More extensive cooperation in the service sector should be established between Shanghai and Hong Kong, government officials, academics and business leaders from the two cities said on Friday in Shanghai.

Further and deeper cooperation is good for both Hong Kong, whose flourishing service sector is hampered by space constraints, and Shanghai, which is keen to focus its development on the sector, Wang Ronghua, vice-chairman of Shanghai People's Political Consultative Conference, said.

He was speaking at a forum on the opportunities for cooperation between the two cities.

Wang said the two cities complemented each other in many ways and have great potential for working together.

"Hong Kong has a long history of developing its service industry and has accumulated abundant experience and talent in the field," Wang said.

"Shanghai is building itself into an international hub for finance and shipping, and is also working on the economic integration of the Yangtze River Delta.

"Shanghai has a lot to learn from Hong Kong and at the same time can provide plenty of opportunities and serve as a platform for Hong Kong to expand its business in other mainland cities," he said.

Leung Chun-ying, a member of the Executive Council of Hong Kong Special Administrative Region, said there was also competition between the two cities and that has to be faced.

"We have to find an effective way to avoid unhealthy competition and increase cooperation," he said.

Cai Laixing, chairman of Shanghai Industrial Investment (Holdings) Co Ltd, said that cooperation was the only way to help both cities bloom.

Wang said: "We should encourage more service businesses from Hong Kong to set up in Shanghai as well as more state-owned or private enterprises in Shanghai to list in Hong Kong and expand their business abroad in that way."

Wang said that cooperation on exhibitions, international merchandising and finance would be particularly encouraged.