Having already slapped an 80% tariff on Australian barley and banned meat from four abattoirs, possibly because of its support of an independent inquiry into the origins of the COVID-19 virus, China seems to be focusing on the nation's second largest export - coal.

A meeting of China's National Development and Reform Commission is believed to have instructed the power stations to avoid Australian product.

While China has denied there are any links between the potential cuts to coal imports from Australia because of its support of the COVID-19 inquiry, its diplomatic language at its displeasure has prompted many analysts to believe it will go ahead and hit Australia's exports.

An industry insider, who was not authorised to speak publicly on the matter, told The Sydney Morning Herald Beijing was also encouraging Russian imports over Australian imports.

"The China-Australia situation is not good, and traders are getting the message very loud and clear from the government," he reportedly said.

Wood Mackenzie's Asia-Pacific head of coal Rory Simington backed this up saying five major state-owned utilities were said to have been directed to stop buying cargoes of Australian thermal coal and look to buy Russian and Indonesian coal instead.

Nationals leader Michael McCormack said the government was "very concerned" about restrictions being put on Australian coal.

However, he said China "needs" Australia coal.

"Of course we're very concerned by it," Mr McCormack told ABC News Breakfast this morning.

"But we have a two-way relationship with China.

"China needs Australia as much as Australia needs China, and we want to make sure that whatever we do is in a careful and considered way.

"That's why I know [Trade Minister] Simon Birmingham and our Department of Foreign Affairs and Trade officials are working very closely with our Chinese friends and diplomats in making sure that we work through this in the way that you would expect the Australian Government to operate.

"We want to make sure that our coal exports have a destination.

"China has long been a customer of ours. They know the quality of our coal, of our iron ore and other resources. For their steel mills, for their energy needs, they're going to require Australian coal."

Labor frontbencher Joel Fitzgibbon, who represents the coal rich area of the New South Wales Hunter Valley, said the government should seek to repair the relationship with the Chinese rather than offending the nation's largest trading partner.

"We were always going to have an inquiry so we didn't need to be out there in front, offending the Chinese," he told ABC TV.

"And if we hadn't done that, we might not be having some of the diplomatic relationship troubles we're having at the moment."

Customs clearance times for Australian coal by Chinese ports are in some cases blowing out to more than 60 days last year when the China-Australia relationship had a major convulsion.

The ANZ bank said in its Commodity Update newsletter that imposing restrictions was part of NDRC efforts to stabilise coal prices in China.

In 2018 it specified nine measures to pull prices back to a reasonable range between RMB500-570 per tonne.

"Actions included increased scrutiny of excessive coal use in key regions to cut coal consumption and stronger market inspections to avoid price gouging and speculation," it said.

"These are not the first restrictions on the industry. In 2019, reports emerged suggesting total bans in imports were being implemented.

"Even so, this didn't result in overall volumes falling. China's total thermal coal imports in fact rose 4.7% to 225 million tonnes. The growth in Australian sourced imports was lower at 0.5%."

Australia sends between 20-25% of both its total coking and thermal coal exports to China.

Of the 225Mt of thermal coal China imported in 3029, 46Mt came from Australia.

For coking coal, China imported 75Mt last year, with 31Mt from Australia. However, imports were particularly strong in the first quarter 2020.

Total coal imports between January and April are up 30% year-on-year, supporting the idea that the latest restrictions are more about reducing the overall impact on the domestic market.

"To compound things, Australia's other exports markets are depressed," the ANZ report states.

"While we don't think the move by authorities in China is specifically aimed at Australia, it is likely to weigh on coal prices somewhat.

"The Newcastle coal price is wallowing around US$50/t. We see little upside, while these measures are in place.

"News suggests the restrictions are targeted at thermal coal imports. But, as in the past, we suspect coking coal imports will be caught up."