Description
The dynamic nature of the state-accounting profession relationship has been mostly
explored within a western democratic and capitalist context. Taking into account the
unique culture and the system of power in China, this paper contributes by examining
the influence of the state over the Chinese public accounting profession during the
1990s. Utilizing a corporatist framework and combined with Gramsci’s concept of hegemony,
this paper provides insights into the power relation between the state and the
accounting profession, as well as illuminates the ideological influence of the state in the
development of the profession.
Analyzing the state-accounting profession dynamic: Some insights
from the professionalization experience in China
Helen Yee
?
Centennial College, Hong Kong University, 3 Wah Lam Path, Pokfulam, Hong Kong
a b s t r a c t
The dynamic nature of the state-accounting profession relationship has been mostly
explored within a western democratic and capitalist context. Taking into account the
unique culture and the system of power in China, this paper contributes by examining
the in?uence of the state over the Chinese public accounting profession during the
1990s. Utilizing a corporatist framework and combined with Gramsci’s concept of hege-
mony, this paper provides insights into the power relation between the state and the
accounting profession, as well as illuminates the ideological in?uence of the state in the
development of the profession. The empirical investigation also pays particular attention
to the intra-professional con?icts that took place in the 1990s and provides further insights
into the dynamic of the state-accounting profession relationship in that era.
Ó 2012 Elsevier Ltd. All rights reserved.
Introduction
Within academic circles, there have been numerous dis-
cussions on how the function and the role of the state are
perceived (Jessop, 1977; Lehman, 1992; Lindblom, 1982;
Miller, 1990; Offe & Ronge, 1984; Tinker, 1984). For in-
stance, there are the functional conceptions of the state
as a common-bene?t organization and a con?ict resolver
(Lindblom, 1982) that plays an active role in managing so-
cial con?icts and dispersing social tensions (Lehman,
1992). More critical views of the state, such as those con-
sidered within the Marxist tradition, see the state as an
instrument of class rule; a system of political domination;
or, a factor of cohesion that regulates the struggle between
antagonistic classes while maintaining, at the same time,
the continued domination of the ruling class (Jessop,
1977). Nevertheless, despite differences in conceptions of
the role of the state, evidence has indicated that, in ful?ll-
ing its various functions, the state has been intricately in-
volved with the development and regulation of
institutions such as the accounting profession (see, for
example, Bailey, 1992; Chua & Poullaos, 1993, 1998; Chua
& Sinclair, 1994; Loft, 1986; MacDonald & Richardson,
2004; Poullaos, 1993, 1994; Puxty, 1990; Richardson,
1989; Robson, Willmott, Cooper, & Puxty, 1994; Sian,
2006; Walker & Shackleton, 1995; Willmott, 1986).
Accounting institutions (and accounting practices for that
matter) are said to play a particularly important role in
assisting the state with supporting market mechanisms;
managing economic policies; planning national economic
resources; regulating particular industrial and commercial
sectors; implementing price and wage control; combating
trade union power; as well as reinforcing power relations
(Burchell, Clubb, Hopwood, Hughes, & Nahapiet, 1980;
Miller, 1990; Sikka & Willmott, 1995a). From this perspec-
tive, it can be argued that examination of the dynamic rela-
tionship between the state and the accounting profession
can be used bene?cially to illuminate broader social issues
such as distribution of power; competition for social
resources; con?icts and struggles within society; as well
as the role of the state in adjudicating amongst interests.
0361-3682/$ - see front matter Ó 2012 Elsevier Ltd. All rights reserved.http://dx.doi.org/10.1016/j.aos.2012.04.003
Abbreviations: CACPA, Chinese Association of Certi?ed Public Audi-
tors; CICPA, Chinese Institute of Certi?ed Public Accountants; CNAO,
National Audit Of?ce of the People’s Republic of China; CPA, Certi?ed
public accountant; CPC, Communist Party of China; CRS, Contract
Responsibility System; MES, Modern Enterprise System; MOF, Ministry
of Finance; SOEs, State-owned enterprises; WTO, World Trade
Organization.
?
Tel.: +852 37626200; fax: + 852 25512298.
E-mail address: [email protected]
Accounting, Organizations and Society 37 (2012) 426–444
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For this reason, this paper will focus on investigating the
state-accounting profession dynamic. More speci?cally,
emphasis is placed on examining this dynamic within the
context of the development of the public accounting pro-
fession in a non-western and, supposedly, non-capitalist
society, to wit, China.
In terms of the development of the Chinese public
accounting profession, one of the remarkable features,
since its re-emergence in the 1980s, is its phenomenal
growth and development over a relatively short period of
time – especially when compared with experiences in wes-
tern countries. Considering the plight of Chinese accoun-
tants under Mao Zedong’s regime and the extraordinary
turnaround of their fortunes after Deng Xiaoping (hereafter
referred to as Deng) rose to power in the late 1970s, it is
conceivable that the state, and the state leaders for that
matter, might have had an important in?uence over the
development of the accounting profession in China. Fur-
thermore, given the vast differences between the ideolog-
ical principles of the two leaders – with Mao emphasizing
the primacy of class struggle, public ownership and central
planning, and Deng more concerned with economic devel-
opment, marketization and mixed-ownership (Ezzamel,
Xiao, & Pan, 2007) – the shift from one regime to the other
would have unavoidably changed the political and ideolog-
ical discourse, impacting on all aspects of Chinese society,
including the rise and fall of the occupation of accounting.
It is, therefore, the aim of this paper to uncover the role
and the importance of the state (and state leaders) in the
professionalization process of Chinese public accountants.
Previous studies on the development of the Chinese
public accounting profession, such as Hao (1999) and Yee
(2009), have examined the dynamic interaction between
the state and the profession in the 1980s. This paper seeks
to contribute by further examining such dynamic in the
1990s. The paper also highlights a particular episode which
happened during that period when the ?edgling Chinese
public accounting profession experienced intense intra-
professional competition – this being a phenomenon com-
monly found within the ‘internal dynamic’ (Klegon, 1978,
p. 268) of the professionalization process and one that
has been the subject of much critical research in western
countries (see, for example, Caramanis, 1999; Poullaos,
1994; Walker, 2004).
In accounting research, a number of critical writers (see,
for example, Cooper, Puxty, Lowe, & Willmott, 1989; Puxty,
Willmott, Cooper, & Lowe, 1987; Richardson, 1989; Walker
& Shackleton, 1995) have utilized a corporatist framework
to examine the relationships between the state and the
accounting profession in advanced capitalist economies
such as the US, Germany, Sweden, Canada and the UK.
