Go to Help > Edit Custom VM options... then add the following option:
-Dconsole.encoding=UTF-8
-Dfile.encoding=UTF-8
I'm not sure if both are necessary but it worked for me. You need to restart IntelliJ for changes to be applied.
I had already tried changing every encoding setting in Intellij, setting those options in Gradle and changing the system encoding, this is the only one that worked.
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