The Chinese government is to limit the use of imported coal with more than 16 per cent ash and 3 per cent sulphur from January 1, 2015 in a bid to improve air quality, especially in cities such as Beijing and around Shanghai.

At the same time, China is moving to force power utilities to slash coal import volumes, also with the stated aim of improving air quality, although this move will primarily give China's local coalminers a lift.

According to an analysis by Macquarie Bank, consultant Wood Mackenzie has indicated the ban could affect more than half of Australia's thermal coal exports to China, although the ban is also likely to hit Indonesian coal.

''We all trying to sort out what is going on,'' one large coal exporter said. ''The information has been fairly fluid. I'm not sure what the endgame is beyond driving more domestic production.''

The Minerals Council of Australia said exporters could adapt to the changes.

As much as a quarter of all coal shipped through Newcastle goes to China, up from less than 10 per cent a few years ago. Coal shipped through the port - the largest coal export port in the world - is running at around 170 million tonnes a year at present.

Australia exports an estimated 49 million tonnes of thermal coal a year to China,and a large part of this could be at risk with the ban.

Industry sources said the Chinese government moves were aimed at propping up its domestic coalminers as well as assisting its power generators amid the slowdown.

Part of the measures disclosed on Tuesday include slashing China's coal import volumes by 50 million tonnes over the balance of this year alone, which could hit the Australian industry hard, they said. ''Both the miners and the power companies are doing it hard in the slowdown, and the measures are aimed at giving both some room to manoeuvre,'' one industry source said.

''[Australian coal exports are] typically around 5500 kilocalories and 24-25 per cent ash. So we've got big problems,'' Bruce Jacques of IHS McCloskey Coal said. Some coal producers may be able to reduce the level of ash by washing the coal to meet the tighter controls, although this involves additional cost and many producers would be unwilling to pursue this option, he said.

''It is a quality and a quantity approach,'' Mr Jacques said of the new controls. ''If one doesn't get you the other will.''

Australian exporters had been wary before the decision to impose the ban, since it appears to apply irrespective of the energy value of the coal, and gives exporters of low-energy coals such as lignite a free kick.

''The situation has been fairly fluid the past few hours,'' one coal producer said as the initial reports of the new rules circulated, with staff seeking to verify and clarify the extent of the Chinese government's decision.

The Minerals Council of Australia hosed down any potential impact on exports.

''There is nothing in the information … to suggest that Australian coal exporters will be disadvantaged and we are confident that we can meet the proposed specifications,'' Minerals Council executive director of coal Greg Evans said.

''We disagree with the assertion that the coal import restrictions proposed by China's National Development and Reform Commission will hit Australian exporters hardest. There is no evidence to suggest that Australian coal exports to China would be significantly affected if this proposal became law,'' he said.

This article first appeared in the Sydney Morning Herald