China's International Accounting Rules

China is currently the world's most potential market for consumer goods. Its average annual GDP growth rate of nearly 10 percent for the last 10 years is the strongest among other major economies around the world. This is mainly due to the increase in manufacturing investment from foreign companies over the years because China is full of resources and cheap labor.

With joint ventures, foreign companies were able enter China's market easier. It really helps to have a local partner that is already familiar with the market and know the laws of doing business in China. Also, with a joint venture, it is much less capital intensive since the local partner will be contributing to the business.

Compared with other nations, China's taxation rate is not so high because of the developing country situation. The potential of the Chinese market plus the mild taxation system can be seen as an alluring factor to attract many overseas investors put more money in this goldmine to take back the bigger profit.

China culminated the first stage of its accounting reforms by issuing a conceptual framework titled Accounting Standards for Business Enterprises (ASBE) in November 1992. Accounting journals and other Chinese publications already provide several overviews of China's conceptual framework for accounting and the underlying rationale for its publication.

The financial statements published by Chinese companies typically include a balance sheet, an income statement, a cash flow statement, notes to financial statements, and other supporting schedules. One of the major problems associated with accounting practices adopted by China is the lack of coherent interpretation of relevant requirements.

Formerly the Chinese system, similar to that of the U.S.S.R., was geared toward statistics, providing data for economic planning to different ministries and tax authorities. Some deficiencies of the system include lack of consolidated