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Satchu's Rich Wrap-Up
Friday 09th of October 2020

The Chinese yuan soared to a 17-month high, as investors wagered on a Joe Biden presidency and on more U.S. stimulus spending
World Currencies

But as it extended gains beyond 1%, heading for its sharpest daily gain in more than four years, traders said it provided one of the clearest indications yet that Biden’s lead in the polls is driving bets on a steadier Sino-U.S. relationship. [CNY/]

A stronger-than-expected setting of the yuan’s trading band also signalled that policymakers in China don’t mind its rise.

The yuan CNY= was last up 1.2% at 6.7112 per dollar in onshore trade and it rallied half a percent to 6.7024 per dollar offshore CNH=D3. 

The dollar eased 0.1% against a basket of currencies =USD and it is down 0.4% for the week.

“I think the main message is that the (People’s Bank of China) is allowing further renminbi appreciation at this level,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong. 

“So markets are positioning for a renminbi rally.”

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“In his blue gardens men and girls came and went like moths among the whisperings and the champagne and the stars.” ― F. Scott Fitzgerald, The Great Gatsby

“Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that's no matter--tomorrow we will run faster, stretch out our arms farther.... And one fine morning-- So we beat on, boats against the current, borne back ceaselessly into the past.”  ― F. Scott Fitzgerald, The Great Gatsby

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Donald Trump is risking a Covid election blowout @FT @EdwardGLuce
Law & Politics

“Don’t be afraid of Covid” was Donald Trump’s message on leaving hospital this week. To say he was tempting fate would be an understatement.
 The US president could not know where the disease would leave him. He ought to know that the only way he could win re-election is by focusing on anything but the pandemic. 

The polls are unequivocal on that: a clear majority of Americans do not trust what he says about the disease. 

That was true long before he fell sick and is likely to remain true on November 3.

It follows that Mr Trump must change the subject or take radical steps to make Americans trust his pandemic-management skills. 

He has instead chosen to do something solipsistic — tell Americans the pathogen can be defeated by sheer force of will. This is a rash mix

It is further depressing his poll ratings on coronavirus while making it harder for him to change the subject. 

The fact that Mr Trump is insisting on going ahead with next week’s presidential debate when he still may be infectious only reinforces that. 

It should be no surprise that Joe Biden’s poll leads over Mr Trump has hit double digits in Florida where a lot of retirees live, according to one recent poll. 

His averaged overall national lead is now near double digits. Even if those margins were halved, Mr Trump would be facing a heavy defeat. 

It will take more than heroic willpower to reverse that. No US presidential candidate has entered the last month of the election with a deficit that wide and gone on to win.

So why is he pushing on a failing strategy? Much has been made of the fact that Mr Trump is taking a steroid, dexamethasone, which can cause wild mood swings. Doubtless, the drug can induce euphoria

But there is little to differentiate Mr Trump’s post-hospital and pre-hospital behaviour. He did not suddenly chance on the notion of issuing torrents of capitalised tweets after checking out of Walter Reed. 

Nor did the idea of publicly stripping off his mask come in the wake of his drug treatment. He has been taunting social distancers all year. The only seeming effect of Mr Trump’s treatment is that he became even more like himself.

The fact that the president is ignoring advice is also in character. In a hypothetical world, Mr Trump could have used the fact that he caught the disease to reset the narrative. 

“My fellow Americans, the fact that the US president could be struck low by this disease means all of us are vulnerable,” Mr Trump could have said. “I am fortunate enough to get the best care available on the planet. I know that most of you are not so fortunate. So I urge you to join me in taking this disease seriously and follow the best scientific advice so we can flatten the curve. Together we can beat Covid and make American great again.”

That would be the rough idea of how to create empathy with the legions of older voters who are abandoning Mr Trump. Such a pivot seems as improbable as Mr Trump taking up ballet. 

Which leaves him with a change of subject. The one issue on which he still leads Mr Biden is the economy. The problem is that it does not respond to his command. 

America’s much-promised V-shaped recovery floundered on the failure to flatten the coronavirus curve. 

Mr Trump did not help matters this week when he pulled out of talks for another coronavirus relief bill. That dealt a heavy blow to the prospect of more relief for ordinary Americans before the election.

