China's football association (CFA) warned Tuesday that it would punish teams who flout its transfer rules, following reports two clubs are battling to sign striker Pierre-Emerick Aubameyang.

Chinese Super League (CSL) champions Guangzhou Evergrande are reportedly prepared to pay at least 70 million euros for the Borussia Dortmund attacker, trumping an offer by rivals Beijing Guoan.

The CFA last year introduced a 100 percent tax on incoming foreign transfers in an effort to encourage Chinese clubs to invest on local youth players, but media reports suggest both clubs are prepared to either incur the penalty or find a way to circumvent it.

Evergrande denied they were pursuing Aubameyang -- without explicitly naming him -- but that was not before the CFA made plain its anger.

The CFA too did not name the striker but made a clear reference to the 28-year-old and Evergrande and Guoan.

"The news of two clubs suspected of engaging in a bidding war on a transfer has caused social concern," it said in a statement, adding that it had asked them to explain.

"In the next step of the investigation, if any violations are found, the Chinese FA will handle this seriously according to law and regulation."

Stressing that the 100 percent surcharge was applicable in the current winter transfer window and in the year ahead, the CFA warned: "We will watch closely every club's transfer movement in the new season and increase scrutiny.

"The Chinese FA will seriously investigate and will not tolerate any violation or any loophole-exploiting behaviour."

The hard-hitting missive is the latest salvo in the Chinese government's war on "irrational" overseas investments -- a word also used in the CFA statement -- as football authorities attempt to rein in CSL clubs who have shelled out record amounts for foreign stars.

A year ago, Shanghai SIPG smashed the Asian transfer record to sign Chelsea's attacking midfielder Oscar for 60 million euros.

However, with the 100 percent levy in place last summer, Tianjin Quanjian secured French striker Anthony Modeste from Cologne on a two-year loan deal, rather than buying him outright.

Dortmund have dismissed the Aubameyang transfer talk as speculation, but Chinese media has been filled for several days with multiple reports that a deal has been reached for him to move to Fabio Cannavaro's Evergrande after the Bundesliga season.

Soon after the CFA statement, Evergrande hit out at "the purely fictitious" reports and threatened legal action.

"We will, as we always have, strictly follow the FA's regulations on transfers," the club said.

"We reserve our legal right to pursue those responsible for the inaccurate reports."

Source: AFP