China has cancelled 67% of the overseas coal power capacity it planned to build in 2021, fulfilling a major climate pledge made by President Xi Jinping, according to a report released in September 2026 by the Centre for Research on Energy and Clean Air and the People of Asia for Climate Solutions. While Beijing has halted 61.5 gigawatts of planned international projects, energy experts warn that private Chinese companies are utilizing regulatory loopholes to fund new overseas coal plants, particularly for heavy industries in Southeast Asia.
China’s 2021 Pledge and the State of Overseas Coal
Addressing the United Nations General Assembly in 2021, Chinese President Xi Jinping pledged that Beijing would stop funding overseas coal power plants. The commitment marked the first time China extended its emerging climate ambitions beyond its borders, positioning the world’s largest annual carbon dioxide emitter as a key infrastructure partner for the Global South.
A joint report published in September 2026 by the Centre for Research on Energy and Clean Air (CREA) and the People of Asia for Climate Solutions (PACS) reveals that Beijing has successfully canceled 67% of its planned overseas coal capacity. According to the findings, halting these projects prevented 6.4 billion tons of lifetime carbon dioxide emissions. “This marked the first time Beijing was willing to extend its emerging climate ambition beyond its borders,” said Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub.
Regulatory Loopholes and Captive Coal Expansion
Despite the cancellation of numerous projects, coal expansion persists due to exemptions within the original policy framework. Syahdiva Moezbar, an industry analyst with CREA in Jakarta, notes that the moratorium’s specific wording still permits private Chinese companies to invest overseas.
Private investors are increasingly financing “captive coal” plants—facilities built specifically to power heavy industries like nickel and aluminum smelting without connecting to national electricity grids. Indonesia has emerged as the primary hub for these developments, accounting for 17.1 gigawatts of planned China-backed coal capacity. Vietnam and Pakistan follow at a distant second and third, each holding less than 4 gigawatts in the works, according to the CREA and PACS report. “When commercial interests take precedence over China’s broader green development commitments and the world’s climate security, the benefits of China’s remarkable clean-energy leadership are undermined,” said Xiaojun Wang, PACS’ executive director.
Energy Shocks and Coal Demand in Southeast Asia
Geopolitical conflicts and supply chain disruptions have complicated the clean energy transition in Southeast Asia, a region that accounts for nearly 20% of the world’s growing energy demand through 2035. Following energy shocks driven by the Russia-Ukraine war and the Iran war, the closure of the Strait of Hormuz heavily impacted the region’s fossil fuel imports.
Government bodies across the Philippines, Thailand, Indonesia, and Vietnam engaged in energy triage by ramping up coal usage to survive the crisis. While regional governments are actively scaling up investments in rooftop solar, electric vehicles, and nuclear power, analysts caution that grid reliability concerns could provoke a resurgence in fossil fuel reliance. “The growing desire among countries in Southeast Asia to secure reliable energy supplies could bring about another round of coal fever,” Li Shuo said, adding that the trend will continue to test the resolve behind Beijing’s moratorium.
Did you know? China remains the global leader in producing wind turbines, solar panels, and electric vehicles, consistently setting records for massive rollouts of renewable energy even as regional demand for fossil fuels fluctuates.
Frequently Asked Questions
Did China stop funding all overseas coal projects?
China has canceled roughly 67% of the coal power capacity it planned to build abroad in 2021, following President Xi Jinping’s pledge. However, private Chinese companies continue to invest in overseas coal projects, particularly captive coal plants powering heavy industries in countries like Indonesia.
What is “captive coal”?
Captive coal refers to power plants built exclusively to supply electricity to specific heavy industrial facilities—such as nickel and aluminum smelters—rather than feeding power into a nation’s public grid.
Which countries are receiving the most continued Chinese coal investment?
According to research from CREA and PACS, Indonesia leads with 17.1 gigawatts of China-backed coal capacity planned, followed by Vietnam and Pakistan with under 4 gigawatts each.