The announcement of an agreement to build a Disney theme park in Shanghai was greeted with equanimity by the Hong Kong government. China, a senior official said, is so big that it can easily accommodate two Disney theme parks. Hong Kong won't be adversely affected.
This was the reaction eight months ago when Beijing announced Shanghai would become an international financial centre by 2020. Hong Kong's response then was that China is big enough to have two international financial centres.
But this head-in-the-sand approach won't work. For too long, Hong Kong has been resting on its laurels while the rest of China forged ahead. In fact, in some areas, Hong Kong has already fallen behind. Its container throughput used to be first in the world. Now, it is third, behind Singapore and Shanghai. And expectations are that, soon, Shenzhen and Guangzhou will overtake it.
Officials often cite Hong Kong's advantages, such as its level playing field for business, the free flow of information and the independent judiciary. That is all true. These are assets Hong Kong must retain. But the fact remains that the American Chamber of Commerce in Hong Kong is now dwarfed by the one in Shanghai. Many companies, it seems, do not mind locating in an area where judges are under the control of the Communist Party, as long as there is money to be made.
The fact is that Hong Kong is a small economy and, while it punches above its weight, it simply cannot compete when pitted against the mainland, with its 1.3 billion people and its US$4 trillion economy growing at over 8 per cent a year, at a time when other economies are shrinking.
Hong Kong has to wake up to the fact that its economic future is tied to that of China and develop strategies to enable it to compete with other Chinese cities, all of which are eager to replace Hong Kong.
While Hong Kong was Beijing's window on the world when China was isolated, and helped enormously in bringing capital and know-how into the country when it first opened up 30 years ago, there is little need for that role today. Now that China is so open, it has little need for a gateway. People and goods can go directly to almost every part of China, without passing through Hong Kong.
In fact, the more China's relations improve with the rest of the world, the less it needs Hong Kong.
This situation is reflected in the relationship between Taiwan and the mainland. Taiwan travellers once had to pass through Hong Kong on each trip to the mainland. But, with the resumption of direct flights, Hong Kong has been left out in the cold.
What is Hong Kong to do? The answer is clear. It must integrate itself into the mainland's economy, so that it will grow as the mainland grows. Hong Kong's decision to play a part in the drafting of the next five-year plan was correct. It will give it a seat at the table.
One of Hong Kong's strengths is its wealth of professional talent, and Beijing is well aware of this. Thus, it appointed Laura Cha Shih May-lung, former deputy chairman of Hong Kong's Securities and Futures Commission, to be vice-chairman of the China Securities Regulatory Commission from 2001 to 2004.
And Andrew Sheng, former chairman of Hong Kong's SFC, is now chief adviser to the China Banking Regulatory Commission.
But this is a game at which two can play. Just as the mainland has been making use of Hong Kong professionals, Hong Kong is now starting to make use of mainland talent. Mainlander Charles Li Xiaojia has been appointed chief executive of Hong Kong Exchanges and Clearing. Li, now a Hong Kong permanent resident, is expected to use his connections to attract not just overseas but mainland companies to list here.
Hong Kong is still the most advanced city in China. But, as Premier Wen Jiabao has said, not to advance is to retreat.
Frank Ching is a Hong Kong-based writer and commentator.