Focussing on the experience in the UK, Cooper et al. (1989)
suggest that the corporatist model can usefully illustrate
‘the historically contingent, materialist basis and dialectical
relationship between the state and the profession’ (p. 246).
However, corporatismis not without its weaknesses. In par-
ticular, there have been considerable discussions in the lit-
erature that point to the ‘profound lack of agreement’
(Panitch, 1980, p. 159) on the usage of the concept and on
its de?nition (see, also, Schmitter, 1977a; Walker & Shackl-
eton, 1995), with writers impressing ‘reservations, criti-
cisms, extensions, and corrections upon its use’ (Schmitter,
1977a, p. 4). Aware of suchanissue, critical accounting writ-
ers have often utilized the corporatist framework in modi-
?ed form, or in conjunction with other concepts (Walker &
Shackleton, 1995; see also, Cooper et al., 1989; Richardson,
1989 for example). Likewise, this paper is informed by an
approach that makes use of a corporatist framework, but
combines it with Gramsci’s (1971) concept of hegemony.
Corporatism, as referred to in this paper, is understood
as a system of interest intermediation, or, in accordance
with Schmitter’s (1974, p. 86) interpretation, ‘a particular
modal or ideal-typical institutional arrangement for link-
ing the associationally organized interests of civil society
with the decisional structures of the state’. Distinguishing
it from pluralism, Schmitter (1974) de?nes the ideal-type
corporatism
1
as:
. . . a system of interest representation in which the con-
stituent units are organized into a limited number of
singular, compulsory, noncompetitive, hierarchically
ordered and functionally differentiated categories, rec-
ognized or licensed (if not created) by the state and
granted a deliberate representational monopoly within
their respective categories in exchange for observing
certain controls on their selection of leaders and articu-
lation of demands and supports.
While corporatism has been mostly studied within a
Western liberal capitalist context (see, for example,
Lehmbruch, 1977; Panitch, 1980), Schmitter (1974) con-
tends that corporatism is neither a characterization of a
particular political system nor a distinctive product of a
particular political culture. Rather, it is compatible with
several different regime-types and party systems, with dif-
ferent varieties of ruling ideology and levels of political
mobilization, and also with varying scopes of public policy
(Schmitter, 1974, p. 92). In other words, corporatist mech-
anisms can be embedded not only in polity with a liberal
parliamentarian state, but, equally, in authoritarian Third
World government or dictatorial Communist Party regime
(Unger & Chan, 1996).
Within a corporatist framework, the state would deter-
mine which organized functional interests are to be recog-
nized as ‘legitimate’. Apart from engaging with the state
(mostly, at the leadership level) in the policy-making pro-
cesses, these organized groups are often mobilized to par-
ticipate in the implementation of state policy.
Conceptualizing within this context, the use of the concept
of hegemony is useful as a means of understanding how, in
the absence of, or in conjunction with, coercion from the
state, consent can be established and maintained in a cor-
poratist arrangement.
The remainder of this paper is organized as follows. The
next section looks at professionalization and the state-
accounting profession dynamic as portrayed and under-
stood in a western context. It brie?y discusses two theoret-
1
It is recognised, even by Schmitter (1974; see also Schmitter, 1977a)
himself, that no empirically extant system of interest representation may
perfectly reproduce all the dimensions as described in the de?nition.
However, Schmitter’s (most elaborate) de?nition of the ideal-type corpo-
ratism provides a useful starting point for subsequent discussions of the
concept and is the most oft-quoted de?nition referred to in the literature.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 427
ical perspectives that have been useful in interpreting the
state-accounting profession relationship in western demo-
cratic societies, and highlights the recent trend in account-
ing professionalization that has been studied by
researchers. The following section then proceeds to explain
why the particular power relation between the state and
organized accounting groups can be very different in China
as compared to western democratic countries. The theoret-
ical concepts for explaining the Chinese phenomenon are
explained in this section. With regard to corporatism,
two subtypes of corporatist arrangement are distinguished,
i.e. state and societal corporatism, with China being lo-
cated within the former. In terms of the concept of hege-
mony, the focus is on the consensual ideological aspect
whereby ideology is said to play an important role in the
process of social control and as a mode of domination.
Thereafter, the remaining sections of the paper present
the analysis. The empirical study examines the state-
accounting profession dynamic during the 1990s within
its wider political and economic environment. It highlights
the political and ideological in?uence of Deng Xiaoping,
and the new form of consciousness – encapsulated in the
concept of building socialism with Chinese characteristics –
he created. It also illuminates the state-corporatist
arrangement between the state and the Chinese Institute
of Certi?ed Public Accountants (CICPA), and how the latter
assist the state in steering its memberships into aligning
their functions with the prevailing ideology of the state.
In terms of the intra-professional competition, it reveals
how the power relation between the state and the public
accounting profession impacted on the outcome of the
con?icts at the time. To conclude the paper, a discussion
of the key insights gained from the investigation is pre-
sented in the ?nal section.
Analyzing professionalization and the state-accounting
profession dynamic: The western context
Embedded in much of the critical research on the devel-
opment of the accounting profession, and particularly
those in the UK and the US, is a pluralistic conception of
the state and of the system of power in western societies.
This perceives the state to be the foci for competing de-
mands (Miliband, 1973), legitimized and vested with
power by the citizenry through institutions such as univer-
sal suffrage, and political machineries such as free and reg-
ular elections (Lindblom, 1982). Individuals, in advancing
their interests and in asserting their political demands,
are said to achieve a greater in?uence when organized into
coherent group (Dahl, 1961; Truman, 1955) – although no
one group is said to dominate all or most key decisions in a
democratic political system (Key, 1964; Polsby, 1960).
Re?ecting this conceptualization, critical writers depict
professional associations as interest groups, or more po-
tently, as ‘inescapably political bodies’ (Willmott, 1986, p.
