Chapter 2 enrironmental influence on accounting development


Some Chinese points of view



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Some Chinese points of view

In Chinese literature there are also some articles discussing China's accounting environment and China's accounting characters. The hottest topic in China’s accounting research is the issue of the Chinese accounting theory and practice with distinctive Chinese characteristics. In December 2000 the Accounting Society of China conducted a seminar, whose topic was accounting theory and method systems with distinctive Chinese characteristics. In the seminar, the Vice Head of the Department of Administration of Accounting within the Ministry of Finance, and also the secretary-general of Accounting Society of China, Liu Yuting concluded, "the environmental influencing factors on characteristics of China's accounting are political and economic environment, legal and institution environment, education developing level and culture environment" (ASC, 2001:52). And Zhu (2001:23) considered that "Under the multiple influence of China's political, economic, legal and cultural environment, the characteristics of Chinese accounting, or the feature of the model of socialist market economy should primarily demonstrate these aspects, that is its theoretical basis is the theory of Deng Xiaoping's, its political direction is the socialism, its accounting system must be centralized, its accounting work must be continuously controlled by the Ministry department of State Council, and its unity of state accounting will be realized by constrain of law and regulation as well as ethic system and norm of socialist ideology". Zhu's argument has got consensus in the special seminar.

This seminar set the basic tone of China’s accounting development both from the Chinese government and Chinese Accounting Research Society. It implies that China’s accounting is still under the tight control of the CCP and Chinese government. Political ideology is an ever going highlight during China’s accounting development.

The literature both in international and in Chinese reviews reveal that environmental factors such as culture, economic, ideology and politics are highlighted as the influential factors on China’s accounting development. While legal, educational and professional factors are not recognized as the dominant factors within the Chinese context.

Culture’s influence on China’s accounting is conceived to include China’s accounting theory, accounting system and accounting institution. But this conclusion is based on both Chinese traditional culture and modern culture, two aspects without considering the other factors. Moreover Zhang (1992) referred to the state theory, the class theory, Marxism, and the Cultural Revolution as modern culture. This classification is quite susceptible; it would be more suitable to classify these factors into political philosophy. Besides, traditional Chinese culture may play a very important part in shaping Chinese accounting methods, but for modern Chinese accounting there is no evidence to show culture’s important role. Thus it is unilateral to arbitrarily conclude that culture plays an important part in determining the accounting system. While quite obviously, various economic factors’ influence on accounting can be found in Chinese context, the evidence comes mostly from contemporary China’s economic reform. Economic factors determine the contents of China’s accounting system.

It is worth note that political philosophy and Chinese politics’ influence on China’s accounting have permeated into every aspect of China’s accounting development since 1949, and much evidence can be found in literature.

Based upon the literature review on influential factors on China’s accounting development, it can be concluded that there are still some strong links between politics and accounting in China. As Hilmy concluded, “there is a close link between political philosophy and its impact on economic goals, structure and growth. Accounting provides the indices and parameters to appraise such a relationship” (Hilmy, 1999:505).

As to what extent and to what strength each factor’s influence has on China’s accounting at different periods, and whether there are other factors that have not been recognized, still need further exploration. In order to have an insight on China’s accounting development, it is important to have a good understanding on China’s political and economic structure first. Just as Enthoven (1987:209) states: "It is hard to comprehend Chinese accounting without a clear understanding of both its historical and recent (since 1949 and 1979) eco-political developments. These historical trends are extremely significant in trying to grasp the current Chinese accounting system, while Chinese accounting has its own characteristics resulting from these developments. The concept of social consciousness is a line that runs through Chinese accounting". The next chapter will give an introduction of background of China’s accounting development.


1 Cited from Shalin,1999:11

2 Cited from Shalin,1999:19

3 Cited from Shalin, 1999:19

4 The culture of opposition between Yi and Li resulted accordingly in discrimination against merchants in Chinese history. As a result, the recognition of and emphasis on the importance of profits in accounting world would be criticized publicly.

According to Chinese philosophy, a good understanding and relationship based on mutual trust does not require legal provisions in order to stipulate the responsibilities and obligations.







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