Ironically, the company to watch here isn't even Indian. Cognizant's stock price has gone up 58 percent since July 2010 and the stock got another boost on Thursday after Goldman Sachs said Cognizant (CTSH) was one of its top picks in the IT services sector. Cognizant's home office is in Teaneck, New Jersey and the stock is traded on Nasdaq, but it has a major presence in India and it's growing in the country. Last month, the company announced it will invest more than $500 million in four Indian cities through the end of 2014. That will give it space for 55,000 workers. With a workforce at the end of 2010 of 104,000 workers, Cognizant is going to be giving India's big outsourcing companies even more of a scare in the months and years ahead.

The turmoil following the March 11 earthquake has provided a rude reminder that, when it comes to the global electronics industry's supply chain, Japan still matters. The country's factories produce about one-fifth of the world's semiconductors and 40 percent of electronic components. Japan's Mitsubishi Gas Chemical and Hitachi Chemical combined make almost all of the world's BT Resin, a raw material used in chip packaging, and Hitachi Chemical has 70 percent market share for a type of chemical slurry used by semiconductor producers for polishing chips. Tech executives and investors therefore should be worrying about a prolonged shutdown of production in Japan, where many factories are closed and there's no clear sign of how much damage they suffered or when they might reopen. Typically, big chipmakers like Taiwan Semiconductor Manufacturing Co. keep between four to six weeks of supply, so uncertainty about maintaining supply from Japan is not a problem -- for now. However, "all these Japanese companies are not able to give us an estimation of when they are able to resume their production," says Warren Lau, an analyst in Hong Kong with Samsung Securities. He warns there could be "some destruction" in the supply chain that could cascade down to affect companies like Apple.

One Western company that might feel the pain soon is Nokia, a major purchaser of Japanese components for mobile phones. The region hit by the earthquake, tsunami, and nuclear accident is home to many manufacturers of those parts, and the disaster is likely to hit the handset industry the most, according to a March 14 report by Barclays Capital. For Nokia, finding other sources in the event of an extended disruption to the supply chain won't be easy, Barclays analysts wrote, since the struggling Finnish company's "declining market share has reduced its once legendary ability to procure alternate supply."

As they wait to see if and when the power comes back on at Japanese factories, companies are trying to trying to find back-up suppliers. In some cases, though, there aren't viable alternatives that can produce in the scale that companies need. "The shortfall of supply will be so huge," says Samsung's Lau. "These companies will have to make difficult decisions."

Amongst the flood of economic statistics released this week by Beijing, the trade numbers certainly were some of the most notable. With imports up 19.4% and exports up just 2.4%, the least since 2009, China registered a $7.3 billion trade deficit, its first since last March (by contrast, the Bloomberg survey of economists had been predicting a surplus of $4.9 billion). So does this mean the world should expect China to start running a trade deficit regularly, a possibility that would likely lessen trade frictions, and might even ease global pressure on China to more quickly appreciate its currency, the yuan?

Not so fast. As numerous analysts pointed out, including Goldman Sachs and UBS, the unusual trade numbers have much to do with the seasonal effect of the Chinese New Year, which fell in early February this year. That holiday tends to have a much larger impact on exports than on imports, as factory owners and workers tend to take off not just the official holiday, but often the days surrounding Chinese New Year, too. "We believe the trade deficit is likely to be a temporary phenomenon distorted by the Lunar new Year," write Yu Song and Helen (Hong) Qiao in a Goldman Sachs Asia Economics Data Flash dated March 10. "Distortions affect exports much more than imports because exporters have a much greater tendency to take extended holidays." UBS for its part is predicting China will still run a $150 billion trade surplus for the whole year--"smaller than in 2010 but still sizable," writes economist Tao Wang in a March 10 note.

Still, the latest trade numbers--and the likely smaller surplus this year--will provide ready ammunition for Beijing as it faces further criticism on the value of the yuan. Chinese officials already have been defending the country's currency policy during the ongoing legislative session that closes Monday. "We're likely to see some narrowing in the trade surplus, perhaps to the $150 billion range in 2011 from $180 billion last year," says David Cohen of Asian Economics in Singapore in a Bloomberg article earlier today. "China will no doubt attempt to point to this number to deflect the criticism from the U.S. and other trading partners that the yuan is devalued."