574), who derive power ‘from their organisational capac-
ity’ and who seek to ‘continuously secure from the market
and the state the right to control and regulate the supply
of, and in?uence the demand for, accounting labor’ (Will-
mott, 1986, p. 574). Professionalization, too, is portrayed
as being driven mainly by economic self-interest and as a
strategy of collective social advancement – the main plot
of which is to constitute an institutional structure for the
purpose of protecting market advantage or a threatened
economic monopoly (see for example, Anderson, Edwards,
& Chandler, 2005; Kedslie, 1990; Lee, 1995, 2001, 2002;
Macdonald, 1984, 1985, 1995; Miranti, 1986, 1988, 1990;
Previts & Merino, 1998; Walker, 1991; Walker & Shackl-
eton, 1995, 1998; Willmott, 1986). Accordingly, the role
of the state is often examined within the context of how
professions sought ‘to use the state merely to give it priv-
ileges, and to back up its power of monopolization and of
self-regulation over its members’ (Collins, 1990, p. 16).
The competing demands made upon the state and how
the state in?uences the outcome of the professionalization
process is particularly highlighted in studies that look at
inter- and intra-professional rivalries. Having an af?nity
with these types of interrogations are two conceptualiza-
tions that are quite distinct, yet both lend themselves to
examining the purposive action of professionals and pro-
fessional organizations. There is, ?rst of all, the Weberian
notion of social closure with its focus on social mobility
and market control. Research that draws on this notion de-
picts elite accountants and their occupational associations
as ‘legally privileged groups’ (Weber, 1968/1978, p. 342)
that ‘sought to constitute and control a market for their
expertise’ (Larson, 1977, p. xvi). Particularly useful for
examining the many struggles faced by professional asso-
ciations in their early years of existence, such theoretical
approach not only illuminates the self-interest aspect of
professional organizations, but, more importantly, the
highly political nature of the professionalization process.
It illustrates, amongst other things, the ‘expanding role of
the modern state in regulating social and economic life’
(Willmott, 1986, p. 556) and the mutual dependence that
cements the state-profession relationship as ‘the activities
of each party are simultaneously supported and restricted
by the other’ (Willmott, 1986, p. 564). While some describe
this interdependence relationship as being ‘close and
indulgent’ (Sikka & Willmott, 1995a, p. 362), there are oth-
ers who recognize the state to be ‘a particularly dangerous
foe or a particularly helpful friend’, depending on ‘the spe-
ci?c struggles that the agencies were engaged in and the
interests they wished to ?nely and ‘‘fairly’’ balance’ (Chua
& Poullaos, 1998, p. 164; see, also, Chua & Poullaos, 1993).
The second conceptualization comes from Abbott’s
work in The System of Professions (1988). Arguing that pro-
fessions constitute an ‘interdependent system’ (Abbott,
1988, p. 2), Abbott’s emphasis is on jurisdiction and how
competitive forces (both externally and internally) work
to shape the jurisdictional boundaries. Researchers have
drawn upon and extend Abbott’s work to usefully highlight
how professions defend, maintain, extend and modify their
jurisdictions (e.g. Sikka & Willmott, 1995b; Walker, 2004).
With the recent shift in research focus from professional
associations to professional ?rms, this conceptualization
has added a new level of understanding to both intra-
and inter-professional rivalry (Anderson-Gough, Grey, &
Robson, 2002; Arnold, 2005; Cooper & Robson, 2006,
2009; Covaleski, Dirsmith, & Rittenberg, 2003; Dezalay &
Garth, 2004), re?ecting, at the same time, that the
accounting professionalization project has entered a new
428 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
phase – from one of local monopoly to that of building a
global cartel. Indeed, as mega international ?rms (such as
the Big Four) developed into multidisciplinary practices,
they emerged as powerful and in?uential ‘interest groups’,
with strategic interests in extending and consolidating
their jurisdictions in a global market (Arnold, 2005; Cara-
manis, 2002). While capable of in?uencing national state
policies, these transnational ?rms also play important roles
as members of major international trade lobbies, working
closely with powerful international actors (such as the
WTO and OECD) in the globalization of professional ser-
vices (Arnold, 2005). In a geographic and a disciplinary
sense, they have assuredly outgrown the jurisdictional
boundaries of their professional associations as well as the
regulatory boundaries established by the state/profession
compact (Greenwood & Suddaby, 2006; Suddaby, Cooper,
& Greenwood, 2007). While, at the transnational level, the
state remains a somewhat important player, international
professional ?rms have now replaced professional associa-
tions as active participants of the professional project,
prompting some researchers to appeal ‘for a greater link be-
tween studies of accounting professionalization and regula-
tion, and the activities of the professional ?rms’ (Cooper &
Robson, 2006, p. 432). Furthermore, with a globalization
agenda, these ?rms not only seek to ‘maintain strong links
with the major states in which they have a signi?cant pro-
portion of their operations’ (Caramanis, 2002, p. 403), but,
more importantly, they attempt to leverage the suprana-
tional authority of powerful international actors (Arnold,
2005).
So while previous research supports the argument ‘that
‘‘professions’’ are the dynamic outcome of the mutual
interaction and transformation of state and profession’
(Chua & Poullaos, 1993, p. 724), the professionalization
process, as depicted in recent research, has become much
more complex in a globalized context. It involves the mobi-
lizing of political power as well as the evoking of support
from a range of actors, of which the state is but one.
Understanding the Chinese context: State corporatism
and ideological hegemony
Whilst, in western democratic countries interest groups
compete for the attention of a pluralist state; in China, the
authoritarianism associated with the Communist Party re-
gime, together with the promotion of socialist democracy
and the in?uence of traditional culture, combined to shape
a very different system of power distinctive from the kind
of interest group dynamics experienced in the west. The
relationship, and thereby the interaction, between orga-
nized accounting groups
2
and the state can thus be very dif-
ferent in China as compared to western societies. In this
regard, one particular concept that offers strong explanatory
value for China has been explored by Unger and Chan
(1996). In analysing the system of political (and social) orga-
nization in China, Unger and Chan (1996) observe the trend
in the state’s political arrangements during the 1980s and
the 1990s, and theorize the Chinese polity at the time within
a corporatist framework. More speci?cally, they depict the
Chinese phenomenon under the rubric of state corporatism.
State corporatism
According to Unger and Chan (1996), state corporatism
lies at the other end of the spectrum from societal corporat-
ism – the latter being most commonly found in western
democratic countries, such as Australia and the UK. While
both state and societal corporatism involve an actively
interventionist state, acting on the premise that it is the
guardian of the common good and of a national interest
that supersedes parochial interests (Unger & Chan, 1996),
they are the vehicles for very different power and in?uence
relations, and the products of very different political, social
and economic processes (Schmitter, 1974, 1977b). Under
societal corporatism, for example, corporate bodies are
seen to emerge organically within civil society (Richard-
son, 1989), with their leaders beholden to their member-
ships instead of the state (Unger & Chan, 1996). On the
contrary, under state corporatism, corporatist organiza-
tions are created and maintained by the state, and the
weight of decision-making power is also said to lie very
heavily on the side of the state (Unger & Chan, 1996).
