China's industrial watchdog Friday urged local governments across the country to make an "overall" liquidation on coal mines that are under construction so as to step up the structural adjustment of the coal industry.

The National Development and Reform Commission (NDRC) and related departments announced policies on Friday in this regard, said an official with NDRC, who asked to be anonymous.

"Construction on coal mines that are being built in violation of concerned regulations should stop immediately and violators will be punished," said the official.

"Construction on coal mines that are not in line with the country's concerned policies and development plans must stop," he noted.

Coal mine projects that have not obtained opening approval, mining license and environment evaluation report should renew submission report and get approval before undergoing further construction, the official noted.

NDRC statistics showed that the country's investment in coal mines grew an average 40 percent from 2003 to 2005.

Currently, China's coal inventory is surging rapidly and coal prices is tending to fall.

"This indicates some new changes in the coal market," the official said, pointing out that the coal industry faces increasing overcapacity and oversupply pressure in the 11th Five-Year Plan (2006-2010) period.

Meanwhile, he added, the industry's accumulated deep-rooted problems have not been solved fundamentally.

Currently, small-sized coal mines account for 88.3 percent of the country's total and the mining mechanization is only 42 percent.

Besides, the industry has been plagued by increasing and frequent coal mine accidents and environment pollution and deteriorating ecological problems.

"The industry should grasp the favorable opportunity provided by the current oversupply situation to accelerate the adjustment of industrial structure so as to realize the goal of long-term high quality balance of coal supply and demand," he said.