When Xi Jinping talks about climate, he is not saving the earth. He is reshaping the global economic landscape. In his speech at the United Nations General Assembly on 24 September, the Chinese President announced a commitment to reduce net greenhouse gas emissions by seven to ten per cent from their peak by 2035, increase the share of non-fossil energy to more than thirty per cent, and expand wind and solar capacity sixfold from 2020 levels to reach 3,600 gigawatts. He also promised to expand the national carbon market, increase forest stocks to 24 billion cubic metres, and make new energy vehicles the mainstream in the domestic market.

This move is not merely an environmental policy, but a blueprint for a new phase of industrialisation. Beijing is shifting its growth engine from heavy manufacturing to a high-tech green economy, while expanding its global influence through clean energy exports. The world may refer to it as a transition towards decarbonization, but for China, green policies are a strategy for industrial development and competitiveness.

China is now integrating clean energy, electric vehicles and batteries into a single, coordinated policy ecosystem under state planning. By controlling more than 80 per cent of the global solar panel supply chain, around 70 per cent of lithium battery production and almost all rare earth metal processing, China holds the keys to the core technologies of the global low-carbon economy. The green industry not only serves to reduce emissions, but also expands economic and diplomatic influence. Over the past decade, Beijing has invested more than US$2.7 billion in the clean energy sector in Southeast Asia, leading to US$4.3 billion in green technology trade, which encompasses batteries, electric vehicles, solar modules, and wind turbine components.

China's green energy policy also demonstrates a level of discipline and consistency that is rarely seen in other countries. Cross-agency planning is carried out by the National Development and Reform Commission, the Ministry of Ecology and Environment, and state-owned enterprises under SASAC that are linked to financing institutions such as the China Development Bank and the Export-Import Bank of China. The policy is not solely related to energy, but also demonstrates the country's ability to integrate industrial, technological and financing policies into a single long-term development vision. Behind the slogan of decarbonisation lies a systematic effort to build a new development model that remains rooted in national independence and global technological expansion.

The effects of this strategy are being felt widely across Southeast Asia. As China expands its production capacity in the green sector, global prices for solar panels, batteries and wind turbines have fallen sharply. This price decline has exceeded forty per cent for solar modules since 2020. The impact is being felt directly in Southeast Asia, where projects that were previously financially unviable are now becoming realistic. In Vietnam, for example, solar installations have surged to more than 16 gigawatts in just two years. Malaysia has accelerated its solar power development to exceed 2 gigawatts, and Thailand is promoting electric vehicles as a priority industrial sector. Price has ultimately become the most universal language of diplomacy, and China is currently its interpreter.

However, technology exports almost always come hand in hand with standard goods and services exports. From inverters and energy storage systems to network control software, most renewable equipment in the region follows technical specifications made by Chinese manufacturers. Gradually, this has created a technological dependency that is difficult to change. This dependency is not political, but technological, and requires a smart policy strategy to maintain independence. In this context, ASEAN's role is crucial as a coordination platform, enabling green investment flows from outside to strengthen regional industrial capacity, rather than simply expanding the market for ready-made green products.

ASEAN has actually already taken action. Under Malaysia's leadership this year, the ASEAN Common Carbon Framework and ASEAN Power Grid initiatives have regained momentum. Cross-border investment in clean energy projects in the region has exceeded US$20 billion over the last decade, with China, Japan, and South Korea as the primary partners. However, institutional readiness still varies. Countries with strong energy governance, such as Singapore and Malaysia, can attract high-quality investment, while other countries still face challenges in licensing and policy certainty.

For Indonesia, this major trend presents both opportunities and challenges. With nickel reserves of approximately 21 million tonnes, equivalent to around 22 per cent of global reserves, Indonesia is a key node in the global electric vehicle supply chain. Chinese companies, such as CATL, Tsingshan, and Huayou Cobalt, are now operating in the Morowali and Weda Bay industrial areas, with investment commitments exceeding US$13 billion. However, most of the processing technology is still controlled from abroad. Knowledge transfer to domestic research institutions and universities is slow, while domestic component policies are still administrative in nature. Without clear policies, downstreaming could become a new form of dependency, where raw materials are processed domestically but strategic added value remains abroad.

In the energy sector, the challenges are more complex. Coal-fired power plants still account for more than 60 per cent of the national electricity supply. In comparison, renewable energy only accounts for around 13 to 14 per cent, far from the target of 23 per cent by 2025. PLN is burdened with long-term take-or-pay contracts for approximately 35 gigawatts of coal-fired power plants until the 2040s, making it challenging to accelerate the early closure of these plants. The US$20 billion Just Energy Transition Partnership financing scheme, agreed upon by Indonesia, the G7 countries and private investors, has yet to show significant progress. As of September 2025, no major projects have reached financial close. In contrast, renewable energy projects funded by Chinese development banks are progressing more quickly due to simpler lending mechanisms. The challenge now is how to balance speed with accountability.

The energy transition cannot be left to project logic alone. This change requires strong institutional coordination and a clear industrial vision. The Ministry of Energy and Mineral Resources, PLN, the Investment Coordinating Board, and the Ministry of Finance must work towards a unified policy direction. Currently, policy fragmentation has resulted in green investment being partial and unsynchronised. PLN is still caught in the dilemma of keeping electricity tariffs affordable and meeting decarbonisation targets. BKPM focuses on the value of incoming investment without ensuring quality and technology transfer. ESDM is busy with renewable energy targets but faces fiscal constraints. Without policy integration, the energy transition risks becoming a symbolic project with many ceremonies but little transformation.

This problem does not stem from foreign partners, but rather from our own domestic readiness. Green investment, wherever it comes from, is merely a reflection of the capacity of national institutions. Ready countries will use it as a path to new industrialisation, while fragile countries will use it as a source of green rent. Our challenge is not to reject foreign capital, but to direct its flow to strengthen national research, manufacturing and technology.

The government needs to make technology transfer and human capacity building key requirements in every clean energy project. Research institutions and universities must be given a role in policy design, rather than just being spectators. Fiscal policy needs to provide incentives to industries that dare to innovate domestically. If this step is taken consistently, green investment will become a stepping stone for sovereign green industrialisation.

The world is now moving towards a low-carbon economy, and China is at the forefront of this change. However, the end of this massive wave will actually impact places like Indonesia, a country with abundant resources, a thriving market, and a crucial geopolitical position in Southeast Asia. The question is simple, but decisive. Will Indonesia take advantage of this momentum to strengthen the foundations of green industrialisation, or will it merely become an extension of the global supply chain without technological sovereignty? If institutional coordination is not strengthened immediately and the national vision is not clarified, the energy transition will merely be a new face of old dependencies. We are not building the future; we are renting it.

Note: this article was published in Indonesian language by Business Insight under the title “China, ASEAN dan Hujian Hijau Indonesia” on October 10, 2025 and is available here.