In general, the state takes a more top-down approach
under state corporatism. It is said to assume more power
and exert more in?uence over corporatist organizations –
from the creation of the particular occupational–vocational
category, the granting of state recognition, the selection
and appointment of leaders, through to the imposition of
state-decreed administrative dependence. In order that
representational monopoly can be established, the state –
apart from its continuous mediation and arbitration –
may even intervene by eradicating multiple or parallel
organizations (Schmitter, 1974).
Apart from being recognized as a system of interest rep-
resentation, state corporatism has also been argued by
some to be a form of social control. Cohen (1982, p. 48),
for example, argues that state corporatism is an institu-
tional arrangement that enables the Brazilian governmen-
tal elites to put its working class in a situation of utter
dependence on the state. Cohen (1982, p. 48) de?nes state
corporatism as:
. . . a system by which the state structures, subsidizes,
and controls the groups whose interests are to be repre-
sented – a system of sanctions and incentives that
molds the behaviour of social groups in accordance
with the goals of the state rather than with their own
interests.
By recognizing and subsidizing only the corporatist un-
ion, effectively turning it into a bureaucratic welfare
agency of the state, the Brazilian government was able to
pre-empt the formation of a more autonomous labor
2
While international accounting ?rms play an increasingly important
role in recent times in the continued professionalization of the accounting
profession in western countries, they did not have much in?uence in China
during the 1990s. The state was extremely cautious in allowing interna-
tional accounting ?rms to set up their businesses in China, and thus sought
to control such foreign in?uence by recognising only sino-foreign joint
venture accounting ?rms. It would be worth investigating this somewhat
uneasy relationship between the state and the international accounting
?rms, as well as the impact these ?rms had on the development of the
public accounting profession after 2001, following China’s admission to the
WTO. This time frame is, however, outside the scope of the paper.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 429
movement, minimize industrial con?icts, and lock its
workers into a vicious circle of dependence – an outcome,
according to Cohen (1982, p. 57), that is ‘precisely as Bra-
zilian elites have always wanted’.
Discussing corporatism in East Asia, Unger and Chan
(1996) argue that countries such as Japan, Taiwan and
South Korea all share a cultural bias favorable to corporat-
ist structures. Deeply entrenched in their value system is
the Confucian philosophy, which encourages the pursu-
ance of Yi (justice and righteousness) and the forsaking of
self-interest in the enhancement of the greater good. The
latter, understood to be ‘ideally manifested in a consensus
overseen by the moral authority of the leadership’ and ‘re-
?ected in a moralistic father-knows-best paternalism’ (Un-
ger & Chan, 1996, p. 99), is particularly conducive to the
implementation of a state-corporatist regime (Unger &
Chan, 1996). With Confucianism being diffused into every
aspect of the Chinese way of living, there is no doubt that
China, too, share the same cultural advantage of its East
Asian neighbors when it comes to pursuing a state-corpo-
ratist solution.
Arguably, according to Unger and Chan (1996), a sort of
proto-corporatism was already in existence during Mao’s
rule. However, it was not until after his death that state
corporatist bodies were allowed to revive as peak organi-
zations and were rapidly ‘gaining a representative author-
ity within government channels that they never had been
able to hope for under Mao’ (Unger & Chan, 1996, p.
104). As will be discussed in the empirical section of this
paper, the political and economic climate in China after
Mao and, in particular, during the 1990s, has made the
strengthening of the corporatist arrangements an impor-
tant strategy for the state. The Chinese Institute of Certi?ed
Public Accountants (CICPA), established in 1988 under the
jurisdiction of the Ministry of Finance (MOF), was one such
corporatist association.
Ideological hegemony
While cultural belief emanating from Confucianism can
serve to promote a state-corporatist regime, the stability of
such political structure does depend on the ability of the
state to persuade corporatist bodies to fall in line with its
agenda. The Brazilian case studied by Cohen (1982), for
example, suggests that, while state corporatism was used
to put the working class in a situation of dependence, the
state also has to encourage a corresponding form of
consciousness – one that perceives the state to be a ‘benev-
olent leviathan’ – to reinforce and perpetuate the state-
corporatist relationship.
Similarly, in the case of China, whether the state-corpo-
ratist structure – rejuvenated during the 1980s and 1990s
– can remain stable and effective depends largely on the
state’s ability to achieve and maintain organized consen-
sus. As Unger and Chan (1996) succinctly point out, har-
mony is ‘the catchword of a corporatist system regardless
of whether this harmony is truly consensual or imposed
from above’ (p. 97). To examine this facet of the corporatist
arrangement – in particular, how the Chinese state ap-
proaches the issue of consensus mobilization – and the
power relation between the state and corporatist associa-
tions such as the CICPA, this paper combines the corporat-
ist framework with Gramsci’s (1971) concept of hegemony.
This concept, which has been successfully employed to
illuminate the ideological in?uence of the state in the UK
(Cooper, 1995) and, more recently, in China (Yee, 2009),
is particularly useful in highlighting how consent is being
‘manufactured’ within society. The incorporation of the
concept of hegemony within a corporatist framework has
also proved to be valuable in examining the relationship
between the state and the accounting profession in Canada
(Richardson, 1989). At the simplest level, Gramsci’s con-
cept of hegemony postulates that ‘man is not ruled by force
alone, but also by ideas’ (Bates, 1975, p. 351). In more
sophisticated terms, hegemony can be characterized as
the ‘spontaneous consent given by the great masses of
the population to the general direction imposed on social
life by the dominant fundamental group’ (Femia, 1986, p.
32), whereby ‘those who are consenting must somehow
be truly convinced that the interests of the dominant group
are those of society at large, that the hegemonic group
stands for a proper social order in which all men are justly
looked after’ (Femia, 1986, p. 32). While Gramsci also re-
fers to the coercive aspect of state power – whereby the
state is said to exercise direct domination through its coer-
cive apparatuses such as the armed forces, the police and
the law courts – it is the consensual ideological aspect that
takes on an important dimension in the concept of
hegemony.
