IN a major push towards price reform, the Chinese Government has decided to lift all price controls on coal from January 1 next year, one year ahead of schedule. Coal, which accounts for 76 per cent all China's energy consumption, is one of the last major commodities still subject to strict government price controls. Last year only about 20 per cent of China's annual coal output of more than one billion tonnes was sold on the open market and although that percentage has increased slightly this year, the sudden lifting of all price controls would still provide a significant jolt not only to the coal industry but to the economy as a whole. Inflation, currently running at around 12 per cent nationally, is expected to rise further next year as the higher cost of coal gradually works its way through the system. The Coal Ministry decided to press ahead with complete price liberalisation, originally scheduled to be phased in by 1995, after successful experiments in market reform in the eastern provinces of Jiangsu and Shandong, said the ministry's official newspaper, China Coal News. Under the ministry's plan, all major coal mines in the northeast, northwest and southwest of China will withdraw from the state allocation system, in place for more than four decades, and distribute their coal according to the needs of the market, thenewspaper said. In addition, national output will be reduced by some 70 million tonnes next year and more than 100,000 workers will lose their jobs in order to make coal more competitive in the domestic market. The deputy Coal Minister, Zhang Baoming, was quoted by China Coal News as saying coal enterprises would henceforth have to meet the needs of market economy rather than state planning quotas. ''Enterprises will have to convert from being geared solely to production to being concerned with both production and marketing,'' Mr Zhang said. Analysts said the unexpected move to drastically accelerate the pace of price reform showed the Government was serious about transforming China into a genuine market economy. ''This is probably the most important move towards price reform yet undertaken,'' said a Western economist in Beijing. It is difficult to predict just how prices will be affected next year when the controls are lifted. The current price differential between the market price and the price set by the state varies from region to region. Costs are highest in the south where little coal is mined but there is a tremendous demand from the power industry. On average the price of coal allocated under the state plan is around 70 yuan (HK$93.80) a tonne, while coal sold on the free market averages out at 160 yuan a tonne, according to industry estimates.