HONG KONG HAS ALWAYS had strong cultural ties with its hinterland across the border. However, these links have been dramatically strengthened since the handover, as companies have increasingly seen that their future lies in growth areas such as Guangdong, Shenzhen and Zhuhai. This has led to a faster narrowing of the economic differences across the border. Integration has become an economic force that cannot be ignored. For the central government Hong Kong remains a special place, with an identity that still sets it apart from other cities. At the National People's Congress in March, Premier Zhu Rongji said no city in China would be able to replace Hong Kong in the short term. While ports up and down the mainland coast are improving their facilities, Hong Kong's port remains the best and most efficient in China. In other fields, such as insurance, tourism, entertainment and information, Hong Kong retains a substantial lead over other Chinese cities. The mainland's legal system, corrupt and subject to political interference by the Communist Party, is years behind that of Hong Kong. The mainland's stock and capital markets are years away from replacing those here, at least as long as the yuan remains unconvertible. The Bank of China must be especially aware of this. Following a series of scandals in New York and at home, the bank had to cancel the listing of its Hong Kong operations in New York but was able to continue with its listings plan in Hong Kong. Hong Kong also remains an important source of expertise for the Chinese government and companies. Examples of locals making a contribution to the mainland are Anthony Neoh, an adviser to the China Securities Regulatory Com-mission, and Laura Cha Shih May-lung, a commission vice-chairman. At the end of May, Vice-Premier Wen Jiabao, the favourite to succeed Mr Zhu next March as premier, said China was seriously short of financial specialists and could not train them quickly enough. It was therefore compelled to bring in experts from outside. Hong Kong people have shown themselves as among the best qualified for this purpose; they have the expertise and experience, and they are also politically acceptable to be entrusted with jobs that include policy-making. But perceptions are changing among ordinary mainlanders. Tens of thousands have visited Hong Kong in the past few years. With tourist visas increasingly easy to obtain in the mainland, the mystique of the rich southern neighbour has faded. The stereotypical image of a city oozing modernity and super-wealth, of drunk American sailors with a girl on each arm and loud British policemen with beer bellies, is gone. Last month, the state media barely mentioned the handover anniversary, and ordinary Beijing people were unaware of it. The main official event was an exhibition of Hong Kong's past, present and future, which opened last week at the China Millennium Monument in the capital. It runs until July 14, and organisers expect about 100,000 visitors. 'The fact that the anniversary counts for so little shows both the success and failure of the handover,' says Cecilia Lo, a Hong Kong accountant working for a Sino-US joint venture in Beijing. 'It shows how smooth the transition has been, which is good, but also that Hong Kong has become just like another Chinese city, which is bad.' As the gap with the rest of the delta narrows, the distinctiveness of Hong Kong people has diminished. 'The political status of Hong Kong people has fallen since 1997,' says a civil servant in Beijing. 'They are subjects of the Communist Party, just as we are. We have the same boss. 'We don't regard them in the same way we once did. In China they are treated like us.' Ms Lo says for Hong Kong people who work in the mainland, 'the jobs we have now may be our last free lunch. 'When China opened the door to foreign investment we had a competitive edge, but we are losing it. An increasing number of smart and well-educated local people are coming into the market. The person who will replace me will be a mainlander. 'We will have to adjust to a more competitive job market and possibly lower salaries. 'We must be prepared to work in the mainland even if we prefer Hong Kong,' she says.