Economist 5/8/15

  1. CRACKDOWNS in China often unfold without explanation, carried out by officials acting on directives that never see the light of dayThe 330 Metal Festival had been held without a hitch since 2002. This year the daylong bash was, as usual, to have featured heavy-metal bands whose very names sou.nd calculated to annoy the party’s prudes: Crack, Massacre of Mothman and Suffocated.But a few hours after the event opened—two days before the guitarist’s birthday—the police arrived at the venue, a nightclub in Beijing called Tango. They demanded the festival be shut down for safety reasons.Then in April came the announcement that Beijing’s two biggest rock festivals, Strawberry and Midi, which are held every year during the May Day holiday, were being “postponed” indefinitely.It may be that ensuring safety was indeed a reason for some of the closures. But officials are trying to tighten control over culture generally.
  2. Western sanctions over Ukraine, and what looks set to be a long-term chilling of relations with America and Europe, has given Russia no option other than to embrace China as tightly as it can.Next week, in a further symbol of the growing strategic partnership between the two countries, three or four Chinese and six Russian naval vessels will meet up to conduct live-fire drills in the eastern Mediterranean.In theory, Russia’s incursions into Ukraine and its seizure of Crimea violate two of China’s most consistently held foreign-policy tenets: non-interference in other states and separatism of any kind. But China abstained from voting on the UN Security Council resolutions condemning Russia, while Chinese media have given Russia strong support.Striking evidence of the new closeness between China and Russia was a $400 billion gas deal signed in May last year under which Russia will supply China with 38 billion cubic metres (bcm) of gas annually from 2018 for 30 years.In April it agreed to sell China an air-defence system, the S-400, for about $3 billion. This will help give China dominance of the air over Taiwan and the Senkaku islands.
  3. Companies in the Valley are big spenders too. Last year around $184 billion of mergers and acquisitions were struck in the American technology industry.With a current stockmarket value of $48 billion, Salesforce would not come cheap. But many of America’s biggest technology firms are rolling in money: Microsoft, for one, has $95 billion in cash and short-term investments on its balance-sheet.Recently Twitter and LinkedIn, two social networks, missed earnings forecasts, sending their shares falling by around 28% and 21% respectively. Sustained underperformance could drive down public firms’ prices and make some of them easier targets.When Twitter reported its earnings on April 28th, it announced a partnership with Google to help it sell and measure the effectiveness of ads.Midsized, advertising-supported firms have struggled of late, as it has become clearer that some will not add users and revenues as quickly as once hoped.
  4. As well as touring bikes big enough to fit a Jacuzzi on,Harley-Davidson now offers zippier models that are easier to ride if you are female—and easier to afford if you are young. So-called sports and street bikes made up a fifth of volumes in 2014. Sales in India, China and Vietnam are booming.In the quarter to March, Harley’s sales, in dollars, fell by 3% compared with a year earlier. Had currencies remained flat, sales would have been unchanged. Almost all big American manufacturing firms are in the same boat, although the degree of pain varies according to the size of their foreign arms and the currencies they operate in.Harley’s rivals are mostly European and Japanese firms, which typically manufacture in their home countries. That means they are enjoying soaring revenues and expanding margins thanks to the dollar.Some have decided to blow these new profits by starting a price war in America
  5. America’s navy is trading explosives for electricity and working on a railgun, a weapon designed to hurl shells at seven times the speed of sound. As the name suggests, a railgun dispenses with the enclosed barrel employed by explosively propelled artillery in favour of a pair of electrically conductive rails.The currents involved—millions of amps—are difficult to generate, and they place huge stress on the system. The same force that flings the projectile out of the gun also tries to force the rails apart.Two firms have been working on the navy’s railgun—BAE Systems and General Atomics.The brief given to the companies is to develop a weapon that can fire a 10kg projectile at about 2.5km a second. This is roughly seven times the speed of sound—and about three times the muzzle velocity of a conventional naval gun. At those sorts of speeds, there is no need to give the projectile a warhead. Its momentum is enough to cause destruction.ngle ship-launched missile can set the navy back well over $1m. Current estimates for railgun projectiles are around $25,000 per shot.
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