Hong Kong people have the typical island mentality. They are paranoid, especially when it comes to competition from other cities.

In the past, it was Singapore that caused the most anxiety. Never mind that Singapore is more than 2,500 kilometers away, providing specialized services to an economic community that is mostly out of reach of Hong Kong. Whatever Singapore did was seen as a threat to Hong Kong, although it was clear that each city enjoyed distinct advantages that the other could not match because of the wide social and economic differences.

Now, the focus of attention has shifted to Shanghai, which is giving many Hong Kong people a sense of doom that is much more intense than the one spawned by the specter of Singapore. We all know that Shanghai has always harbored the ambition to recapture the city's former glory as the greatest and most advanced metropolis in this part of the world.

This dream of greatness is matched by the oversized ambition of the city's government, which is dedicated to building Shanghai into a center of everything, to rival London and New York. Hong Kong is obviously not worthy in the eyes of the Shanghai city fathers to serve as a model.

Fair enough. But Shanghai's ambition seems to have got under the skin of many Hong Kong politicians, business leaders and influential commentators. They have been saying that the rise of Shanghai could render Hong Kong irrelevant in the economic development of the mainland.

But nobody has yet come up with a convincing argument as to how Shanghai's bid to become an international financial center would undermine Hong Kong's position in the global marketplace. Of course, the progressive internationalization of the yuan and the opening up of the capital market will bring dramatic changes in coming years. But those changes do not necessarily leave Hong Kong on the wayside.

At least for now, financial reform on the mainland has brought more, not less, opportunities for Hong Kong. The offshore yuan market in Hong Kong is growing, thanks to the relaxation of rules on how those funds can be invested on the mainland. What's more, the big increase in foreign funds allowed to be invested in the stock markets of Shanghai and Shenzhen has helped advance the fund management industry in Hong Kong with more and more foreign investment firms expanding their presence there.

If you're a real pessimist who indulges in the perverse pleasures of taking a dim view of the long-term, you may be able to conjure the dark picture of the diversion of yuan businesses, the drying up of mainland stocks seeking listings on the local bourse and the exodus of foreign banks and investment houses to Shanghai. But as the late economist John Maynard Keynes once famously said: "In the long run, we are all dead."

Understandably, we all worry about our future. But the perceived threat from Shanghai, or any other city, should rank pretty low on our list. Why, for instance, should some of us make such a big fuss about the imagined loss of our status as a trading hub to Shanghai because the government there just mentioned, among a host of other initiatives, a plan to expand its free trade zone?

Perhaps, we have gotten numbed to Shanghai's challenge as a financial center. That, too, was highlighted as an important thrust of the Shanghai government's future efforts. This time, the neurotics among us chose the trade hub issue as their pet instrument of torture without explaining the fact that much of the trade in that region is already handled through Shanghai with very little, if any, coming to Hong Kong. We are a trade hub servicing an entirely different region.

Shanghai can have all that trade it wants and we won't be losing anything. So what exactly is there to worry about?

A lot. But they aren't coming from Shanghai. Instead, the biggest threats facing us today come from within, seething public discontent about the widening wealth gap, lost opportunities, deteriorating living conditions and a government that fails repeatedly to project a vision that we can rally behind.

If we can rediscover our purpose as we did in the 1980s, we shall have no fear.

The author is a current affairs commentator.

(HK Edition 01/30/2013 page9)