the academic. Most people spend a big part of their income on mortgages over a period of about 20 years, he said. If the housing problem is resolved, the people's living environment will be greatly improved.

joseph@chinadailyhk.com

China Daily

(HK Edition 12/16/2011 page1)