'The problem of Guangdong and Hong Kong - reporters have asked me and I have already said you shouldn't put emphasis on who is the dragon head. I say the two of us combined make up the dragon head,' he said.

'[The benefits of] co-operation supersede competition, but put in other words can you not say Hong Kong is the dragon head in entering the global market? Hong Kong is a free port.

'They lead us into the international market. You want to be a dragon head. It's possible, it's not a problem, but if it is merely services and no manufacturing, this body cannot develop.'

The development of the services industry was dependent on a manufacturing base while the manufacturing sector could not go far without the services industry, so it was a chicken and egg situation, he said.

Mr Huang assured Hong Kong that Guangdong 'can never forget' the strong support that the special administrative region has given to the province, citing the more than 70,000 Hong Kong enterprises whose US$93.4 billion investment in the province makes up 74 per cent of the total figure.

But he also pointed out it was not one-way traffic.

Guangdong provided Hong Kong with a big market, cheap labour and a platform to raise its international status, he said, citing the huge volume of exports that pass through Hong Kong's port, enabling it to become a leading international shipping centre.

Last year Guangdong's exports amounted to US$280 billion, of which US$204 billion went through Hong Kong's port.

Stressing his point on co-operation and integration, Mr Huang said a combined Guangdong and Hong Kong stood to benefit from the setting up of a Pan Pearl River Delta economic region mooted by Guangdong party chief Zhang Dejiang.

'Why do we now talk about Pan Pearl River Delta and greater Pearl River Delta? Nine plus two [Guangdong provinces plus Hong Kong and Macau] is actually Guangdong and Hong Kong complementing each other's strengths to become the Pan Pearl River Delta's dragon head in attracting investment.

'Guangdong and Hong Kong's co-operation will be a magnet for investment,' he said.

The Pan Pearl River Delta was in line with the regionalisation trend in global economic development, Mr Huang said.

'We hope to build a Pan Pearl River Delta that is a regional economic system in which there is a complementary sharing of resources, a big market and benefits for all parties.

'The Pan Pearl River Delta is a new combination of the eastern, central and western parts of the country,' he said.

Hong Kong, with its internationally integrated economy, can combine with Guangdong as the mainland opens up, to be the engine for the development of the Pan Pearl River Delta, Mr Huang said.

Guangdong scholars studying the concept envisage a region that holds one third of the mainland's population, covers a fifth of its land surface and makes up one third of its gross domestic product.

The Pan Pearl River Delta includes provinces that share the Pearl River system as well as neighbouring provinces. They group the nine provinces of Guangdong, Fujian, Jiangxi, Guizhou, Guangxi, Sichuan, Yunnan, Hunan and Hainan together with Hong Kong and Macau.

'The Greater Pearl River Delta's flaw is that it does not have enough land. With nine plus two, there will more land, abundant resources, a big labour market,' he said.

'If we develop it well, we can speed up the opening of the interior and raise international competitiveness.'

The idea has been reported to the central government and has received Beijing's support. Discussions are now going on to elevate the level of participation from the planning and reform commission heads to government leaders, Mr Huang said.

Touching on the Closer Economic Partnership Arrangement, Mr Huang said Hong Kong's economy improved in the second half of last year after the signing of the agreement and the relaxation on individual travel to Hong Kong.

Individuals travelling to Hong Kong spend $5,000 a day on food, accommodation and shopping on average, but Mr Huang sounded a warning, saying: 'There's not much to buy in the SAR'.

Mr Huang would not say if Guangdong would reap any benefits from the central government in return for the price that the province has to pay to make sure that Cepa succeeds.

The government is already forgoing tax revenue from the abolition of duties on 273 Hong Kong products.

When Hong Kong services companies start coming in a big way, they are expected to cause consolidation of firms or closure of weak companies.