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With a yearly production of three billion tons, China's coal industry will face serious over-production problems in future, warned Pu Hongjiu, vice president of the China National Coal Association (CNCA), on Tuesday.

China's coal demand is expected to reach only 2.5 billion tons in 2010, much lower than the current output, he said.

"Increasing coal output and slowing demand, along with soaring production costs, will impose great pressure on the industry," said Pu.

CNCA statistics show the industry realized fix asset investments of 300.5 billion yuan in the 10th Five-year Plan period (2001-2005), 55.5 billion yuan more than in the previous 40years.

Coal demand in the power generation industry is expected to see a moderate increase in 2007, and the country's total coal demand next year will increase just 150 million tons, said Pu.

Meanwhile, the government had cancelled tax rebates and levied a tariff on exports, which discouraged exports, increased domestic supply and worsened the overproduction problem, he said.

Figures show in the first ten months, China exported 52.5 million tons of coal, 13.6 percent down from the same period last year, and imports reached 23.4 million tons, up 42 percent.

CNCA statistics show China's coal output was 1.37 billion tons in 1996, and the figure soared to 2.15 billion tons in 2005.

(Xinhua News Agency November 29, 2006)