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.
The governing body of world football awarded the country the FIFA Development Award for 2009 for a grassroots scheme involving one million children backed by $6 million of government cash.
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.
The sports ministry are under great pressure to improve the standard of Chinese football after a string of top Communist Party officials, including President Hu Jintao, made comments bemoaning its lowly status.
The remarks came last year, just before the first arrests in the ongoing nationwide police probe into match-fixing in the professional game.
The investigation has so far resulted in corruption charges being laid against the former head of the Chinese Football Association (CFA), a World Cup referee and more than 20 other officials.
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