EXECUTIVE Councillor and leading economist Professor Edward Chen Kwan-yiu says the development in southern China is based on production, not speculation, and so is not a bubble that will burst. Professor Chen, director of Asia Studies at the University of Hongkong, said that, unlike other developing regions which relied on overseas markets, southern China had the vast mainland market for its products. Fifty per cent of its products were for domestic sale, he said. Professor Chen told the Lions Club yesterday that, having been a mere supplier of cheap labour, the region was moving into a phase of labour shortage. But businesses there had shown flexibility, and some had moved production elsewhere. Professor Chen thought that within one or two years, economic growth on the mainland would mean it would overtake the United States as Hongkong's main export market. He said southern China's future focus should be on developing service and high-technology industries. And although the economy would overheat, the problem would not be the disaster that it had been in 1987-88.