His preferred line of attack has always been law and order. But that has three drawbacks. First, it has not worked yet. Mr Biden consistently leads Mr Trump on law and order. Second, last summer’s protests have died down. Third, the antifa — the loosely organised anti-fascist movement — is not playing the suburbia-threatening role it has been allotted.

Mr Trump has thus built himself a maze. He wants Americans to be afraid of something that does not seem particularly lethal — the radical left — yet be unafraid of a disease that has so far claimed more than 200,000 American lives. It does not feel like a winning strategy.

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07-OCT-2019 :: Xi is building an Algorithmic Society.
Law & Politics

Xi’s model is one of technocratic authoritarianism and a recent addition to his book shelf include The Master Algorithm by Pedro Domingos. Xi is building an Algorithmic Society.

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SARS-CoV-2 Is an Unrestricted Bioweapon: A Truth Revealed through Uncovering a Large-Scale, Organized Scientific Fraud @ZENODO_ORG

Since its publication, the RaTG13 virus has served as the founding evidence for the theory that SARS-CoV-2 must have a natural origin

However, no live virus or an intact genome of RaTG13 have ever been isolated or recovered. 

Therefore, the only proof for the “existence” of RaTG13 in nature is its genomic sequence published on GenBank. 

SARS-CoV-2 is an Unrestricted Bioweapon

Although it is not easy for the public to accept SARS-CoV-2 as a bioweapon due to its relatively low lethality, this virus indeed meets the criteria of a bioweapon as described by Dr. Ruifu Yang. 

Aside from his appointment  in  the  AMMS,  Dr.  Yang is also a key member of China’s National and  Military Bioterrorism Response Consultant Group and had participated in the investigation of the Iraqi bioweapon program as a member of the United Nations Special Commission (UNSCOM)in 1998. 

In 2005, Dr. Yang specified the criteria for a pathogen to qualify as a bioweapon

1.It is significantly virulent and can cause large scale casualty.

2.It is highly contagious and transmits easily, often through respiratory routes in the form of aerosols. The most dangerous scenario would be that it allows human-to-human transmission.

3.It is relatively resistant to environmental changes, can sustain transportation, and is capable of supporting targeted release.

All of the above have been met bySARS-CoV-2: 

it has taken hundreds of thousands lives, led to numerous hospitalizations, and left many with sequela and various complications; it spreads easily by contact,  droplets,  and  aerosols via respiratory routes and  is  capable  of transmitting  from human to human75-77, 

the latter of which was initially covered up by the CCP government and the WHO and was first revealed by Dr. Li-Meng Yan on January 19th, 2020 on Lude Press

78;it is temperature-insensitive (unlike seasonal flu)and remains viable for a long period of time on many surfaces and at 4°C(e.g. the ice/water mixture)79,80. 

Adding to the above properties is its high rate of asymptomatic transmission, which renders the control of SARS-CoV-2 extremely challenging. 

In addition, the transmissibility, morbidity, and mortality of SARS-CoV-2 also resulted in panic in the global community, disruption of social orders, and decimation ofthe world’s economy. 

The range and destructive power of SARS-CoV-2are both unprecedented

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‘’Zoonotic’’ origin was one that was accelerated in the Laboratory.

There is also a non negligible possibility that #COVID19 was deliberately released

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However, after sequencing the full genome for RaTG13 the lab’s sample of the virus disintegrated, he said. “I think they tried to culture it but they were unable to, so that sample, I think, has gone.”

According to Daszak, the mine sample had been stored in Wuhan for six years. Its scientists “went back to that sample in 2020, in early January or maybe even at the end of last year, I don’t know. They tried to get full genome sequencing, which is important to find out the whole diversity of the viral genome.”

However, after sequencing the full genome for RaTG13 the lab’s sample of the virus disintegrated, he said. “I think they tried to culture it but they were unable to, so that sample, I think, has gone.”

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.777

Dollar Index 93.502

Japan Yen 105.940

Swiss Franc 0.916045

Pound 1.294945

Aussie 0.717435

India Rupee 73.2249

South Korea Won 1147.350

Brazil Real 5.5999000

Egypt Pound 15.70790

South Africa Rand 16.549600

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Vatican used charity funds to buy @Hertz credit derivatives @FT
World Of Finance

The Vatican invested some donations for the poor and needy in derivatives that bet on the creditworthiness of Hertz, the US car rental company that defaulted on its debts earlier this year, according to documents seen by the Financial Times.

