Since reform and opening-up in 1978, the coal industry in China has been developing rapidly. This article identified major factors affecting the growth of China's coal industry, immediate targets, economic policies, as well as structural reforms of the sector. Authors have divided its developing process into three stages: rapid growth of coal industry (1979-1992); close-down of small-scale coal mines (SCMs) (1993-2001); resource consolidation (2002-present). At the first stage, led by the 'two-leg walking' strategy, SCMs grew significantly, which eased the pressure of energy shortage. From the transition of planned economy to market economy, major state-owned coal mines (MSCs), which were not consistently profitable, would have to learn how to withstand severe competitions and survive. As a result, the central government took several measures to try to keep them alive. This situation was not changed until 2001. Large-scaled coal mine groups were then established by the government when China entered the WTO. MSCs were encouraged to merge with others to form a certain scale, as a way to compete with giant overseas. So a trial was firstly implemented in Shanxi province. Crown Copyright (C) 2011 Published by Elsevier Ltd. All rights reserved.