Hong Kong's apprehension over the competitive threat from the north and a lack of confidence in its own economic future is 'irrational pessimism', according to Goldman Sachs's head of Greater China research Fred Hu Zuliu. Likening 'the artificial and rigid border' between Hong Kong and the Pearl River Delta to the 38th Parallel dividing North Korea and South Korea, Mr Hu, speaking at the conference, urged Hong Kong to speed up steps towards economic integration with the delta. 'The more prosperous the Pearl River Delta, the more widely its influences spread across the mainland, the better validated and more secure Hong Kong's economic and social system will be,' he said. Shenzhen and Zhuhai in the delta, China's earliest special economic zones, are often cited as potent threats to the SAR economy, but Mr Hu described them as pupils of Hong Kong's free-wheeling economy and testing grounds of China's reforms for more than 20 years. 'In other words, Hong Kong is the master and the cities in the Pearl River Delta are all star pupils,' he said. 'It is gratifying to note that these former pupils of Hong Kong have now grown up and become tutors to other cities on the mainland.' With economic growth averaging a stunning 13 per cent annually for 20 years, the delta now accounts for more than 30 per cent of China's exports and claims the highest per capita gross domestic product among the country's cities. Mr Hu said its growing wealth would generate an attractive consumer market for Hong Kong's wholesale and retail businesses. The delta's urbanisation - 'the fastest . . . history has ever witnessed' - would extend opportunities for Hong Kong in urban planning, property development and infrastructure construction. Addressing concerns that China's World Trade Organisation entry last year might diminish Hong Kong's role as an entry port and its share of China's trade and investment, Mr Hu said: 'The absolute volume is bound to increase rapidly on the back of expansion of China's total foreign trade and capital flows.' Goldman Sachs projects China's annual foreign trade to reach US$800 billion by 2005, with foreign direct investment inflows of US$100 billion that year.