Beijing's decision to come clean on its dirty air has embarrassed Hong Kong, where smog kills hundreds of people a year, hurts business and drives away talent, a think-tank has said.

Mike Kilburn, head of environmental strategy at non-profit group Civic Exchange, said Hong Kong Chief Executive Donald Tsang's failure to fix the city's air quality could have far-reaching consequences for its competitiveness.

"The Hong Kong government must introduce new air quality objectives immediately, especially now that China has put out its own air quality objective," he told AFP.

"Hong Kong is in a highly embarrassing position now that China has introduced new measures."

Beijing last week bowed to a vocal online campaign for a change in the way air quality is measured and pledged to start publishing figures showing the smallest, most dangerous pollution particles.

The Chinese capital currently bases its air quality information on particles of 10 micrometres or larger, known as PM10, and does not take into account the smaller particulates that experts say are most harmful to human health.

The Beijing Environmental Bureau said it would provide hourly updates of measurements of particles of 2.5 micrometres or less, known as PM2.5, ahead of the Lunar New Year on January 23.

The mainland authorities' move came after Hong Kong's Environmental Protection Department said roadside pollution levels in the southern financial hub were the worst ever last year.

Measurements in the Central, Causeway Bay and Mong Kok districts indicated that pollution levels were 10 times worse than in 2005 on more than one day out of every five.

A recent ranking of cities by the World Health Organisation (WHO) in respect of PM2.5 placed Hong Kong -- which competes with Singapore as Asia's banking powerhouse -- at 559th out of 566 cities.

That dire outcome sparked searching questions to Environment Secretary Edward Yau in the legislative council last week.

Lawmaker Kam Nai-wai asked whether the government would "assume political responsibility" for failing to live up to promises to update Hong Kong's air quality objectives (AQOs), set in 1987, to meet modern health standards.

Yau responded that PM2.5 samplers would be operational in all monitoring stations in Hong Kong by the first quarter of 2012, and laid much of the blame for the small-particle pollution on "regions outside Hong Kong".

"The government is now working on the final proposal to update the AQOs for submission to the Legislative Council for deliberation as soon as possible," he said.

Yau said clean-air measures had to be "generally supported by the community", a likely reference to public opposition to higher transport costs and resistance from business owners to tighter environmental controls.

A report by Civic Action released Thursday said ageing diesel commercial vehicles, LPG-powered taxis and minibuses were the main sources of pollution in the city's "street canyons" of office towers and apartment buildings.

Air quality is not only damaging residents' health, it is also eroding the city's competitiveness as a regional centre for business and finance, it said.

The report cited pollution-related questions over infrastructure projects including the Hong Kong-Zhuhai-Macau (HKZM) bridge and a planned third runway at Hong Kong airport.

An official study last year found that the runway would have to operate at less than half capacity if new air quality standards were implemented.

Surveys showed that "air pollution is driving those who form the base of Hong Kongs knowledge and finance-based economy -- the wealthiest and best educated -- to leave," it said.

"The challenges to the HKZM Bridge and the third runway represent a dramatic escalation in the scale of the problem. The business community is beginning to appreciate the seriousness of this threat," it said.

Tsang's seven-year rule, which is due to end in March, can be measured in terms of the more than 7,200 smog-related deaths recorded since he took power in 2005, Kilburn said.

The figures are backed up by the Hedley Environmental Index run by the medical faculty at the University of Hong Kong.

"It's a shockingly high number. What we are concerned about is the lack of urgency," he said Friday, when a pall of toxic airborne particles made it it barely possible to see across the city's Victoria Harbour.

The think-tank's air quality "report card" said the government had implemented various measures to control pollution, but these had been ineffective in the absence of a coordinated clean-air policy.

"Without tight standards, polluting businesses in Hong Kong, especially vehicle and vessel owners and operators, have been permitted to remain unregulated for the last two decades," it said.