Developing accounting standards on the basis of a conceptual framework by the Chinese government

Contradictory to some existing theories, the Chinese government has been developing accounting standards on the basis of a conceptual framework (CF) titled Accounting Standards for Business Enterprises (ASBE). This article evaluates the role of the ASBE and explores the potential benefits and risks of and the reasons for the adoption of a government-controlled and CF-based approach. We argue that a CF can play an important role even if accounting standard-setting is controlled by the government; however, the ASBE provides an insufficient basis for developing accounting standards.