HONG KONG (AFP) – Plans for China's first free trade zone -- seen as a threat to Hong Kong's status as a finance hub -- are also a tool to dampen political protest in the city, analysts say.
The FTZ in Shanghai will allow unfettered exchange of China's yuan currency as part of a bold push to reform the world's second largest economy, according to proposals revealed exclusively by AFP earlier this month.
Experts have already urged Hong Kong to improve its economic environment, including tackling high rents and labour costs, if it wants to compete with the new trade and finance hub.
But senior Beijing officials last week warned the ex-British colony that it also needs to curb increasing political dissent if it wants to thrive and analysts say the promotion of Shanghai is an indirect message to Hong Kong to cooperate politically, or be marginalised economically.
"Beijing is using a softline economic approach to groom Shanghai to compete with, or possibly replace Hong Kong. The implicit message is clear that if Hong Kong continues to have political squabbles, its economic status will suffer greatly," Sonny Lo, a social scientist at Hong Kong Institute of Education, told AFP.
Yu Zhengsheng, the leader of Beijing's top advisory body, the Chinese People's Political Consultative Conference, and Wang Guangya, director of the Hong Kong and Macau Affairs Office, both called for "unity" in the city last week.
"(Wang) called on us to think clearly whether Hong Kong should be a city for political struggle or economic development," said Walter Kwok, part of a Hong Kong delegation addressed by Wang in Beijing Tuesday, according to Hong Kong's South China Morning Post.
Yu spoke to the same delegation, asking Hong Kong to "stay united and comply with the Basic Law under all circumstances," if it wanted to enhance its competitiveness, the Post reported. He described Hong Kong society has having unwelcome "noise", local media said.
Ma Ngok, a political scientist at Hong Kong's Chinese University, said the remarks by Beijing officials were a bid to "create a stabilising force" amid current political unrest.
Under British rule, Hong Kong was transformed into one of the freest world economies and an international finance centre, outpacing economic development in Chinese cities.
Doubts were cast over its ability to retain its status after the handover from Britain to China in 1997, while Shanghai flourished during a period of stellar economic growth overseen by president Jiang Zemin.
After Jiang retired from the last of his national posts in 2005, several members of his powerful "Shanghai Gang" political clique were dismissed in corruption trials, widely seen as a move by new president Hu Jintao to rein in the city's powerbase.
But with Xi Jinping taking over from Hu in March this year, Shanghai appears to be back on the map, as mainland critics increasingly gun for Hong Kong over anti-Beijing democracy protests.
In the past 10 years, the southern Chinese territory has witnessed frequent demonstrations and increasing discontent, with opposition groups denouncing the city's government as a puppet of Beijing.
Pressure from democrats is increasing as Hong Kong approaches the deadline for the introduction of universal suffrage, which Beijing has pledged for 2017.
Some activists have threatened to seize the main streets of key business district Central in 2014 to force officials to guarantee a fair electoral system.
Asia's richest man Li Ka-shing, based in Hong Kong and considered pro-Beijing, also said Tuesday that the city's pro-democracy movement Occupy Central could harm its economy.
Although Hong Kong is a semi-autonomous region of China, Beijing sees Hong Kong as a subordinate, political analyst Johnny Lau told AFP.
"The thinking is that if you (Hong Kong) can coordinate with me, I will let you in. But I (China) can also make several places like Hong Kong in the mainland," he said of China's FTZ strategy.
"Beijing has lost its patience... this is a wake-up call."