The GDP of South China's Guangdong Province surpassed 11 trillion yuan ($1.7 trillion) last year, the highest in the country. But despite the economic growth, an expert says challenges lie ahead.

For the first time, the province's GDP exceeded that of South Korea. It had already overtaken Spain, Australia and Mexico.

Foreign trade played a major role in driving Guangdong's growth in 2020. It exported trillions of yuan of medical supplies, traditional garments and home appliances.

Professor Lin Jiang of Sun Yat-sen University cautions, however, that the economic powerhouse faces uncertainties.

"During 2021 and the coming years, if the government is going to make domestic demand a main driving force of the economy in dual circulation, this will present a challenge for Guangdong. Because it's export-oriented, Guangdong can't shift all its businesses to domestic market from the international market."

Lin says the requirements and specifications for exports are different from the domestic market.

More importantly, profits can vary because of differences including income and consumption levels.

Let's take computer mice, for example. A China-made mouse costs about 100 yuan, or $15, while in the U.S., the price doubles.

If all mouse manufacturers stop exporting and turn to the domestic market, their profits will drop. Moreover, because of the huge supply, the price for each item could be even cheaper than $15. Factories may struggle to cover the cost of raw materials and salaries.

Lin says they will either have to shut down or turn to other businesses such as the new economy, including 5G and artificial intelligence.

"The transformation from making a mouse to a 5G device is a big challenge... as much as making a cloth factory switch to semiconductors. I think that through upgrades and transformation plans, more factories that used to be exporters will be upgraded to become high-end industries."

Lin says that more countries with cheaper labor, such as in Southeast Asia, the appreciation of the RMB and government calls for high-quality growth are forcing more exporters to rethink their future development.

Authorities in Guangdong are now offering skills training for employees to prepare them for new opportunities in a changing market.

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