ABSTRACT

This chapter reviews the developments of the Chinese economy and of accounting since the revolution in 1949. It emphasises the economic reforms, which have had a direct influence on accounting and also accounting reforms carried out by the Chinese since 1979. From 1958 to 1960, China attempted to bring about a "Great Leap Forward" (GLF) in economy. The Great Leap Forward led to serious imbalances in the economy, and the natural catastrophe which later hit agriculture further hampered development. After the foundation of the People's Republic of China (PRC) the economic structure began to follow the Soviet Union with the introduction of central planning. The capitalist enterprises of the economy were gradually replaced by state-owned and collective enterprises. The Great Proletarian Cultural Revolution began in 1966 and introduced a ten-year period of chaos. The Cultural Revolution shook all of Chinese society profoundly, and was often very painful.