Following my post the other day about the difficulties at Alibaba, company spokesman John Spelich contacted me to point out a few things. First of all, he says Alibaba is not considering an IPO for Taobao, its popular consumer retail site. "We've said repeatedly on record that we have no plans to IPO Taobao," he writes via e-mail.

Second, he disputes my contention that the U.S. Trade Representative's placement of Taobao on its "notorious markets" list was a blow to the company. Yes, Taobao is once again on the list, as it was last year, but so is bitter rival Baidu. Spelich pointed me to Alibaba's in-house blog, which highlighted this bit of good news in the USTR's report: "While recognizing that Taobao is making significant efforts to address the availability of infringing goods through its website, it still has a long way to go in order to resolve those problems." Moreover, Spelich says we should notice the kind words an industry group has for the company. "Alibaba should...be commended for their cooperation with videogame right holders in the removal of infringing items," the International Intellectual Property Alliance writes in its report recommending that USTR keep China on the government's Priority Watch List for copyright protection and enforcement.

Third, Spelich says Alibaba first revealed the fraud among suppliers on its B2B site last November. "We took action to terminate 1,200 paying members," the company reported then, "not only those who have been reported and proved to be fraudulent but also members who demonstrate a high probability to commit fraud."(See page 4 under "Gold Supplier.")

Are we making too much of this latest news, then? Spelich says yes. "It's old news," he argues. He's right that Alibaba revealed the fraud cases last year. This time, though, the company also said that about 100 of its salespeople were involved, either intentionally or through negligence. And this time the CEO and COO both stepped down to take responsibility.

For a good take on the impact of the fraud scandal at Alibaba.com, check out this story by my colleague Frederik Balfour. The B2B site is the only part of the Alibaba group that is publicly listed, so of course the news of turmoil there is painful. The stock price has dropped sharply in the past week. But the latest problem, involving Taobao, is potentially just as damaging over the long-term. Taobao is huge in China and an IPO would help Alibaba to capitalize on that popularity. Getting called "notorious" by the U.S. government will probably make it much more difficult for Alibaba to do that.

At lunchtime on Tuesday, though, the devastating earthquake hit Christchurch, New Zealand's second-largest city. Hundreds of people are dead and many others are still missing. The death toll could go much higher.

The destruction in Christchurch may push the New Zealand economy, which was already teetering, back into recession. The tourism industry in the South Island is likely to be hammered. I was in Christchurch on Sunday, two days before the earthquake, and a taxi driver was telling me then that his business had dropped off badly since last September's earthquake had scared away tourists. And that was an earthquake that had a death toll of zero. The photos and TV footage of Christchurch's misery now will just make things much worse.

It's too early to say what the impact will be on the dairy industry. Christchurch is in one of the prime dairy regions of the country. Farmers were able to shrug off the September quake, but that caused much less infrastructure damage and it came in the Southern Hemisphere's springtime, when the grass was starting to grow and the milking season was just starting. This new quake has caused far more damage and takes place in the middle of the summer. In a press release, Fonterra said its farmers "have come through largely unscathed and are keen to offer help and accommodation." The co-op today announced it is donating $1 million to the Red Cross Christchurch Earthquake Appeal; Fonterra is also transporting water from a nearby factory to the city.

I've always been skeptical about Lenovo, the Chinese computer company. In 2005 it bought the PC division of IBM, a purchase that immediately made Lenovo a worldwide rival to Hewlett-Packard and Dell. But then Lenovo struggled. As the company tried to figure out how best to integrate two very different business cultures, Lenovo went through a couple of management changes, all the while losing market share in the U.S. Five years after the IBM deal was supposed to make it a global player, Lenovo still relies on China for half of its sales. And, to make matters worse, Lenovo allowed Taiwanese rivals Acer and Asustek to gain the head start in a hot new category, netbooks. Lenovo eventually got to netbooks but since the company was just an also-ran, the mini-laps didn't have the same impact on sales as the Taiwanese enjoyed.

Netbooks are yesterday's story, though, and now the Next Big Thing is the tablet. Lenovo seems to be doing better this time. It wasn't as fast as Apple, of course, but Lenovo does have its LePad, which it plans to start selling by the end of March. The company is also moving quickly into smartphones. And it's trying once again to expand into developed markets: Last month Lenovo announced a joint-venture with NEC (with Lenovo owning 51 percent) to make inroads into the Japanese market.

