Cemetery managers have cheated thousands of investors out of their savings by selling them non-existent tombs with the promise that they would appeciate sharply in value.

Four managers have been jailed for up to three years for a swindle in which more than 2,400 people bought and hoarded “ash repositories” on a Buddhist tower. The cemetery was fined 50 million yuan (£3.25 million) and most of the victims lost all of their savings, according to the People’s Court Daily.

About 700 investors stormed the provincial government building in protest.

Chinese beliefs and superstitions about the afterlife, ingrained filial piety and a new-found wealth have fuelled a lucrative but poorly regulated funeral industry in a country where land is increasingly at a premium.

The Government has belatedly introduced measures to protect investors who speculate in so-called tomb futures. The new regulations, drawn up by the Ministry of Civil Affairs, specify that cemeteries will be allowed to sell grave plots only to families who can produce a death certificate. Cemeteries that break the rules are liable to a fine of between 100,000 and 500,000 yuan.

News of the new rules governing graveyards emerged just before Tomb Sweeping Day, which falls tomorrow and is the date when families traditionally tend to the graves of their ancestors, burning paper models of items needed in the afterlife, placing offerings such as fruit and flowers and often taking a picnic at the tombside.

The regulations also aim to prevent families from burning paper offerings that are “in poor taste”, such as paper Viagra, paper mistresses or paper limousines.

So far the Government has had difficulty curbing the sales of such items because of high demand, and each year there are thousands of fires at grave sites as family offerings burn out of control.

An official at the Fuzhou Xiaoshu Hill Tombs in southeastern China said: “I think more than 70 per cent of buyers are purchasing tombs for their own use. Only a few people are speculating and they are not the mainstream.”

He explained that many families felt comfortable if they can purchase a little plot with a good view and good fengshui (geomancy).

The official said: “When someone dies then his relatives won’t have much time to choose but while he is alive then they can compare and decide slowly. The elderly also feel at ease if they see where they will be after death.”

It is also a question of face – as well as location, location, location. He said: “Some rich people or officials of a certain rank like to find their tombs for themselves because then they can be confident that their afterlife won’t be in a bad location.”

China’s emperors would begin building their tombs as soon as they ascended the throne to ensure the grandest style and best position for the afterlife.

Finding a good plot may not, however, guarantee a peaceful afterlife. One cemetery in the wealthy southern province of Guangdong has installed 43 closed-circuit television cameras to try to catch tomb robbers who have stolen the ashes from some graves and held them for ransom from their families. Chinese regulations require that the dead be cremated – part of a decades-old campaign to preserve scarce agricultural land.

Gone but not forgotten

Mexico, November 1-2
Families decorate graves with flowers; sugar skeletons and skulls are eaten to celebrate the cycle of life and death

Japan, August 13-16
O-Bon festival is a traditional period of prayer for souls of ancestors. Paper lanterns are lit outside houses and traditional dances performed

Haiti, November 1
Voodoo practitioners hold raucous parties at tombs to pay respect to guardian of dead

Austria, November 2
Tyrolean families bake cakes for the souls of the dead, leaving them in a heated, lit room through the night

Source: HaitiXchange; Mexonline.com; gojapan.com; stpetersnottingham.org

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