Governmental influences in the development of Chinese accounting during the modern era

This paper reviews the historical development of accounting in China during the modern era since 1911, dividing the period into three phases: the pre-revolution period (1911-49); the pre-reform period (1949-79); and the current period (1979-to date). Attention is focused on the development of accounting during the current period. This paper critically evaluates an important phenomenon in Chinese accounting history - governmental dominance. It reveals that there have been two forces at work during the modern era, governmental control and outside influence. In China, the state has dominated the evolutionary process of accounting despite strong external influences, e.g. from Japan in the early part of the twentieth century, from the Soviets in the 1950s, and from the West more recently. The article examines accounting developments in their social, political and cultural environment, and concludes that with the Western influence increasingly strong, particularly given the world-wide trend towards the adoption of International Financial Reporting Standards, the Chinese government can maintain its controlling power over accounting affairs for the foreseeable future.