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Hong Kong's reliance on its financial industry rather than fostering small and emerging industries contributed to its drop in the Blue Book on Urban Competitiveness. Photo: EPA

Shenzhen knocks down Hong Kong to take top spot in China’s ranking of most competitive cities

For first time in 10 years, city has lost its title as the nation's most competitive centre, with Shenzhen taking the lead thanks to innovation

For the first time in a decade, Hong Kong has been unseated as the most competitive city in China, according to the Chinese Academy of Social Sciences, which placed Shenzhen in the top spot.

Hong Kong had held first place since 2005 when it was first put on the list, which ranks 294 cities across the country and includes Taiwan.

The survey, titled the Blue Book on Urban Competitiveness, placed Hong Kong in second place. The result was revealed by the academy in a press conference in Beijing yesterday.

A report on the survey cited Shenzhen's focus on innovation as the reason for its ascent, and said Hong Kong relied too much on its core industries of finance, shipping, tourism and professional services. It said the city had failed to offer enough support for organisations working in innovation and technology and other small but emerging industries.

In 2013, Hong Kong's spending on research and development for innovation and technology projects accounted for 0.73 per cent of its gross domestic product, according to the Census and Statistics Department.

That figure included spending in the private sector, higher education institutions and the public sector. The department did not yet have the corresponding figures for last year.

By contrast, Shenzhen's spending in the same area accounted for 4.05 per cent of gross domestic product last year, according to mainland media.

Dr Li Chao, a member of the research team that conducted the study, said Shenzhen was the most innovative city in the country and its efforts in helping grow emerging industries made it stand out.

"Its product output per land area is the highest in the country … It also has the best environment among cities at the sub-provincial level," he said.

The study measures competitiveness based on multiple areas including business environment, municipal harmony, efficiency, suitability for living and sustainability.

Shanghai ranked third in the survey, while Taipei came in fourth and Guangzhou fifth.

The report said Hong Kong continued to be in front in several sub-rankings such as those for knowledge-based economy, municipal harmony, environment, and culture and information. It said Hong Kong had a clear edge over the mainland in these areas.

But it said the gap was closing and urged Hong Kong to grasp opportunities for cross-border collaboration to avoid being marginalised by the new free-trade zones on the mainland.

Acting government economist Andrew Au Sik-hung said yesterday that Hong Kong maintained high positions in several global rankings of competitiveness, indicating the city remained competitive. But he admitted the lead enjoyed over mainland cities had narrowed.

Au said research and development was a key factor in economic development, and policy bureaus had been encouraging it.

"As for how much research and development is a suitable level, it varies from one place to another … and should be determined by the market," Au said.

The report also said last year's Occupy Central movement and protests against tourists had dented Hong Kong's standing.

This article appeared in the South China Morning Post print edition as: Hong Kong no longer China's No 1
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