World News: China's Factories Point to Rebound
SINGAPORE -- Asia's manufacturing sector appears to be on the mend while inflation remains tame, giving policy makers room to take action to stimulate their economies if global conditions deteriorate.</br></br>Data released Monday showed China's manufacturing and services sectors both picked up in November, providing a positive driver for regional and global growth.</br></br>But analysts warn of the risks posed by the U.S. "fiscal cliff" -- a package of tax increases and spending cuts due to take effect in January absent action by U.S. lawmakers, which could push the U.S. economy into recession.</br></br>Frederic Neumann, co-head of Asian economics research at HSBC, said that scenario would hit growth in Asia -- particularly in trade-dependent economies such as South Korea, Taiwan, Singapore, Thailand and Hong Kong.</br></br>While Asian governments, particularly China's, likely would respond with fresh stimulus, "this would take time to gain traction and thus be too late to prevent a shakeout among the region's smaller economies in the first quarter," Mr. Neumann said. "Even a sea of liquidity is no firewall against faltering demand and shattered confidence."