In 2018, Pope Francis said credit default swaps “encouraged the growth of a finance of chance and of gambling on the failure of others, which is unacceptable from the ethical point of view”. The instruments, he said, were “a ticking time bomb”.

But three years earlier, part of a €528m Vatican portfolio “derived from donations” bought structured notes containing CDS as part of a bet that Hertz would not default on its debts by April 2020, the documents show. 

The company filed for bankruptcy the following month, giving the Holy See a narrow escape on the investment, which paid out in full.

The investment was made under the watch of Cardinal Giovanni Angelo Becciu, who was stripped of his rights as a cardinal by the Pope last month over what Cardinal Becciu described as an allegation of “misappropriation”.

Money was invested on behalf of the Vatican’s Secretariat of State, the Holy See’s powerful central administration office where Cardinal Becciu was second-in-command from 2011 to 2018. 

The Secretariat has responsibility for administering donations made to the Church by Catholics around the world.

There appears to be no evidence Pope Francis himself was aware of the investment in the CDS-linked notes, which were held directly through a Secretariat account in Switzerland and made by a third-party consultant on its behalf.

Similar CDS trades have proved disastrous for several hedge funds in a wave of US corporate bankruptcies this year.

CQS, the London-based hedge fund run by billionaire trader Michael Hintze, suffered a roughly 50 per cent drop in the value of its flagship fund in the spring, after defaults including Hertz led to large losses on high-risk derivatives.

Other investments made by managers for the Secretariat appointed by Cardinal Becciu include financing the 2019 film Rocketman — a biopic of the musician Elton John — according to fund documents seen by the FT.

The Secretariat also bought multiple luxury residential properties in London’s Knightsbridge, and securitisations partly comprising invoices owed by the Italian state to Vatican-controlled hospitals. 

Late last month Pope Francis asked Cardinal Becciu to resign — relieving him of his position as the man in charge of overseeing the canonisation of Catholic saints — as a result of allegations about the management of Vatican money. 

The cardinal has not been charged with any crime by the Vatican. He said he has committed no wrongdoing and vowed to clear his name. He and the Vatican did not respond to requests for comment on the derivatives investment. 

The management of Vatican assets held in Swiss bank accounts during Cardinal Becciu’s watch has come under mounting scrutiny after Vatican police last year raided the offices of the Secretariat to seize documents linked to a London property deal.

The Secretariat’s investment in the London building known as 60 Sloane Avenue was made through a fund in Luxembourg in 2014 in a deal personally authorised by Cardinal Becciu. 

In June the Vatican’s state news service reported that Holy See prosecutors believe the investment caused “huge losses”.

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EasyJet loses $1.1 billion after the Covid-19 pandemic caused demand to collapse
Tourism, Travel & Transport

EasyJet Plc said it lost as much as 845 million pounds ($1.1 billion) in the year through September after the Covid-19 pandemic wreaked havoc with the budget carrier’s summer schedule.

The U.K. company scrapped its dividend and expects to fly about a quarter of its typical capacity during the final three months of 2020, according to a statement on Thursday. 

The airline is reviewing its liquidity position and called on the state to step in with additional aid for the industry.

“Aviation continues to face the most severe threat in its history and the U.K. government urgently needs to step up with a bespoke package of measures to ensure airlines are able to support economic recovery when it comes,” EasyJet said.

Like other airlines, EasyJet has been hard hit by the coronavirus. A resurgence in cases across Europe has resulted in renewed travel restrictions that have quashed any hopes of a recovery in demand. EasyJet has raised over 2.4 billion pounds in cash since the start of the pandemic, including 419 million pounds from an equity increase and 608 million pounds by selling and leasing back planes.


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The Dollar remains very elevated vs non-China EM (blue), where that strength is harmful as it means tight financial conditions & thus weak growth. @RobinBrooksIIF
World Currencies

There's little the Fed or anyone else can do to reduce this Dollar strength. Only a widely available COVID-19 vaccine can do that...

