Accounting for Joint Ventures With Chinese and Foreign Investments

Date of Submission


Document Type


Degree Name

Master of Science in Accounting




John Coulter


Accounting --China, Investments, Chinese --Accounting

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1995 no.2


China has enjoyed spectacular economic growth since 1979, when economic reforms opened the doors to the world beyond the Chinese borders. Along with economic development and a stable political environment, this opening of Chinese enterprises to the outside world brought foreign companies, which began to invest in Chinese markets in three ways: 1) Sino-foreign equity joint ventures, 2) Sino-foreign cooperative joint ventures, and 3) Sole foreign investment enterprises. [1]

Because the purpose of accounting is to provide financial information about an economic entity, the accounting system is an information-connecting link between decision makers and business operations. Both Chinese and foreign business executives and managers depend on financial information to plan and control the activities of the business, and the accounting system directly affects the decision making process and the future of the entities. Since the accounting principles used in China and other countries often differ significantly from each other, accounting for Sino-foreign joint ventures produces conflicts with respect to principles, concepts, and methods. This paper introduces and discusses those differences, and develops ideas and conclusions towards the future of accounting systems in the context of Sino-foreign joint ventures.

The thesis is organized as follows: Chapter one introduces the historic development of Chinese accounting. Chapters two and three display the main accounting features of Sino-foreign joint ventures, emphasizing and analyzing their differences from American accounting systems. Chapter four examines recent Chinese accounting reforms, new tax policies, and their impact on foreign investors. Chapter five concludes the thesis, offering suggestions that would improve accounting for Sino-foreign joint ventures in the future.