Chapter 3: The Development of Accounting Thought and Practices in China

This chapter examines the development of accounting thought and practices in China with the purpose of illustrating its relevance to current accounting policies and practices. The review indicates that changes in accounting in China did not usually occur completely and easily. Over the past three decades, while Chinese accounting has gradually moved toward the Anglo-American model, convergence has presented unique features in China. For example, the review suggests that the accounting reforms in China have been heavily government-driven and that uniform accounting systems still remain. Chinese regulators maintain a cautious attitude toward the application of fair value and professional judgment, which are essentially the center of the Anglo-American accounting system. Furthermore, Chinese accounting regulators have a different view of business combinations from the IASB and have developed alternative accounting methods for those transactions. China’s departure from IFRS reflects its politico-economic context and essentially challenges the IASB’s goal of achieving international accounting convergence. China’s approach to internationally acceptable practices is likely to have implications for the effectiveness of the imported ideas.