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.@WorldBank #africaspulse

The COVID-19 pandemic is not over yet: African countries must not let their guard down .

As of September 28, the numbers of COVID-19 confirmed cases and deaths in the region were, respectively, 3.4 and 2.5 percent of those registered worldwide. 

Economic activity in the region is expected to contract by 3.3 percent in 2020, confirming the prediction that Sub-Saharan Africa would suffer its first recession in a quarter-century in 2020

By the end of 2021, the region’s real gross domestic product (GDP) per capita will likely regress to its level in 2007.

In Africa, COVID-19 could push up to 40 million people into extreme poverty, erasing at least five years of progress in fighting poverty. 

The economic contraction caused by the COVID-19 pandemic will spread broadly across countries in Sub-Saharan Africa in 2020. 

Due to the combination of domestic lockdowns and related spillovers from the global recession, growth is expected to slow in all countries in the region. 

Growth fell sharply in the second quarter of 2020 across countries, especially in Nigeria (6.1 percent year-on-year) and South Africa (17.1 percent). 

The decline in growth is expected to be larger in East and Southern Africa than West and Central Africa, partly because of the stronger output contractions in South Africa and Angola. 

Disruptions in the tourism industry and lockdowns will cause substantial slowdowns in Ethiopia, Kenya, and the island nations. 

In West and Central Africa, the decline in growth is projected to be driven mainly by oil exporters. 

Activity among non-resource-intensive countries, including Côte d’Ivoire, Ghana, and Senegal, will slow but not contract, helped by relatively more robust growth in the agriculture sector.

Ultimately, sustained recovery will depend on how fast African countries prioritize policy actions and investments that address the challenge of creating more, better, and inclusive jobs. 

These policy priorities, in turn, operate through three critical and interrelated channels: digital transformation, sectoral reallocation, and spatial integration.

The rebound in economic activity is expected to be modest in Sub-Saharan Africa in 2021, and the economic outlook is subject to considerable uncertainty .

Sub-Saharan Africa’s real GDP is projected to pick up to 2 .1 percent in 2021, which is below the 2 .4 percent rate achieved in 2019 and below population growth; per capita GDP would contract by more than 6 .0 percent .

Baseline projections assume that new COVID-19 cases will continue to slow across the region, new outbreaks will not lead to national lockdowns, government policy responses will boost business and consumer confidence, the global economy will continue to rebound, and commodity prices will remain stable. 

Under these assumptions, GDP could rise to 3.2 percent in 2022

In the downside scenario, the region’s GDP is projected to expand by only 1 .2 percent in 2021 and 2 .1 percent in 2022 . 

In this scenario, heightened uncertainty related to the evolution of the pandemic constrains domestic consumption and investment, while lower commodity prices weigh on exports. 

The road to recovery will be steep: most countries in the region entered the COVID-19 crisis with weaker growth-supporting institutions .

COVID-19 has exposed acute macroeconomic vulnerabilities across Africa . Most countries will emerge from the COVID-19 crisis with historically large budget deficits. 

Fiscal deficits in the region will widen, on average, by 3.5 percentage points of GDP in 2020. Debt burdens will be heavier. 

The risk of debt default has started to materialize for one country in the region. Declines in export revenues, including from international tourism, have compounded the domestic impact of the COVID-19 shock. 

At the same time, reductions in remittance flows, the slowdown in foreign direct investment, and declining private capital flows have tightened external constraints, leaving countries in the region with daunting debt challenges.

Evidence shows that at the height of the lockdown, 25 percent of the firms in Sub-Saharan Africa accelerated the use of digital technologies and increased investments in digital solutions in response to COVID-19. 

In the East African Community, the pandemic seems to have catalyzed greater trade flows. 

Kenyan exports to the rest of the East African Community have recovered rapidly. Exports to Uganda and Rwanda already surpassed their pre-COVID-19 highs, and re-exports to Tanzania sharply accelerated by July. 

Fiscal deficits in the region will widen, on average, by 3.5 percentage points of GDP in 2020—a paltry figure compared to the deficit expansion in the United States (9.7) and the Euro Area (6.8). 

