A man stands before the city skyline in Hong Kong on May 4, 2017.

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Panic bells have been ringing as experts warn Hong Kong must shed an outdated and largely hands-off attitude toward innovation and technology or fall further behind in the 21st century.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