To Gramsci, ideology means more than a system of
ideas. It has a material existence in the practical activities
of men and women, providing them with rules of practical
conduct and moral behavior (Simon, 1982). Elster (1986, p.
169) de?nes ideology as ‘a ?gure of thought shared by
many people and caused by whatever is common in their
situation’. Shared ideological beliefs can arise simulta-
neously and take root spontaneously in the minds of many
people when they are exposed to similar external in?u-
ences and are subjected to similar psychological processes.
Alternatively, ideologies can be initiated by one person and
then permeate through to other people who, for various
reasons, are inclined to accept them (for example, through
socialization processes). Ideologies can, therefore, be so en-
trenched that they are hard to rebut.
Distinguishing between historically organic ideologies
that are necessary to a given social formation and ideolo-
gies that are arbitrary, rationalistic and ‘willed’, Gramsci
elaborates on the concept of ideology in his Prison Note-
books (Forgacs, 1988, p. 199):
To the extent that ideologies are historically necessary
they have a validity which is ‘psychological’; they ‘orga-
nize’ human masses, they form the terrain on which
men move, acquire consciousness of their position,
struggle, etc. (SPN 367)
3
Interpreting from within this context, Williams (1960,
p. 587) suggests that, by hegemony, Gramsci was alluding
to:
3
SPN represents Selection from the Prison Notebooks, edited and
translated by Quintin Hoare and Geoffrey Nowell Smith, Lawrence and
Wishart, London, 1971.
430 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
an order in which a certain way of life and thought is
dominant, in which one concept of reality is diffused
throughout society, in all its institutional and private
manifestations, informing with its spirit all taste,
morality, customs, religious and political principles,
and all social relations, particularly in their intellectual
and moral connotation.
As the basis of creating a dominant conception of
reality, Gramsci argues that there must be ‘a cultural–so-
cial unity through which a multiplicity of dispersed wills,
with heterogeneous aims, are welded together with a
single aim’ (SPN 349, quoted in Simon, 1982, p. 60). In
this sense, what is crucial about an ideology is not its
truth or falsity, but rather it is ‘its ef?cacy in binding to-
gether a bloc of diverse social elements, and in acting as
cement or as an agent of social uni?cation’ (Simon, 1982,
p. 60).
For the state to secure consent, or advances towards
hegemony, it needs to build up an ideological system that
can act as the cementing ideology. When such ideology be-
comes ingrained into the cultural values and social norms
of the mass of people in society – often through incorpora-
tion into the educational systemand socialization practices
– it constitutes what Gramsci calls ‘common sense’. In
other words, it is absorbed and naturalized and, therefore,
becomes ‘the uncritical and largely unconscious way’ (Si-
mon, 1982, p. 63) through which people ‘?gure out’ both
the world and society.
In China, ideological hegemony has long been an impor-
tant aspect of state control. Confucianism, which was for-
mally adopted as the of?cial moral and political ideology
of the state during the Han Dynasty, is an excellent exam-
ple of an ideological system that was used successfully as
cementing ideology (see discussion in Yee, 2009). The Con-
fucian ‘way of thinking’ captured the self-understanding
and ideology of the Chinese people and became an impor-
tant part of the Chinese culture. Such ideological terrain
was, in fact, so powerfully structured that, despite dra-
matic social and political changes in China in the last cen-
tury, the in?uence of Confucianism within Chinese society
remains profound. Similarly, in modern China, the Com-
munist regime under the leadership of Mao Zedong, and
subsequently Deng Xiaoping, had sought to legitimise its
power through ideological practices that serve to inculcate
and in?ltrate the consciousness of individuals in society.
State leaders – Mao and Deng, in particular – engaged in
what Gramsci refers to as ‘intellectual and moral reform’,
propagating their ideologies through the use of ‘catchy’
campaign slogans. For example, bai hua qi fang, bai jia
zheng ming (let a hundred ?owers bloom, let a hundred
schools of thought contend) was a well-known slogan
introduced by Mao in 1956 to encourage intellectuals to
speak out and discuss the country’s problems. By the effec-
tive use of language, the Chinese leaders were able to
encapsulate complex ideas, as well as government policies,
and ingrain them into the everyday living of the Chinese
people. In this respect, ideology and language can be said
to be closely linked, and the potency of the Chinese lan-
guage as a tool in facilitating the process of social control
cannot be underestimated.
Introduction to the empirical study
The empirical investigation of this paper focuses on the
accounting professionalization experience in China during
the 1990s. Such development is to be interpreted within
its historical context, and is to be combined with an
examination of the wider political and economic climate.
The data comes from a variety of primary sources includ-
ing internal publications of the CICPA (such as the CPA
News), written records of political and accounting dis-
courses (such as minutes of meeting and speeches made
by Deng Xiaoping and other Chinese of?cials holding
key positions within the state), articles published in the
public media (such as newspaper), legislative documents
(including Constitution), as well as a number of interviews
conducted with relevant people (eight in total), most of
whom have had a signi?cant role in the professionaliza-
tion process.
4
A new ideological system under Deng Xiaoping
The certi?ed public accountant (CPA) system in China
only re-emerged in the 1980s. From not having any role
under a socialist regime and being discriminated against
in society, the occupation of public accountants experi-
enced an extraordinary turnaround and became formally
recognized as an important ‘profession’ by the state (Yee,
2009). This change in fate was very much in?uenced by
the political ideologies of Deng Xiaoping, who played the
role of what Gramsci calls ‘organic intellectual’. As Simon
(1982) notes, ideological practice ‘possesses its own agents
in the shape of intellectuals who specialize in the elabora-
tion of organic ideologies and in the task of moral and
intellectual reform’ (p. 59). According to Gramsci, these
intellectuals are to give a fundamental social group
‘homogeneity and an awareness of its own function not
only in the economic but also in the political and social
?elds’ (SPN 5, quoted in Simon, 1982, p. 59). By engaging
in moral and intellectual reform, Deng managed to build
a new ideological system centred, ?rst of all, around his
four-word motto, jie fang si xiang (emancipating the
mind),
5
and then on his concept of building socialism with
Chinese characteristics. Writing on the megatrends in China,
Naisbitt and Naisbitt (2010, p. 11) highlight the signi?cance
of the emancipation of the mind:
4
These interviews were semi-structured focused interviews conducted
mainly in 2007. The interviewees were selected because of their knowledge
of the profession and/or their direct involvement in the development of the
public accounting profession. Some of them were interviewed more than
once because of the considerable amount of ?rst hand knowledge they
possessed. Two of the interviewees were highly ranked of?cials in the
CICPA (one of them, in particular, had a very important role in the 1990s,
implementing a number of policies that had profound impact on the
development of the public accounting profession as a whole). Other
interviewees included: a senior of?cial working in a ministry-level
government institution that regulates the securities market; two Chinese
partners and one senior staff from international accounting ?rms; two
researchers, both of whom have many years of working experience in the
CICPA, with one of them having more than 10 years of research experience
studying the development of the public accounting profession.
