On Wednesday, China celebrated forty years of its showcase “special economic zone” in Shenzhen, a peasant village that was transformed into a metropole the size of Manhattan to transform the country into a 21st century economic superpower. But Xi Jinping also visited a nearby navy base, saying the military should “prepare for war”. The “miracle” of the Shenzhen Special Economic Zone (SEZ) guaranteed the success of China’s “socialist modernisation,” according to China’s Communist Party (CCP) Secretary Xi Jinping. It is a "brand-new city created by the CCP" and its development over the past 40 years is "a miracle in world development history," according to the CCP-controlled tabloid Global Times.Launched in October 1980, the SEZ kickstarted China’s economic reform policy, leading to what was to become the biggest economic growth in human history, boosting the country from being the world 11th biggest economy in 1978, after Spain and Mexico, to being second only to the US today.“The SEZ were created by Deng Xiaoping as an experiment to enable China to modernise and develop, by making use of all the support China could get from outside the country," says Steve Tsang, Director of the SOAS China Institute. “Shenzhen is right next to Hong Kong, so it could benefit from it by transferring management and technological know-how from the rest of the world to China through Shenzhen.Preferential policiesIn 1980, there were only four SEZ’s: Shenzhen (bordering Hong Kong), Zhuhai (next to the then Portugese enclave of Macao), Shantou and Xiamen, (both facing Taiwan).Four years later, 14 coastal cities, including Shanghai, Tianjin and Wenzhou were added. Three delta’s of China’s major rivers, the Yangzi, the Yellow River and the Pearl River joined in 1985. In 1988 the island province of Hainan as a whole became an SEZ.Preferential policies, aimed at attracting foreign investors, included lower customs duties, labour and wages, preferential rents and smoother entry and exit management.“In the early days, these were not very attractive places,” says Tsang. “So, for foreign workers to be able to go to Hong Kong, that was very useful.”The most noticeable incentive is the lower tax rate for foreign enterprises, which was set at 15 percent, a marked reduction from 33 percent paid by enterprises in other parts of the country. This tax rate was even lower than that in Hong Kong at that time, which was then 17 percentPowerhousesAnother 6 upstream river ports, including the mega city of Chongqing, were added in 1992, and 11 border towns were open to preferential investment rules, giving incentives to businessmen from Kazakhstan, Mongolia, Russia, Myanmar and Vietnam to trade and invest in China.The location of the zones was chosen “so that they can benefit from another country that would be able to serve as a provider of expertise or investments to help that region to develop,” says Tsang.Of all the SEZ’s, Shenzhen stands out as the most successful. According to the 2020 figures from China’s Commerce Ministry, Shenzhen ranks fourth in terms of trade volume, after the economic powerhouses of complete provinces Guangdong and Jiangsu, and the megacity Shanghai.Locomotives“The SEZ’s were important locomotives in pulling the regions along in terms of wider development.“Shenzhen played a key part in helping the development of the Pearl River Delta region as a whole.“The tables have been slightly turned. Today, Xi Jinping sees Shenzhen as even more important than Hong Kong as the core part of the ‘Greater Bay Area’,” a massive territory that includes the Pearl River Delta, Hong Kong, Macao, and the two SEZ’s Zhuhai and Shenzhen.Talk of war One day before going to the massive celebrations that marked Shenzhen’s 40th anniversary as an SEZ, Xi Jinping paid a visit to a station of the Chinese navy at Chaozhou port, part of Shantou, another SEZ.According to Chinese media, Xi said that “the Marine Corps should focus on war preparedness and combat capabilities, and maintain a high level of readiness,” adding that the force should “stick to combat-oriented training and strengthen mission-oriented training tailored to the specific needs,” without saying what these “needs” might be.MissionShantou is “close to Fujian province, which is directly opposite to Taiwan,” according to Tsang. It was chosen because of its location so it could benefit from investments from Taiwan in the 1990s.“The signal is clear: ‘don’t just think about making money now. You’ve made a lot of money. Now think about what the Chinese government under Xi Jinping wants: it wants Taiwan. So be prepared to support that, that is now your mission.”For the Taiwanese people, the message is clear too: after years of trying to convince the island with experiments like the SEZ’s and the “One Country, Two Systems” policy that was designed, but failed, to show that Beijing would allow Hong Kong a virtually autonomous status, talk of war makes them think twice about ever wanting to join with mainland China.No peaceful reunification?“People in Taiwan do not take it very seriously,” says Tsang. “But the Taiwanese government does. Since the 1980s, the Chinese government has always insisted that it will take over Taiwan at some stage. “When it was clear that China did not have the military capability to use force to take Taiwan, it regularly committed to use “peaceful means” to take over Taiwan” – as may have been underlined when Chinese Prime Minister Li Keqiang omitted the word “peaceful” from the habitual catchphrase “peaceful reunification of Taiwan” during a speech at the National People’s Congress in May.“Now that they are building up their capability and nearly having the capability to take Taiwan, they are less willing to underline their peaceful description of their taking over of Taiwan. They now say, we’ll get Taiwan one way or the other at some stage, under Xi Jinping,” says Tsang.