As the 20th anniversary of Hong Kong's handover to China approaches, there has been much soul-searching over whether the city's importance as a gateway to the mainland has declined, as China opens up more to the world over the last two decades.

Hong Kong has slipped behind its Chinese rivals in some areas. For example, the port of Hong Kong was ranked the world's fifth busiest container port last year, behind Shanghai and Shenzhen, first and third respectively.

But analysts told The Straits Times that Hong Kong's tradition of free trade and the rule of law, as well as its rich history of collaboration with China, would help it to remain important to China.

The city is still the key hub for investment going in and out of China, according to statistics from the Hong Kong Trade Development Council, a statutory board to promote Hong Kong trade.

By the end of last year, among all the overseas-funded projects approved in the mainland, 44.7 per cent were tied to Hong Kong interests, amounting to a cumulative utilised capital inflow of US$913.7 billion (S$1.3 trillion).

Apart from the money, many foreign firms which want to do business with China prefer to set up shop in Hong Kong, as the city offers a more stable investment environment and an independent judiciary system, said Assistant Professor Raymond Yeung Wai Man of Hong Kong Shue Yan University.

Dr Lim Tai Wei of the National University of Singapore's East Asian Institute said that Hong Kong has many years of experience conducting business with the West and remains, at least within China, an English-speaking and cosmopolitan city. "Its laissez-faire economic system has seen Hong Kongers of different political, socio-economic and ideological stripes working out problems for themselves," he added.

With Beijing's plans to make Hong Kong its most important offshore yuan trading centre, the city would be indispensable to China, at least financially, he added.

Analysts say Hong Kong's unique "one country, two systems" framework, which gives the city a high degree of autonomy after the British handed it back to China in 1997, would give it an advantage over other Chinese cities.

China could tap Hong Kong's long-established financial hub status and its rule of law system as its gateway into the global economy, said Prof Yeung.

Hong Kong is still one of the global leaders in competitiveness, analysts note. In a ranking by the International Institute for Management Development, a Swiss business school, it was ranked as the world's most competitive economy last year for two years in a row.

However, unrest has grown in Hong Kong and this could threaten its economic development. The city's police had to handle 13,158 protests and rallies last year, more than double the number in 2015.

Many residents have become unhappy as a result of a widening income gap, a lack of universal suffrage and soaring property prices, which have dashed the dreams of young Hong Kongers who yearn to get on to the property ladder.

Relations between the city's residents and China have also become more tense, as many blame an influx of mainland Chinese for the problems faced by the city.

Last September, Hong Kongers voted at least six young radical politicians into the city's 6th Legislative Council, hoping that they will help improve livelihoods.

In March this year at a National People's Congress meet, China's No. 3 leader, Mr Zhang Dejiang, warned that Hong Kong could be eclipsed by Shenzhen within two years if it continues "politicising" issues.

A veteran Hong Kong politician urged Hong Kongers not to be obsessed with safeguarding the city's pre-1997 lifestyle and lose sight of the profound changes in the world.

In an opinion piece headlined "Why Hong Kong is a city in decline" in the South China Morning Post on May 6, Ms Regina Ip wrote: "Hong Kong must think hard about what remains of its competitive advantage and core strengths, economically, culturally and system-wise, and sharpen its competitive edge. Otherwise, marginalisation will become an inevitable reality, and Hong Kong in 2017 will go down in the annals of world cities as a city in decline."