At the welcoming lunch, Mr Hui said Shenzhen is Hong Kong's closest neighbour and the two cities' strengths were highly complementary. Following the trends of globalisation in the world economy and regionalised competition, both need to consider taking further steps in collaboration, he added.

He said both sides have agreed upon the terms of reference of a joint study group to look at setting up a new control point at Liantang, and the group will soon meet to consider relevant issues.

He added the two sides will also step up co-operation in the areas of cross-boundary infrastructure, finance and science and technology.

Secretary for Housing, Planning & Lands Michael Suen, Secretary for Constitutional Affairs Stephen Lam and the Permanent Secretary for Financial Services & the Treasury Kevin Ho also attended the lunch.

During his meeting with Mr Xu, Mr Tang noted that Hong Kong and Shenzhen have been working closely in financial co-operation.

He said over the past few years, the Hong Kong Monetary Authority and the Shenzhen Branch of the People's Bank of China have worked together on the clearing arrangement for Renminbi business in Hong Kong, and on many types of financial infrastructure linkages.

The joint cheque clearing facilities and cross-boundary Real Time Gross Settlement system links of Hong Kong dollar and US dollar, and the clearing of Hong Kong's RMB cheques are some good examples.

Mr Tang said Shenzhen provided a good pilot site for extending such co-operation to other places on the Mainland.

This afternoon, Mr Xu attended a seminar on Shenzhen-Hong Kong financial co-operation the Shenzhen Municipal Government organised.

Secretary for Constitutional Affairs Stephen Lam and Permanent Secretary for Financial Services & the Treasury Kevin Ho also attended the seminar.

Other members of the Shenzhen Municipal Government delegation include Vice-Mayors Zhuo Qinrui and Chen Yingchun.