Will the new strategy work? It won't be easy, but at least for now there's some good news. Today Lenovo announced that profit for the quarter ended in December rose 25 percent to $99.7 million; analysts were expecting just $86 million, according to Bloomberg data.

In June, China National Petroleum formed a joint venture with a Canadian company, Encana, to develop unconventional gas projects in Canada. As Worldwatch Research Fellows Saya Kitasei and Haibing Ma write, "the deal with Encana will give CNPC a chance to gain insight from an independent gas company that has some of the longest experience with applying hydraulic fracturing and horizontal drilling to extract gas from shale formations. In this model, one hand washes the other: major oil and gas companies gain access to the technology and expertise they need to develop unconventional gas, and smaller independent gas companies get access to the sizeable amounts of capital that many have needed in recent years."

Now comes news that another state-owned company, CNOOC International, has agreed to pay $1.08 billion in cash for a one-third stake in a shale gas project in south Texas owned by Oklahoma City-based Chesapeake Energy. Like PetroChina's Aussie deal, this Texas investment is not just about a short-term boost to supply from developing unconventional gas reserves overseas; it should also help the Chinese achieve their bigger goal, developing unconventional gas reserves at home.

American readers might be puzzled, asking who knows or cares about a second-tier event like the Commonwealth Games. Indians do care, though, and they long ago pointed to Delhi 2010 as India Shining's answer to China's success in staging the 2008 Olympics. This would be an event showing how India had overcome its corruption and mismanagement demons. The current failure therefore is about more than just whether some athletes don't show up because of reports there's poop on the walls in the living quarters. Here's what Economic Times of India columnist Sudeshna Sen writes: "The disaster is economic and political. A setback to the country's economic future , its geopolitical standing, its clout in places like UN and G20, et al. I don't care what the Sensex is doing -- we're heading straight into Christmas bonus time when international traders need to spice up their earnings -- the games disaster is going to make life very, very difficult for any politician, businessman, corporate, investor or diplomat in the future. Every single overseas investor who is being wooed for trillions of dollars to invest in India's infrastructure will think thrice. Forget China and the Asian Games. Dear everyone, India is no longer considered in the same league as China, whatever we may wish to think."

But China has plenty of corruption problems, too. And there's no shortage of inept Chinese officials. So why does China succeed where India fails? Here's one theory. In China, which executes more people than any other country, high level officials who screw up badly may face the death penalty if the country becomes an international laughing stock because of their actions. Consider the former head of the State Food and Drug Administration, Zheng Xiaoyu, executed in 2007 after a series of Made-in-China scares involving tainted food and drugs. Two people implicated in the tainted milk scandal, which left several children dead, thousands of others sickened and countries around the world shunning Chinese dairy products, were executed last November.

India, to its credit, rarely imposes the death penalty. But it rarely imposes any other penalties, either. The notoriously slow Indian legal system, where cases can languish for decades, makes it easy for corrupt officials to go ahead without any fear of punishment.

The era of good feeling didn't last long. Less than a month later, Sino-Japanese relations are at their worst point in years. Beijing has cut senior-level government contacts and Japan's top spokesman has warned against "extreme" nationalist sentiment. The two sides are fighting over Japan's detention of a Chinese shipping-boat captain following a Sept. 7 collision near islands in the South China Sea administered by Japan but also claimed by China and Taiwan. My colleagues at Bloomberg News report investors in Tokyo are nervous the fight could hurt Japanese companies that do business in China. "There's a possibility Japan would try to implement sanctions on China, which would be bad for related companies in Japan," Daiwa Securities Capital Markets general manager Kazuhiro Takahashi told Bloomberg.

I don't see that happening. Japanese Prime Minister Naoto Kan's government last week declared war on currency traders, intervening in the markets to strengthen the yen for the first time in six years. That yen battle is far from over, and the fortunes of Japanese exporters like Sony, Honda and Toyota are up in the air as it plays out. The last thing the Japanese need now is to open a second front and invite Chinese retaliation against Japanese exporters. The Chinese captain is currently scheduled to be in detention until Sept. 29. Chances are, he'll be on his way back to China soon after that.