5
This is a propaganda slogan ?rst used by Deng in 1978.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 431
The dimension of Deng Xiaoping’s call for emancipating
the minds of the people can be captured only in the con-
text of the time: almost 1 billion people divided in a
class struggle had to be united in the common goal of
transforming the country. The destructive forces of the
Cultural Revolution had to be turned into constructive
energy for building a new China. The transformation
had to start with allowing people to reclaim their own
thinking. The liberation of minds from indoctrination
to emancipation was the ?rst and most important pillar
of the transformation of China.
Indeed, as highlighted in the Minutes of the 1980 Na-
tional Conference on Accounting Work organized by the
Ministry of Finance, the detrimental impact of the Cultural
Revolution – in particular, the in?uence of leftist political
ideologies propagated by the Gang of Four
6
– continued
to hamper the revival of accounting work in the late
1970s. Not only was accounting not recognized as important
by many institutions and departments, accounting person-
nel who tried to do their work were sometimes being perse-
cuted and even killed (Minutes of the 1980 National
Conference on Accounting Work & Finance, 1981). Deng Xia-
oping’s call to expose and criticize the Gang of Four (Deng
Xiaoping, 1978a) and, more importantly, to emancipate the
mind (Deng Xiaoping, 1978b) was crucial in changing the
mentality of Chinese people, including the accountants
themselves. Indeed, many accountants who suffered (both
physically and mentally) during the Cultural Revolution la-
ter became the backbone of the public accounting profession
when it was re-established in 1980.
To rebuild China and its near collapsed economy, Deng
continued his intellectual and moral reform in the 1980s,
propagating the concept of building socialism with Chinese
characteristics to create a new form of consciousness that
would powerfully gripped the mind of the mass of the peo-
ple in China in the years to come. In his opening speech on
1 September 1982 at the Twelfth National Congress of the
Communist Party of China, Deng Xiaoping (1982) intro-
duced this concept for the ?rst time, strategically linking
it with the country’s unique historical condition:
In carrying out our moderisation program we must pro-
ceed from Chinese realities. Both in revolution and in
construction we should also learn from foreign coun-
tries and draw on their experience, but mechanical
copying and application of foreign experience and mod-
els will get us nowhere. We have had many lessons in
this respect. We must integrate the universal truth of
Marxism with the concrete realities of China, blaze a
path of our own and build a socialism with Chinese char-
acteristics – that is the basic conclusion we have reached
after reviewing our long historical experience (emphasis
added).
Building socialism with Chinese characteristics encapsu-
lated many of Deng’s other ideologies. Amongst them,
the revitalizing of the economy and opening to the outside
(dui nei gao huo, dui wai kai fang),
7
as well as the reforming
of both economic and political structures. Not only did Deng
introduce the idea of opening the economy to foreign inves-
tors, he was prepared to combine socialism with a market
economy, allowing some people to become prosperous ?rst
‘in accordance with their hard work and greater contribu-
tions to society’ (Deng Xiaoping, 1978b). This new ideologi-
cal system, though revolutionary in a socialist society, began
to diffuse throughout society in the 1980s, motivating as
well as mobilizing Chinese people towards the transforma-
tion of their backward economy. After living through years
of poverty and hardship during the Cultural Revolution, Chi-
nese accountants were amongst those who could see the
reversal of their plight, and the potential role they were to
play under Deng’s ideological and political leadership.
8
The public accounting profession and state-corporatist
arrangement
Indeed, the shift in political ideology under Deng’s era,
with emphasis placed on economic reforms and opening
to the outside, had provided opportunities for the Chinese
accountants as well as the conditions for the development
of China’s own public accounting profession. With the ini-
tiatives taken by the state, the CICPA, which is the national
organization responsible for all affairs relating to CPAs, was
established in November 1988. The CICPA has all the hall-
marks of a state corporatist organization. For while the
CICPA enjoyed state recognition, it was supervised and in-
structed by the Ministry of Finance (MOF) and local gov-
ernment ?nancial departments (CICPA, 1989a). The
minutes of the inaugural Council meeting of the CICPA also
revealed that the ?rst honorary chairman of the Institute
was an of?cial of the MOF (CICPA, 1988). According to its
?rst Charter, the CICPA was to serve as a bridge between
the state and certi?ed public accountants (CPAs), re?ecting
the wishes and requirements of the latter on the one hand,
and communicating the state’s policy and decisions on the
other (CICPA, 1989a, article 4). Furthermore, its role was to
assist the various state agencies in the management of
both CPAs and public accounting ?rms (CICPA, 1989a, arti-
cle 4).
To reaf?rm the state’s recognition and further establish
the legitimacy of the Chinese public accounting profession,
the state made use of its coercive apparatus and promul-
gated the Law of the People’s Republic of China on Certi?ed
Public Accountants (hereafter referred to as the CPA Law)
in October 1993. The CPA Law became operational in
6
Many scholars have written about the serious disruption to the
development of accounting during the Cultural Revolution. Van Hoepan
(1995), for example, described it as ‘the most dangerous expression of
discrimination against accountancy in Chinese modern history’ (p. 363).
The Gang of Four believed that accounting was unnecessary and asserted
that ‘even if we do not perform accounting for 10 years, money (i.e.
resources or wealth) can never go to foreign hands’ (Van Hoepan, 1995, p.
363).
7
This so called ‘eight-character policy’ sums up Deng Xiaoping’s reform
policy initiated in the late 1970s. It became a propaganda slogan, and was
popularised and embedded into social discourses.
8
For example, even as early as 1978, the Chinese government under the
leadership of Deng promulgated the Regulation on the Authorities of
Accounting Staff. In the preface to the Regulation, it was stated that there
would be higher expectations of accounting work under the new condi-
tions, and that every region, department and unit should have as a key task
the exposure and criticism of the Gang of four, as well as the strengthening
of accounting work (State Council of the People’s Republic of China, 1978).