The World Bank’s June Global Economic Prospects report forecasted that the global economy would shrink by 5.2 percent this year, with activity in EMDEs falling by 2.5 percent—their first contraction in at least 60 years. 

The global economy suffered an unprecedented and synchronized collapse in activity in the first half of the year, with many countries experiencing double digit contractions in activity, led by weakness in services consumption.

With cumulative cases per million people estimated at 1,007 as of September 15, 2020, Sub- Saharan Africa remains one of the regions least affected by the COVID-19 pandemic.

Although testing in the region as a whole is low, there is wide variation in testing across countries (figure 1.10). 

Only eight Sub-Saharan African countries had conducted more than 200,000 total tests by September, with South Africa and Ethiopia conducting more than one million tests. 

South Africa has so far conducted about four million tests (more than 67,000 tests per million people) and Ethiopia has conducted nearly 1.2 million tests (more than 10,000 tests per million people). 

Nigeria’s population is about 207 million people, and the country has only conducted 2,328 tests per million people.

While the COVID-19 pandemic has evolved more slowly in Sub-Saharan Africa than in other regions, it has exerted a sizable toll on economic activity

The main channels through which the COVID-19 pandemic has impacted economies in Sub- Saharan Africa have been 

(1) the drop in domestic production resulting from lockdowns and other restrictions on nonessential business operations as countries implemented strict containment measures to limit the spread of the COVID-19 virus, 

(2) the impact on demand for goods and services as lockdowns decreased household incomes, and 

(3) the disruption of global trade and its effects on commodity prices and exports. 

The combination of domestic lockdowns and lower external demand from the global recession weighed heavily on economic activity across the region in the first half of 2020. 

In South Africa, where containment measures were particularly severe, the economy collapsed in 2020Q2. Real GDP contracted by 17.1 percent, year-on-year, following a 0.1 percent year- on-year expansion in 2020Q1.

Angola, Sub-Saharan Africa’s second largest oil producer after Nigeria, saw its economy contract by 1.8 percent year-on- year in 2020Q1, hit by the fallout from the COVID-19

In Botswana, real GDP contracted by 24 percent year-on-year in 2020Q2, following a 2.6 percent year-on-year expansion in 2020Q1.

Tourism has been hit hard by the pandemic, with a collapse in the number of visitors.

Nigeria’s real GDP contracted by 6.1 percent year-on-year in 2020Q2—the worst result in more than a decade

Ghana’s economy shrank 3.2 percent year-on-year in 2020Q2, following a 4.9 percent expansion. 

Agriculture sector growth partially offset output contractions in the service and industrial sectors (figure 1.21). 

In Kenya, the PMI rose from 46.6 in June to 54.2 in July before moderating to 53.0 in August. Notably, export orders picked up, as the reopening of international travel supported an uplift in tourism. 

However, the employment subcomponent indicated that firms are scaling back on wage costs. 

Weaker jobs growth highlights the underlying challenges to a sustained recovery, even as business confidence has improved in recent months. 

In Uganda, the headline PMI jumped from 50.3 in July to 54.6 in August, the highest reading since prior to the COVID-19 outbreak. 

By contrast, in Zambia, customer demand remained weak in 2020Q3, contributing to a further reduction in business activity. 

The PMI fell to 43.4 in August from 44.6 in July, reflecting the weakness in investment demand.

Sub-Saharan Africa’s median current account deficit is expected to widen from -4.8 percent of GDP in 2019 to -6.9 percent of GDP in 2020, the highest since the 2014 commodity price shock, before moderating to -4.9 percent of GDP in 2021

In 2020Q3, no Eurobonds were issued in the region and none have been issued so far at the start of 2020Q4.

remittances—a key source of financing for a large number of countries in Sub-Saharan Africa and an important contributor to the balance of payments—are expected to decrease by 23 percent this year before rebounding moderately in 2021.

The impact on individual countries will vary. Countries in which remittances account for a large proportion of GDP (South Sudan, Lesotho, and The Gambia) are the most vulnerable, while remittances are expected to hold steady in countries with diverse remittance sources, such as Kenya.

