Salaries for domestic players would range from 20 million yuan ($2.96 million) to 44 million yuan and teams that fail to heed limits will be charged a luxury tax of 25%, Xinhua said.
Teams will not be allowed to spend more than $7 million to sign overseas players, the report said.
"We are confident in the system. It's an agreement by our clubs and investors. We are expecting to help them get reasonable control of spending," said Zhang Chi, head of the CBA's Player Development.
"Besides that, all of us want a more balanced league. Under the cap, the teams are encouraged to pay more attention to their youth training system instead of buying players."
Zhu Fangyu, general manager of defending champions Guangdong Southern Tigers, said the cap would be fair on each club.
"We all need a balanced league because the players' income will finally be affected if the clubs keep losing money," he said.
The league will re-evaluate the cap at the end of the season. ($1 = 6.7664 Chinese yuan renminbi) (Reporting by Arvind Sriram in Bengaluru; Editing by Peter Rutherford )