432 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
January 1994, marking another new stage in the develop-
ment of the profession – in terms of further re?ning the le-
gal and regulatory framework upon which the work of
certi?ed public accountants (CPAs) and public accounting
?rms was based. As observed by one of the interviewees
(government of?cial interviewed on 31 January 2007):
Amongst the intermediary occupations, only lawyers
and CPAs have their own legislation. Not only does this
legislation [CPA Law] serve to de?ne and protect the
scope of work of the CPAs, it also de?nes the functions
and responsibilities of the CICPA, as well as specifying
CPAs’ legal responsibilities. It is very comprehensive.
Because of such legislation, CPAs also felt that their
work was recognised by society and, at the same time,
protected by law.
Clearly, the state had taken an active interest in the
public accounting profession, supporting and controlling
its development through the state-corporatist structure.
As will be seen in the next section of the paper, the political
and economic climate in the 1990s required the state to
further strengthen this state-corporatist mechanism.
The maintenance of hegemony and the building of
socialism with Chinese characteristics
While the early 1990s saw a transition of leadership
from Deng Xiaoping to Jiang Zemin (hereafter referred to
as Jiang), the new generation of leadership remained com-
mitted to the ideologies, as well as the reform direction, set
out by Deng. This is evidenced in the 14th National Con-
gress of the CPC held in 1992, where Jiang delivered a re-
port indicating the Party’s unswerving attitude ‘in
furthering the emancipation of mind (jie fang si xiang) of
all Party comrades as well as all people of the nation; in
grasping favorable opportunities to speed up the pace of
reform, opening up and modernization construction; and,
in striving to win the great victory for the cause of socialism
with Chinese characteristics (Jiang Zemin, 1992, emphasis
added). This clearly re?ected the prevailing state ideology
at the time, and was to be the Communist Party’s strategic
direction for the ensuing 5 years.
While, in the late 1970s and in the 1980s, the four-word
motto of ‘emancipating the mind’ (jie fang si xiang) had
very important implications for advancing Deng’s agenda
for China and for countering the problems inherited from
the past, building socialism with Chinese characteristics be-
came the new cementing ideology in the 1990s. It was en-
shrined in the 1993 Constitution as a theory that underlay
the construction of socialist modernization (Constitution of
the People’s Republic of China, 1993, Preamble). For the
very ?rst time in the history of the Communist Party rule,
the establishment of a market economy was upheld as
China’s reform goal. Article 15 of the 1993 Constitution
was amended to avow that ‘[t]he state practices socialist
market economy’. Such an ‘important ideological break-
through’, according to Hassard, Sheehan, Zhou, Terpstra-
Tong, and Morris (2007, p. 57), marked the start of a new
reform era. More signi?cantly, it provided a reconciliatory
answer to the fundamental question of ‘what is socialism
and how to build socialism?’, thereby settling unambigu-
ously China’s future economic direction and legitimizing
the country’s transformation into a socialist market econ-
omy. Thus, on the one hand, the concept of building social-
ism with Chinese characteristics provided the intellectual
and moral direction for the Chinese people, creating for
them a ‘new’ common conception of the world; on the
other hand, it enabled the new generation of collective
leadership under Jiang Zemin to af?rm its social authority
and, thereby, maintain the hegemony which Deng had
worked arduously to achieve.
Gramsci (1971) recognizes that hegemony, once at-
tained, can never be taken for granted. It requires persis-
tent efforts ‘to conserve and defend the existing
structure’ (SPN 178, quoted in Simon, 1982, p. 38). Indeed,
structural contradictions that could endanger the hege-
monic leadership began to emerge during the 1990s, even
as Jiang formulated the Party line, principles and policies in
accordance with the cementing ideology of Deng Xiaoping.
On the economic front, in particular, the weaknesses of the
Contract Responsibility System (CRS),
9
which was initiated
in the 1980s, were becoming increasingly apparent in the
early 1990s. Problems such as ‘short termism’ in the pursuit
of pro?t, lack of responsibility on the part of the manage-
ment over losses, as well as abuse of state assets due to
ambiguous property rights (Hassard et al., 2007), had all
contributed to the demise of the system. Nevertheless, it
was the failure in reducing government intervention in the
operations of the state-owned enterprises (SOEs) that cre-
ated the major barrier to the successful implementation of
the CRS. The reason for this problem was illuminated in a
speech
10
given by the then Vice Minister of Finance, Zhang
Youcai (1992, p. 2), at the National Members’ Congress of
the CICPA in 1992:
. . .tructural transformation of business enterprises,
though having all along been an important issue on
the reform agenda, is not a matter with an easy solution
if it is to be dealt with satisfactorily. Notwithstanding
that, in reforming China’s state-owned enterprises, a
clear principle has been laid down very early on that
enterprises and the government are to be separated.
The progress made so far has been slow. A major reason
is that the transformation in the functions of the gov-
ernment is lagging behind. Various levels of govern-
ment still see the organisation of production and the
operation of state-owned enterprises as their main
function; they are yet to transform their role to one that
is to aim at the overall management of the national
economy as well as the markets, and at serving the
development of the economy. Hence, the dif?culty in
moving ahead with the structural transformation and
9
The Contract Responsibility System was originally trialled in the
agricultural sector in rural areas (Hassard et al., 2007). It is a production
responsibility system where work was contracted out to household units,
with their remuneration linked to the production levels. According to
Hassard et al. (2007), the CRS was actively promoted by the state during the
second half of the 1980s. The system was expanded into urban areas
involving the reform of large industrial state-owned enterprises (SOEs).
10
This speech delivered at the National Members’ Congress of the CICPA
was timely, as the Congress was held not long after Deng Xiaoping’s
inspection tour to South China.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 433
the little headway made in cutting down on the admin-
istrative intervention.
According to Gramsci (1971), such conjunctural con-
?icts, if not understood and dealt with properly, could gen-
erate an organic crisis
11
that would, in turn, destabilize the
systemof alliances that forms the basis of hegemony. As part
of the solution to this problem, the state turned to its coer-
cive apparatus, issuing the Regulations on Transforming the
Management Mechanism of State-Owned Industrial Enterprises
in July 1992, in an attempt to expand the autonomy of enter-
prises and to further separate government administration
from their management. Notwithstanding, the many unre-
solved problems of the CRS pointed to the need for a new re-
form strategy.
