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Chinese President at the UN General Assembly that China "will not build new coal-fired power projects abroad."

Chinese banks have already swung into gear. Three days after Xi's speech, the it would no longer provide financing for new coal mining and power projects outside China from the last quarter of 2021.

Xi's statement is expected to affect of proposed China-backed coal plants that are not yet under construction. Shelving these would save COâ‚‚ emissions equivalent to three months of global emissions.

This pledge from of overseas coal plants could usher in a new era of low-carbon development. But that depends on what happens in the countries where China had funneled money into coal power. Many of these places urgently need new energy infrastructure. Will China's investments here be redirected to renewable energy—or simply disappear?

Chinese support for renewables abroad

One positive sign came in the same speech to the UN, when Xi indicated that "China will step up support for other developing countries in developing green and low-carbon energy."

China's overseas energy investments grew as part of the . Launched in 2013, Xi's signature foreign-policy effort increased China's cooperation with the rest of the world through infrastructure development, unimpeded trade, financial integration and policy coordination. China has to provide finance for the belt and road initiative during the pandemic, and made up most (57%) of the country's financial support for overseas energy projects in 2020—up from 38% in 2019.

Beijing has supported wind and solar projects in more than 20 developing countries since 2013, including and . And Chinese banks and companies have also expanded their overseas investments in renewable energy over the last decade.

While the trends are positive, challenges remain. China's overseas investment policy remains guided by . This means that Beijing is supposed to let host countries determine the type of energy projects, and only requires Chinese firms to comply with .

Research shows that China's finance for coal in Asia was largely driven by . This is because the domestic policies of these countries prioritized improving energy access over reducing emissions, and coal was a cheap and proven source. Inadequate grid infrastructure and politicians skeptical of renewable energy in countries receiving Chinese investment have also hampered development. In , business leaders and politicians formed pro-coal lobby groups to influence the design of China-backed projects.

China's new pledge tells prospective recipient countries that coal finance is no longer an option. China must now promote its offer of investment in renewables. Drawing on its domestic experiences, Beijing should provide to companies willing to build renewable energy projects outside China.

Chinese energy developers are often wary of in developing countries due to their unfamiliarity with local politics. The Chinese government can help by between Chinese companies and local governments, businesses, and communities in host countries.

Over the past decade, China has supported many developing countries to increase their energy generating capacity with financing, affordable technology and quick project delivery. China has taken the first step to stop funding coal. It's now time to adopt policies that support the overseas activities of its renewable energy developers.