Shenzhen is keeping a close watch on the costs of doing business in the city to ensure they do not escalate to levels that have made Hong Kong uncompetitive, its mayor Yu Youjun said yesterday. 'Whether a city can attract investment depends on the cost of doing business and conditions for development. Shenzhen has to pay attention to these two problems, which coincidentally are also Hong Kong's problems,' Mr Yu told a news conference held in conjunction with the 10th Guangdong People's Congress. 'Labour costs are very high in Hong Kong. So is the cost of land. So a lot of manufacturing and service industries have moved out of Hong Kong. These problems are not caused by [Chief Executive] Tung Chee-hwa but are problems that date [back to] before 1997.' The mayor said he understood the difficulties that Mr Tung and Hong Kong faced at present, such as the strong opposition from civil servants to salary cuts. The experience, he said, 'is a lesson for Shenzhen'. The mayor is the third Guangdong official to comment on Hong Kong's situation and its integration with the Pearl River Delta this week. On Monday, Guangdong governor Lu Ruihua gave Hong Kong only one paragraph in his opening address at the congress, leaving proponents of integration with little to smile about. Then on Thursday, Guangzhou mayor Lin Shusen criticised people who, 'out of ulterior motives', were always trying to stir up trouble between Guangdong and Hong Kong. The Shenzhen mayor's warning on cost comes after concern over overheating in Shenzhen's property market prompted Premier Zhu Rongji to warn the city in November to take action so that 'Hong Kong's today will not be Shenzhen's tomorrow'. Mr Yu said land prices in the special economic zone were in line with those in other parts of the delta and housing prices were below Beijing and Shanghai's. As for labour costs, Shenzhen had the advantage of being able to attract a constant stream of cheap migrant labour, Mr Yu said. Mr Yu said co-operation with Hong Kong would continue to develop. An agreement had been reached for Shenzhen Airport and Chek Lap Kok Airport to link up to enable passengers to make connecting flights. On the issue of land crossings, Mr Yu said special permits required for mainlanders who wish to enter Shenzhen would be abolished this year. He said the launch of 24-hour crossings at the Lok Ma Chau-Huanggang checkpoint this month would boost economic growth in Shenzhen and Hong Kong. On regional co-operation, Mr Yu said there was too much duplication of industrial facilities, and unhealthy competition among Pearl River Delta cities. He suggested that cities in the region set up a formal mechanism for regular communication to co-ordinate their development.