Hong Kong, we are told, is losing its competitive edge.
This grim warning was issued on Saturday by a certain Zhang Dejiang. Zhang, in case you're wondering, is chairman of the standing committee of the National People's Congress, which makes him the most important Communist Party official you've never heard of.
According to yesterday's Sunday Morning Post, he told a delegation from Hong Kong that the city will be "swept downstream if it does not forge ahead".
I'm going to be charitable here and assume it was whoever translated his warning rather than Zhang himself who was responsible for the mixed metaphor.
So suppress any mental image you may have of soggy blacksmiths, and let us examine Zhang's contention that "Hong Kong's competitive edge is weakening and will fade away if the city does not put its focus on economic development".
Unfortunately, measuring competitiveness is tricky. Economists talk about things like total factor productivity and unit labour costs, but the data for Asia is lousy.
One alternative is to look at real effective exchange rates. Widely considered a proxy for economy-wide competitiveness, these measure the performance of a country's currency against a basket of its competitors' currencies, adjusted for inflation.
An appreciating real effective exchange rate reflects a rise in relative costs and signals a decline in competitiveness. Depreciation indicates a sharper competitive edge.
In these terms, Hong Kong has nothing to worry about. As the first chart shows, since the start of the financial crisis - the baseline cited by Zhang - Hong Kong's real effective exchange rate has fallen by 2 per cent.
In contrast the real effective exchange rates of most of Hong Kong's Asian neighbours have risen. Both China and Singapore, to take two examples, have appreciated by 28 per cent. In other words, far from losing its competitive edge since the crisis, Hong Kong's has got considerably sharper.
Still, a cheaper real effective exchange rate will not stop people fretting that Hong Kong faces a growing threat from mainland efforts to promote Shanghai as China's main financial centre.
But again it does not look as if Hong Kong has much to worry about. Companies in search of a stock market listing will choose the most attractive market for their initial public offering. As the second chart shows, since the start of the financial crisis, companies have raised almost as much IPO capital in Hong Kong as in Shanghai and Shenzhen put together.
And there is no sign Hong Kong is losing ground. So far this year there have been no IPOs at all in either Shanghai or Shenzhen, while new listings have raised more than HK$8 billion in Hong Kong.
Of course, gloomsters can point to Hong Kong's continuing dock strike as evidence that the city's port is losing its competitive edge.
But the port is a sunset industry. These days, an economy's ability to compete depends more on abstract qualities such as institutional strength and the ability to innovate than on how cheaply it can shift boxes around.
Assessing these objectively is tough, but that does not stop people trying. The World Economic Forum, for example, puts enormous resources into its annual competitiveness survey in an attempt to compare things like business sophistication and "efficiency enhancers" like higher education.
Here, again, according to the WEF, Hong Kong is getting more, not less, competitive. Since the crisis, the city has edged up from 12th place in the WEF's overall ranking, to 9th last year. China, in contrast, came 29th.
So once more, far from losing its edge, Hong Kong is actually sharper than ever.
Zhang doesn't know what he's talking about.Topics: Hong Kong Economy IPO