China's cleantech stocks jump as investors bet on US policy shift

By Colleen Howe

BEIJING, Nov 5 (Reuters) - China's cleantech stocks surged on Thursday as investors bet a Democratic-controlled US Congress would step up support for clean energy, benefitting industries where Chinese companies are major global suppliers.

Democrats' midterm triumph could pave the way for reviving renewable tax credits and increasing scrutiny of efforts to roll back emissions regulations.

"The US is a large and highly profitable market for solar and energy storage, while Chinese suppliers dominate both sectors. Any reduction in trade barriers could create meaningful upside," Morningstar analyst Cheng Wang said, though he added gains were driven more by sentiment than concrete proposals.

The US maintains 50% tariffs on Chinese solar products under Section 301, which targets unfair trade practices, and 25% on Chinese grid batteries.

Shanghai's STAR new energy index .STARNE rose 6.46% in morning trade. Renewables stocks also rallied in the US after the Democratic sweep, seen as a referendum on Trump, who has criticised wind and solar for being unreliable and expensive.

Inverter manufacturer Sungrow Power 300274.SZ gained 7.45%. Reuters previously reported Trump's administration could ban foreign inverters over concerns about grid interference from China.

Panel manufacturer Trina Solar 688599.SS rose 5.51%, while polysilicon producer Daqo New Energy , which has faced restrictions on exporting to the US over forced labour allegations, jumped 9.87%.

Battery manufacturer CATL 300750.SZ gained 5.17%.

If history is any guide, the rally could have further room to run, Citi analyst Pierre Lau said in a note, pointing to the aftermath of Joe Biden's 2020 victory, when clean-energy stocks gained for months.

Jefferies analyst Alan Lau said cleantech was also benefiting from a repositioning away from AI. But he cautioned renewables support may not mean a substantive opening for Chinese exporters.

"The Biden administration launched lots of AD/CVD (anti-dumping and countervailing duties) and Section 301 investigations on Chinese products," he said.