This paper provides some background information on coal industry transition that has occurred recently in China, and shows prospects for better transition management with a focus on employment. Using statistical data and scenario analysis results provided in existing literature, changes in coal consumption, production and international trade in China so far, and the future consumption trajectory of coal are figured out quantitatively. The paper then identifies the impact of overcapacity elimination on employment in this industry in recent years and highlights further employment reduction due to declining consumption and improved mining efficiency in the long run. The difficulties for the phase-out of overcapacity in coal production, as well as policy measures and good practices to deal with employment loss are described in terms of policy suggestions in general. Besides second-hand data gathered through literature review, visits and interviews with several Chinese experts from coal-related industries were carried out to gather additional information and hear their insights.