Hong Kong should develop into a world-class city like London and New York, Mr Tung said. Outlining how the territory should position itself in the 21st century, Mr Tung said Hong Kong was faced with challenges, from globalisation to the changing economic relationship with the mainland and economic restructuring. Hong Kong possessed many of the features common to New York or London since it was a financial centre and a popular tourist destination, Mr Tung said. But it was still behind in many aspects - in particular, in human capital and quality of life. He said Hong Kong should not only be a major Chinese city, but could become the most cosmopolitan city in Asia. 'We must develop and strengthen our advantages further, turn increasingly to innovative, knowledge-intensive economic activities, make the best use of information technology, reduce our costs further to enhance our competitiveness, and restructure our economy in the most advantageous direction. Failing that, we will lose out to our competitors and go into decline,' Mr Tung said. 'Many cities in the Asia-Pacific region are growing very quickly and catching up fast. We cannot continue to rely on past strengths. The current situation calls for urgent action,' he said. Hong Kong's economic link with the mainland was its greatest advantage in developing as a world-class city, and China's admission into the World Trade Organisation (WTO) would provide further opportunities. The Government would increase its road network and transport links with the mainland. Mr Tung said the Pearl River Delta area, including Guangzhou, Zhuhai, Shenzhen, Macau and Hong Kong, would become a more integrated regional economy. TALE OF THREE CITIES HONG KONG LONDON NEW YORK Population 6.8 million 7 million 7.4 million Size 1,097 sq km 1,500 sq km 780 sq km Market cap HK$3,800 bn GBP1,620 bn US$11,340 bn Theatres About 10 About 100 About 59 Taxis 18,000 19,000 12,187 Sales Tax None 17.5 per cent 8.5 per cent