China has previously invested heavily in a small pool of elite players but that has failed to raise its status in world football and the country missed out on the World Cup finals again this year.
"The shortage of reserve talent is the key reason for the low level of the sport in China," Liu (pictured) told Thursday's China Daily. "We have already realised the problem and started to focus on youth development."
Despite a population of 1.3 billion, China had only 708,754 amateur and youth players compared to 738,800 from 41 million in England, according to FIFA's "Big Count" of 2006.
One element of the new drive will be "The Great Wall Cup of Beijing", an annual youth tournament which hopes to attract teams from all around the world to the site of the 2008 Beijing Olympics.
"Promoting an international youth soccer tournament is a way to give local youngsters opportunities to communicate and practice with international teams so they can improve their techniques," Liu added.
