Hong Kong has long dreamed of combining its financial and trade punch with research muscle to develop high-tech ideas that spur jobs and growth.

In reality, the global trade emporium has mostly watched as the nearby mainland Chinese city of Shenzhen soared ahead, hosting tech giants Huawei, Tencent and ZTE.

Panic bells have been ringing as experts warn Hong Kong must shed an outdated and largely hands-off attitude toward innovation and technology or fall further behind in the 21st century.

“Innovate or die,” was the stark message delivered in a study released May 14 by the Hong Kong Academy of Engineering Sciences, the Chinese Academy of Engineering and the Institute for Public Policy at the Hong Kong University of Science and Technology.

“There is no time to lose,” the report said, stressing that Hong Kong is destined to be “left behind” without innovation.

Some see hope for Hong Kong to realize its tech ambitions in an ambitious Chinese government initiative that envisions the southern region centered on Guangzhou, Shenzhen and Hong Kong as a potential rival to California’s Silicon Valley.

The proposed Greater Bay Area includes a total of 11 Chinese cities — including gambling center Macau — with a population close to 70 million people.

William Ma, co-chief investment officer at Noah Holdings, said Hong Kong needs to use the Greater Bay Area project to get closer to Shenzhen, which he said is destined to grow as big as Beijing and Shanghai.

Shenzhen is “more entrepreneurial” and focused on “new growth high-tech” companies and industry, he told CNBC.

The joint academic report, based on a year-long study, put it more bluntly: “Shenzhen has surpassed Hong Kong as the most competitive city in China,” it said.

The report credits the Hong Kong government for establishing an Innovation and Technology Bureau in 2015. But it said authorities must be more aggressive.

“The laissez faire policy is out of date,” it said, calling for the city to take advantage of strong research at local universities, such as the Hong Kong University of Science and Technology and the University of Hong Kong, and improve research funding.

Hong Kong authorities, going back to British colonial days, have taken a largely hands off approach to economic management, fostering an environment characterized by low taxes and light regulation.

That’s in stark contrast to mainland authorities, who, despite recent decades of economic reform and openness, still have attitudes largely rooted in a tradition of top-down control and management with a strong political tone.

China’s official Xinhua News Agency reported last month that the government will allow academics in Hong Kong and Macau access to state research funds for science and technology.

While some see that as a godsend that could help jumpstart local technology development, others caution it comes with strings attached.

“We realize that in mainland China everything is political,” said Benson Wai-Kwok Wong, an assistant professor in government and international studies at Hong Kong Baptist University.

He said research largess in China is a kind of “political patronage” that comes with requirements of loyalty and devotion to the Communist Party.

“They want to get the research funding from China,” he said of researchers. “Of course, they (authorities) will check their background, political background, professional background to see whether they are eligible to get the funding.”

Xinhua, in announcing new government guidelines on May 14, suggested as much, noting one aim is “incentivizing scientists who love the country.”