Coal was a source of energy in pre-industrial China (as described by Marco Polo in the 13th Century), especially in the mountains of Shanxi/Shaanxi. The problem is that the most developed parts of China were in the Yangtze Delta, some 1000 km away; and the major areas of steel production were in Hankou, 500 km away (the Hankou region does have some coal, however). Beijing is around 250 km away, with few riverine connections.
We have to remember, however, that the Shanxi region in Ming and Qing times was China's banking capital, so it is not inconceivable that industrialization could have happened there as well, with rich bankers providing capital for industrial production.
Now the Grand Canal running North-South from Kaifeng to Yangzhou can help matters - but only to an extent. There is an argument that the economically developed areas of premodern China were too efficient, and labor costs too low to justify any of the industrial inventions that later happened in Europe. In such a case, the cost of having to transport all that coal south would provide a near-insurmountable barrier to early industrialization.