China's Belt and Road Initiative: from perceptions to realities in Indonesia's coal power sector

Abstract

This paper contributes to the debate on the sustainability of the Belt and Road Initiative (BRI) by analyzing Chinese investments in Indonesia's coal power sector. Insofar, scholarship on the BRI examined the role of Chinese companies “going out,” neglecting host countries' agency in shaping this initiative. This study analyses this important yet often overlooked dimension through the lens of local stakeholders. Fifteen in-depth interviews provide key insights into themes that are explored using a novel database. Results show a sharp increase in the Chinese-led financing, construction, and investments in Indonesia's coal power plants. While large State-owned enterprises spearheaded this increase, the BRI is also generating an impetus of private investments in new “instrumental” coal power plants that serve industrial parks, owned by non-energy companies. After the Paris Agreement, only Chinese, Japanese, and Malaysian institutions continued to finance coal power plants in Indonesia. However, unlike other foreign investors, Chinese companies are bringing mostly subcritical (low-end) technology, and their operations have been associated with the use of illegal labour. Overall, results show how China's export of industrial capacity and financing through the BRI is met by Indonesia's developmental attitude towards using coal and foreign investments to prioritize its economy growth over environmental and social sustainability.