Fei Lai/ Shanghai Daily news

Shanghai is losing its advantage in attracting and retaining talent and faces increasing competition from nearby cities, the Shanghai Human Resources and Social Security Bureau warned yesterday.

The warning came at a meeting with a delegation of the Chinese People's Political Consultative Conference Shanghai Committee, who were on an inspection visit. The trip is part of Shanghai CPPCC's annual year-end inspection of the city government's work. The inspection began on Tuesday.

Officials from the bureau said since the implementation of the residence permit system in the city in 2004, which encourage talented workers to come to Shanghai from other parts of China and from overseas, the city had once again tightened criteria and strictly limited access to the residence certificate, or hukou, for non-locals.

There was a growing call at the meeting to loosen the criteria and make it easier for non-locals to be granted the hukou.

Other factors making it difficult for Shanghai to attract the best talent included the rapid increase in living costs in the city, the relatively high house prices compared to the rest of the nation, and high personal income tax -- especially for high-earning workers from overseas, the bureau said.

Added to which, the city's health care services often do not meet the high demands of incoming workers, and international schools fall short of foreign parents' needs.

Another problem was related to Shanghai's cultivation of talented workers. The bureau said not enough was being done to help nurture talent and draw out the abilities of foreign workers, and shape their talents to Shanghai's economic and industrial demands.