(Reuters) - Chinese Football Association (CFA) president Chen Xuyuan has said introducing salary caps will help its professional leagues avoid "complete failure" and warned clubs of penalties if they violate the rules coming in next season.
The CFA will introduce a salary cap for the top-flight Chinese Super League (CSL) starting in the new season as part of measures aimed at limiting spending and ensuring sustainable growth.
Salaries for domestic players would be capped at 5 million yuan ($770,000), while those of foreign players cannot exceed 3 million euros ($3.6 million), Xinhua news agency reported.
Clubs will be allowed to spend up to 600 million yuan per year on salaries, with a maximum of 10 million euros on foreign players, the report added.
"We have to take measures to curb the investment bubbles in the leagues and promote the healthy and sustainable development of professional football," Xinhua quoted Chen as saying in an interview.
"CSL club expenditure is about three times higher than Japan's J-league. But our national team is lagging far behind. The bubbles not only affect the present of Chinese football, but also its future."
Chen said any concealment or contract forgery by a club will result in them being relegated and the players involved banned.
The CFA chief added that Chinese football will not view the naturalisation of players as a long-term strategy for success.
Four naturalised players are in the Chinese team's two-week training camp starting on Sunday in Shanghai.
"Naturalised players who meet the related requirements will still be welcome, but it won't be the mainstream in Chinese football's development," Chen added.
Meanwhile, CSL side Beijing Guoan are likely to keep their 28-year-old name despite new regulations requiring clubs to remove references to sponsors or investors in team names.
CSL champions Jiangsu Suning have already said they will become Jiangsu FC with Guangzhou Evergrande changing their name to Guangzhou FC and their local rivals Guangzhou R&F now known as Guangzhou City.
"The Sinobo Group's purchase of Citic Guoan shares in the club is underway, which will keep the club name as Beijing Guoan," Chen said.
($1 = 6.5070 Chinese yuan renminbi, 0.8401 euros)
(Reporting by Shrivathsa Sridhar in Bengaluru; Editing by Hugh Lawson)