The region’s median inflation rate is estimated to have increased from 2.3 percent in 2019 to 3.5 percent in 2020, and it is expected to continue to rise into 2021

In 2020, the inflation rate was in double digits in 12 countries, compared with nine countries in 2019. Sudan and Zimbabwe continued to experience annual inflation rates of over 100 percent. 

In the Democratic Republic of Congo, inflation jumped above 30 percent year-on-year in July before easing slightly in August. 

Among oil exporters, inflation rates rose continuously in Angola, exceeding 23 percent year-on-year in August.

Real per capita GDP is projected to contract sharply in 2020, falling by about 6.0 percent, the largest decrease over the past two decades

World Bank has estimated that in 2020 COVID-19 will push 26 million people in Sub-Saharan Africa into extreme poverty

Risks to the regional outlook remain skewed to the downside.

The emergence of new creditors has increased the opacity in African debt (non–Paris Club governments). Therefore, the issue of greater debt transparency has become more complex. 

The lack of disclosure in debt data may lead to mispricing sovereign bonds and associated default risks (Horn, Reinhart, and Trebesch 2019). 

This leads to greater risks associated with massive hidden debt operations and greater (than expected) interest payments, which impose heavier government burdens (World Bank 2020).

The AfCFTA will cover a market of 1.3 billion people and US$3.4 trillion in economic activity. By 2050, Sub-Saharan Africa will account for one-third of the global labor force.

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Chinese Security Contractors in Africa @CarnegieEndow @PNantulya

Beijing is turning to security contractors to protect its Belt and Road Initiative (BRI) projects, citizens, and diplomats. 

Chinese security contractors are active in a growing number of African countries; they mostly work for Chinese state-owned enterprises (SOEs) and increasingly with African security forces and security companies.
They protect oil and gas installations, railways, mines, construction sites, and even Chinese embassies.
Over 200,000 Chinese workers have relocated to Africa in search of opportunities along the BRI as of 2018, bringing the total number of Chinese immigrants to over 1 million.
Furthermore, over 10,000 Chinese companies were operating on the continent as of 2017.
China’s economic power in Africa is unmistakable; in 2017 alone, Chinese SOEs generated about $51 billion in revenue from local BRI projects, according to China’s National Bureau of Statistics.

As of 2020, China was responsible for more construction projects in Africa than France, Italy, and the United States combined.
However, China’s expanded global engagements are fraught with risks. The Chinese Academy of Social Sciences notes in its 2020 assessment that 84 percent of China’s BRI investments are in medium- to high-risk countries.
To protect its investments, Beijing has invested in and trained security contractors. 

As of 2013, China had around 4,000 registered security firms with an estimated 4.3 million employees, mostly demobilized military and police personnel.
Phoenix International, a Chinese think tank with strong SOE ties, reports that likely no more than twenty of these firms conduct activities overseas protecting SOEs and other Chinese interests.
By 2013, they employed around 3,200 personnel, according to the Germany-based Mercator Institute for China Studies, more than the number of United Nations (UN) peacekeepers China furnishes, a figure that stood at 2,534 troops and police as of June 2020.
The true number of Chinese private security contractors, however, could be much higher. Chinese SOEs spend about $10 billion annually on security, according to the Beijing-based China Overseas Security and Defense Research Center.
Yue went on to say that “China’s forward military presence is weak” compared to that of the U.S. Navy, which is “deployed worldwide and is therefore capable of engaging in peacekeeping missions or wars in coastal regions.”

In Kenya, DeWe trains local guards along the $3.8 billion Standard Gauge Railway connecting Mombasa, Nairobi, and Naivasha under a contract with the China Roads and Bridges Corporation. 

This directly supports the activities of China’s Ministry of Public Security, which coordinated the training of Kenya’s elite railway protection force. 

China’s engagements in Africa will continue to grow in the coming decades. Beijing has leapt ahead of its competitors in terms of its deployment of cultural institutes, media presence, training and educational opportunities for Africans, and its portfolio of megaprojects. 

However, the risks that come with this expanding presence will not disappear. Around the world, 350 security incidents involving Chinese citizens occurred between 2010 and 2015, according to China’s Ministry of State Security, ranging from kidnappings and terrorist attacks to xenophobic violence against Chinese nationals and businesses.

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by Aly Khan Satchu (www.rich.co.ke)
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October 2020

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