HONG KONG, July 27 (Reuters) - Hong Kong has proposed opening up its border to permanent residents of the booming southern Chinese city of Shenzhen to boost its competitiveness and cross-border integration, a newspaper reported on Friday.

Chinese residents in numerous mainland cities including Shenzhen are now free to visit bustling Hong Kong, with paperwork required for each visit for a maximum of seven days.

But Hong Kong had now put forward a more progressive proposal to Beijing to allow Shenzhen's 2 million permanent residents to visit Hong Kong as they wished, the South China Morning Post said, quoting a government source.

"They would either use their electronic identity cards or be issued with a special pass. It would be a breakthrough in travel between the mainland and Hong Kong," the Post reported.

It was now up to Beijing whether the proposal went ahead, it said.

Shenzhen residents entering the former British colony wouldn't however be immediately allowed to work in the city, though the scheme could eventually lead to the more effective tapping of mainland talent.

"Government thinking is that Hong Kong's competitiveness hinges on a critical mass of quality human capital, and technologically advanced Shenzhen would be a good city to pair up with," the Post said.

The proposal, if realised, would tie in with the vision of Hong Kong leader Donald Tsang to boost the city's population by 40 percent to 10 million, which might let it better compete with New York and London as a global financial centre.

Britain handed back Hong Kong to China in 1997 with the guarantee of widespread autonomy from Beijing. In a matter of 30 years, Shenzhen has grown from a quaint Communist fishing village into a thriving city rivaling Hong Kong.