Abstract: Under the background that reducing overcapacity has become one of the primary tasks of supply-side structural reform, the paper discusses the influence of government subsidies on coal enterprises' overcapacity and its mechanism from the perspective of policy.Based on the data of 40 coal enterprises listed in Shanghai and Shenzhen A-shares from 2009 to 2019, the Cobb-Douglas production function is used to calculate their capacity utilization rate, and the multiple regression analysis method is used to explore the relationship between government subsidies, technological innovation and coal enterprises overcapacity.The results show that the problem of overcapacity in China's coal industry is still serious, government subsidies are promoting the overcapacity of coal enterprises, and technological innovation can weaken this positive effect.Furthermore, the Richardson investment expectation model is used to measure the degree of overinvestment of coal enterprises.Through the establishment of an intermediary effect model analysis, it is found that overinvestment has played a part of the intermediary role in the process of government subsidies promoting coal companies' overcapacity.Therefore, it is proposed that the government can improve the capacity utilization rate of coal enterprises by establishing a subsidy mechanism oriented by technological innovation, clarifying the functional boundary between the government and the market, and building a perfect local government performance appraisal system.The conclusion has a certain reference significance for promoting the early realization of high quality development of China's coal enterprises.