Tianjin, a megacity that has long been overshadowed by neighbouring Beijing, has finally burst into the spotlight this year. On Monday, the State Council announced its endorsement for the city's plan to build itself into an economic centre for northern China.

Earlier this year, the central government announced a package of preferential policies for the development of the city's Binhai New Area, which resembles Shanghai's Pudong New Area.

It is obvious that the central government has pinned its hope on Tianjin in its search for a place that can play a role in the north like the one Shanghai plays in spearheading growth in East China.

Being an economic centre of China's northern bloc means the city, which now produces 2 per cent of the country's total gross domestic product, should become a leading driver for growth in the area stretching from the Northeast all the way down to East China's Shandong Province.

Tianjin has already been thinking big. Its grand plans in infrastructural construction, financial industry development and many other areas already bespeak its ambition.

However, Tianjin should focus more on its proximity before a real take-off can be achieved. It should first make sure its development fits into the overall situation of its surrounding area  Beijing and Hebei Province. Tianjin's chance of fulfilling its ambition will be dimmer if it cannot co-ordinate with the other two. In fact, development of all three will be limited if they do not pay attention to making their respective development stories compatible and complementary to one another.

To that end, the three should co-operate more closely in developing cross-border infrastructure. The construction of an inter-city rail between Tianjin and Beijing is coming to the final stage. That was a good start.

The three should also bring down protective barriers limiting the flow of goods, people and capital.

Co-ordination between Beijing and Tianjin has been developing rather positively in recent years.

Beijing, which used to be a centre for everything in the country, gave a much more prominent position to services than manufacturing in its latest version of development plan. That basically indicates the end of the two cities' bitter decades-long competition in manufacturing.

Beijing and Tianjin have long been like two prosperous islands because surrounding Hebei is much more underdeveloped. Now Hebei is eager to become a link in the new chapter of the tale of two cities.

The ideal scenario, broadly speaking, is that Tianjin become a modern manufacturing centre, Beijing excels in services, and Hebei takes over heavy industries moving out of Tianjin and serves as an upstream producer for firms in Tianjin and Beijing.

However, it is enterprises that will make the business decisions about their locations. We are not living in the era of planned economies any longer.

What the governments should do is to create a favourable environment for business, something the Beijing-Tianjin-Hebei area lacks, compared to the commercially successful areas of Yangtze River Delta and Pearl River Delta in the south.