Hong Kong is facing many challenges posed by China's fast-growing economy but the city will not be marginalised by the nation's economic development, a senior mainland official said Monday.

Xu Lin from the National Development and Reform Commission said Hong Kong faced threats from China, including its port business which had lost its traditional advantage due to its higher costs.

While the southern Chinese territory would have to study how to sustain its status as a logistics centre, Xu said he believed the city would still be able to benefit from the country's strong economic growth.

"With further development on the mainland, Hong Kong will be supported by an even bigger hinterland in this development into a centre for international trade, finance and logistics," said Xu, director general of the Department of Fiscal and Financial Affairs under the commission.

He was speaking during an economic summit on China's 11th five-year plan. Beijing sets targets every five years for the nation's economic and social development and maps out the direction of future development.

While Hong Kong benefits from increased foreign investment in China and a general rise in trade there, the territory faced rising competition from other cargo terminals in southern China where charges are lower.

In the first seven months, total container throughput at Hong Kong's ports rose 7.7 percent, compared with growth of 12.5 percent in neighbouring Shenzhen city and 18 percent in Shanghai.

However, Xu noted Hong Kong still had many advantages including the free trade pact, known as the Closer Economic Partnership Arrangement (CEPA), which had further liberalised trade in goods and services between both sides.

"With numerous favourable conditions, with a positive attitude of getting prepared, we have no reason to doubt that Hong Kong will have a better future," he added.

Speaking at a press conference, Hong Kong chief executive Donald Tsang said the territory should attract more talent from China and overseas to help maintain the city's status as a free and international financial centre.

"We must upgrade Hong Kong's global competitiveness," he told reporters.

He said an action plan would be drafted by early next year on how to take advantage of opportunities and challenges the city faced due to the economic development on the mainland.

Source: Agence France-Presse