Shanghai deemed most competitive

This year, Shanghai dislodged Hong Kong for the first time as China's most competitive city, the China Institute of City Competitiveness announced Tuesday.

The institute, which has been ranking the competitiveness of 296 cities in China since 1998, dropped Hong Kong to second place for the first time in 11 years, primarily because Shanghai established a pilot free trade zone this year, according to the institute's announcement.

The ranking measures each city's size, economy, international influence and its degree of opening-up.

Shanghai is also competitive in science, culture and education, according to Gui Qiangfang, the institute's president. The city's economy is also growing faster than Hong Kong's.

Although only a narrow margin separated the two cities in this year's ranking, Hong Kong's economic development will be comparatively limited in the future due to its geographic area, Gui said. That means other cities on the Chinese mainland, such as Beijing, Guangzhou, Tianjin and Chongqing will have an opportunity to overtake Hong Kong in the future.

Nonetheless, Hong Kong retains a strong regulatory system and talent pool, especially in the financial industry, which mainland cities will struggle to surpass.