But the Chinese company is making progress in overcoming opposition in that market, with the Indian government easing up on its ban. On Monday, Indian operator Tata Teleservices said it is buying 3G equipment from Huawei. This comes just a few weeks after Huawei announced an earlier deal with the Indian operator to provide CDMA equipment in Mumbai.

Indian security concerns aren't limited to Huawei and other Chinese companies, of course. Look at what RIM has had to go through in order to keep New Delhi from kicking the BlackBerry out of India. http://www.bloomberg.com/news/2010-09-01/india-asks-rim-google-skype-to-set-up-local-servers-update1-.html Huawei's breakthrough is probably a sign that the company made enough concessions to satisfy India's security officials. It's also a sign, though, that for all the rhetoric about the threat from China, Indian companies can't afford not to do business with Chinese suppliers. As Insead professor (and sometimes Businessweek.com columnist) Anil Gupta told me a few months ago, Chinese equipment makers like Huawei enjoy a big price advantage over Western competitors. "We are talking about very competitive tech at 30% lower price; in a very capital intensive biz, that is important," he said. As Indians look to spend to fix their woeful infrastructure, "India as market becomes the most attractive for capital goods from China. And because of China's cost advantage, China becomes the most attractive supplier base." For the two Asian giants, that co-dependence could help both countries put aside their past hostilities and work together.

There's still a lot of work for China to do before it has a well-functioning banking system, though. Next up: fixing the banks owned by local governments. These banks are important because traditionally they've been more innovative and have been more willing to lend to smaller, private-sector companies. One sign of what's to come: China Daily reported last week that China Pacific Insurance, the country's third-largest insurer, is going to invest $735 million in one of these local banks, Shanghai Rural Commercial Bank. The paper also reported China's banking regulators are pushing M&A among rural credit cooperatives (RCCs). "RCCs have long been the weakest sector of the country's financial industry," the government paper said. "Financial experts estimate that nonperforming loans of the RCCs have reached 700 billion to 800 billion yuan ($102.74 billion to $117.41 billion)." Look for more news on this in the months ahead.

On Thursday, we got our answer. Unicom reported a 54 percent drop in profit for the second quarter, earning $205 million. "Terrible numbers," HSBC analyst Tucker Grinnan told Bloomberg News. One big problem: Unicom suffered from high marketing costs to attract customers to the iPhone. Apple's smartphone is popular with Chinese users - but many of them buy their iPhones on the gray market rather than from Unicom. Unicom sold 500,000 iPhones in the first half of 2010, and Chinese bought another 400,000 on the gray market, according to Beijing-based market research firm BDA China.

China Mobile, meanwhile, earlier this month reported a better-than-expected 6.8 percent increase in profit for the quarter, earning $4.7 billion. Who needs Apple? Not China Mobile.

With Obama's election and his easing of restrictions, that question became moot as the U.S. got back in the game. Now, though, the Aug. 23 ruling by U.S. District Judge Royce Lamberth halting U.S. funding for embryonic stem-cell research is a reminder of the uncertainty surrounding the issue in the States. Even if Judge Lambert's ruling is overturned on appeal, what happens if Sarah Palin, Newt Gingrich, or some other conservative Republican defeats Obama in 2012? Count on a new executive order banning research before the Inauguration Day balls are even over. There's almost zero chance of any such change in policy in Singapore, China, or other Asian countries aspiring to be centers of stem cell research.

How serious is this latest salvo from Washington? No Democrats signed the letter, and with the midterms approaching it's easy to dismiss this call by Republican senators as a stunt to embarrass the Obama administration. For the GOP, it's win-win: If Obama does nothing, Republicans can hammer the Democrats for being soft on China; if Obama intervenes, the Republicans can claim credit.

The company has been burned in the past. See its failed attempt to take over 3Com after politicians raised security concerns. Here's a suggestion for Huawei, one I've made before: Open up. The senators write in their letter that the company's founder and CEO, Ren Zhengfei, "was a member of the PLA" (the People's Liberation Army, China's military). Huawei says the company isn't connected to the PLA, but clearly people in the U.S. have their doubts. Ren, who doesn't give interviews, doesn't help matters by being so secretive. If Huawei really wants to allay security concerns and make headway in the U.S., Ren needs to take some tips from experts in crisis PR, who generally coach execs to tackle problems like these head on. CEO Ren, you need to talk to the media. (Your PR folks know my number.)