It was not so long ago that Shanghai loomed as Hong Kong's major economic competitor, while the special administrative region's traditional rivalry with Singapore faded in importance. The 'Hong Kong versus Shanghai' story was spiced with an element of drama when the two made separate bids for the second Asian Disneyland theme park in 1998. Standing in front of a backdrop carrying the slogan 'New Era' yesterday, Chief Executive Tung Chee-hwa and Shanghai Mayor Han Zheng signalled that co-operation was key to the relationship between the two cities. The two leaders did not shy from the reality that they face competition in some areas, but rather deemed it healthy and mutually beneficial. Mr Han underlined the importance of a new body co-chaired by himself and Mr Tung, in which the respective governments will play a more active role in boosting economic co-operation. The new Hong Kong-Shanghai economic plan was formed after another effort to create an 'economic super-zone', by Hong Kong and Guangdong authorities, which is focused on the Pearl River Delta. Under the blueprint adopted at the end of a Hong Kong-Guangdong Co-operation Joint Conference in August, the two sides have reached consensus on division of roles in the region to facilitate co-operation and avoid unnecessary competition. Under the Hong Kong-Shanghai plan, with both cities striving to become the premier international commercial, financial and transport centre, competition on various fronts, including workforce and foreign investment, appears inevitable. Shanghai is keen to tap the strengths of Hong Kong to enhance its competitiveness and narrow the gap between the two cities. Meanwhile, the opening of Shanghai's economy, particularly its service sector, will provide new opportunities for Hong Kong. Following the new agreement, the interflow of human and financial capital between the two cities is set to accelerate. Whether it will result in the so-called 'hollowing out' of the service-oriented economy in Hong Kong depends upon the competitive edge it can maintain in human resources, infrastructure and its institutions. Mr Han described Shanghai as a young person aged 15 who would grow taller, while Hong Kong was more the 25-year-old adult. Hong Kong could still compete if it keeps fit and grows wiser.