Jiangsu and its neighbouring east coast provinces will be the prime source of China's economic development in coming decades, an economist says. Thomas Chan, head of China Business Centre at the Hong Kong Polytechnic University, said Jiangsu's potential was stronger than Guangdong province, although the latter was more popular with Hong Kong investors. 'The development of Guangdong in the past two decades was as a processing and assembly centre for Hong Kong manufacturers who used the cheap labour there, and then re-exported the finished products to Western markets,' Mr Chan said. 'Such assembly activities have shrunk in the past two years as the result of a change in export quotas and a slowdown in these traditional markets. 'But Guangdong's domestic market failed to absorb this productivity surplus due to the small size of its internal market and its poor transportation network with neighbouring provinces. 'However, the economic fundamentals of Jiangsu are different. It has a strong technical base and a huge domestic market. 'Foreign investors who set up a manufacturing base there are aiming to penetrate the domestic market and access the inland through a convenient transportation network.' Most foreign investors in Jiangsu had a longer-term development plan compared with Guangdong. 'Most prefer to start businesses from a basic industry, such as parts and components and materials, instead of shipping from their home country at a fairly high transportation cost,' Mr Chan said. Mr Chan said foreign investment in Jiangsu had surpassed Guangdong in the past few years - with Japanese and Taiwanese investment jumping. 'Japanese and Taiwanese are eyeing two markets - the immediate domestic market and inland,' he said. Mr Chan said Jiangsu's transportation network was good, although the province completed its first highway, the Ninghu expressway, just last September. 'Jiangsu has sound road and waterway networks to link with neighbouring provinces such as Shandong, Zhejiang and Anhui, and to central China through the Yangtze River.' The Ninghu expressway, linking Nanjing and Shanghai, has received approval from the China Securities Regulation Commission to float shares abroad. The 258 kilometre expressway plans to list in Hong Kong in the second quarter of the year, raising four billion yuan (about HK$3.73 billion). Mr Chan said the completion of the expressway could foster the development of cities along its route. 'At the same time, the Ninghu expressway's income prospects are good as there are no other toll-free roads close by,' he said. He said the income potential of some toll-roads in China, especially in the south, was not as good - as the Ninghu expressway. This was because most ran parallel to other older toll-free roads, still favoured by many drivers.