China is the world’s largest producer and consumer of coal, and an increasingly important participant on the international coal market. Paradoxically, while China is now a major coal exporter, it is also a coal importer. As China commits itself to further economic reform and increased involvement in the global economy, its coal industry faces major challenges of rationalisation and structural reform. Coal has been significantly affected by the recent slow-down in the Chinese economy. These pressures have provoked a major overhaul of the State coal administration, radical cuts in production, the restructuring of key state-owned coal mines and the planned closure of over 25,000 small mines. Coal will, however, remain the dominant energy source in China for the foreseeable future despite the strenuous efforts of the authorities to diversify the energy mix. The environmental consequences of continued heavy use of coal raise important issues not just for China but for all those committed to tackling climate change. This timely desktop report on coal in China, prepared by the Member companies of the IEA’s Coal Industry Advisory Board, examines the overriding importance of coal in China’s energy mix, recent technological developments and market trends, and the major challenges which China now faces.