Coal is the dominant source of energy in Asia, and China and Indonesia are itsleading producers and consumers. Understanding the interconnection betweentheir coal industries also illuminates their shifting geopolitical relationship, whichhas become stronger through resource-based economic ties despite the occasionalcontest over issues on sovereignty. China and Indonesia have maintained a hugeand mutually beneficial coal trade for many years, and this coal-based relationshiphas been nationally and globally influential. However, the China–Indonesia coaltrade dropped precipitously in 2015 when shifting political and economic contextsdrove both countries to decrease their levels of exchange. China's domestic airpollution and climate mitigation policies led to a large decrease in demand forcoal, while Indonesia introduced new policies, including new restrictions oncoal exports, to promote economic development and nationalization of its energyindustry. However, the changing incentive structure resulted in new directionsfor the China–Indonesia coal relationship, further strengthening the economicties that undergird their geopolitical relationship. The China–Indonesia coalrelationship is no longer a consumer–producer relationship defined by trade andexport, but is instead shifting toward Chinese investment in coal productionwithin Indonesia. China is becoming more involved in coal-related infrastructurein Indonesia, especially electric power generation. These new directions willbe critical for understanding the environmental and economic impacts of coal.