With the push for a socialist market economy, the state
began to experiment with corporatization. Supporting this
latter initiative was a landmark document, the Decision on
Issues Concerning the Establishment of a Socialist Market
Economic Structure (hereafter referred to as the Decision),
adopted in November 1993 at the Third Plenary Session of
the 14th CPC Central Committee. The Decision re-af?rmed
the prevailing ideology, stating the practice of a socialist
market economy to be an important component of the The-
ory of Building Socialism with Chinese Characteristics (Com-
munist Party of China, 1993). It also reinforced the
fundamental ideology of jie fang si xiang, shi shi qiu shi
(emancipate the mind, seek truth from facts),
12
the essence
of which was to ‘promote the enthusiastic exploration of
new paths and the daring trial of new experiments’ (Com-
munist Party of China, 1993). Emphasis was again placed
on the reform of SOEs. Furthermore, the establishment of a
Modern Enterprise System (MES)
13
with public ownership
as the mainstay was formally pledged. The Decision particu-
larly highlighted the corporatisation of SOEs as ‘a bene?cial
trial in the building of a Modern Enterprise System’, and one
that was highly conducive to clarifying property rights, sep-
arating government and enterprise operations, as well as
transforming the management structure of enterprises
(Communist Party of China, 1993). Multiple forms of owner-
ship, including limited liability or joint-stock companies,
were allowed under the MES. It was believed that such a sys-
tem, if implemented, would resolve some of the structural
contradictions, as well as ‘relieving the state from the bur-
den of unlimited liability, facilitate the raising of funds as
well as diversifying the risks involved’ (Communist Party
of China, 1993).
Strengthening state corporatism: Hegemonic leadership
and consensus mobilization
While state corporatism was commonly used as a
mechanism for strengthening the state’s grip over the
economy and society, it was not the case with China. Unger
and Chan (1996) observe that state corporatism, as prac-
ticed in China, was used instead as a mechanism for allow-
ing the state’s grip to be loosened. It embodied ‘a shift from
a Party command system that dominated directly’ to ‘one
that dominates partly through surrogates’ (Unger & Chan,
1996, p. 105), with the latter assisting the state in the
implementation of public policy as well as communicating
government policy lines to their memberships (Unger &
Chan, 1996). Under the political and economic climate of
the 1990s, and amidst the desire of the state to loosen its
administrative control over SOEs, such state-corporatist
arrangement was perceived by the Communist regime as
an appropriate measure to resolve conjunctural con?icts.
To strengthen this corporatist mechanism, hegemonic
leadership was paramount and the state faced the impor-
tant task of consensus mobilization centred, particularly,
on its cementing ideology of building socialism with Chinese
characteristics and the eight-character policy of dui wai kai
fang, dui nei gao huo (opening to the outside and revitaliz-
ing the economy). In this regard, the CICPA, being a corpo-
ratist association, had the function of assisting the state in
steering its memberships into aligning their functions with
the prevailing (cementing) ideology of the state, as well as
with the economic reform agenda. As was re?ected in its
?rst Charter, apart from providing professional training, it
was one of the responsibilities of the CICPA to organize
the launching of quality ideological education (CICPA,
1989a, article 5, emphasis added).
Even before the Decision was adopted, the political ide-
ologies of Deng had already ‘?ltered down’ the government
ranks and the important role that could be played by CPAs
in both dui wai kai fang (opening to the outside) and dui nei
gao huo (revitalizing the economy) was increasingly recog-
nized by state of?cials (Zhang Youcai, 1992). Working in
partnership with the CICPA, who organized meetings of
public accountants, state of?cials made explicit the sup-
port of the state in the development of the profession.
The importance and the expectation of the role to be
played by Chinese CPAs were repeatedly conveyed to
them. At the inaugural meeting of the CICPA, for example,
the then State Councillor and Minister of Finance, Wang
Bingqian (1988), speci?cally linked the role of CPAs with
the prevailing ideology of the state and the policy of dui
wai kai fang, dui nei gao huo (opening to the outside and
revitalizing the economy). He empowered his audience
by saying that:
Certi?ed public accountant is both an estimable and
valuable occupation. A certi?ed public accountant
should have a sense of pride and responsibility, and
should strive to bring into play his/her role in the
11
The term ‘conjunctural’ is used to refer to ‘the current situation’ (Simon,
1982, p. 38), or to ‘a given moment’ (Forgacs, 1988, p. 427). ‘Organic crisis’,
on the other hand, refers to ‘a crisis of the whole system, in which
contradictions in the economic structure have repercussions through the
superstructures’ (Forgacs, 1988, p. 427).
12
Shi shi qiu shi was Mao’s fundamental Marxist viewpoint, and was the
essence of Mao Zedong Thought. In a speech at the All-Army Conference in
June 1978, Deng (1978a) re-af?rmed and explained this motto: ‘‘‘Facts’’ are
all the things that exist objectively, ‘‘truth’’ means their internal relations,
that is, the laws governing them, and ‘‘to seek’’ means to study. We should
proceed from the actual conditions inside and outside the country, the
province, county or district, and derive from them, as our guide to actions,
laws which are inherent in them and not imaginary, that is, we should ?nd
the internal relations of the events occurring around us’.
13
The establishment of the MES was the key to the state’s economic
reform agenda (particularly in relation to state-owned enterprises) in the
second half of the 1990s. The core feature of the MES is corporatisation and,
according to Hassard et al. (2007), it signalled, ‘for the ?rst time, that the
public ownership of SOEs could be diversi?ed through various forms of
ownership change, including privatization’ (p. 58).
434 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
socio-economic activities of society, thereby contribut-
ing to the construction of socialist modernisation (p. 3).
Apart from Wang Bingqian, many other top of?cials at-
tended and spoke at the inaugural meeting, re?ecting the
importance attached to the establishment of the CICPA. In-
deed, attendance of top political ?gures in meeting as such
carries symbolic meaning that serves to strengthen the
state-corporatist structure (Jeong, 1997). Furthermore,
the ‘friendliness’ exhibited by these of?cials can lead par-
ticipants ‘to believe that they are closely connected to
the state’ and that ‘their voices are sincerely heard’ (Jeong,
1997, p. 167). Such was, in fact, the case at the CICPA inau-
gural meeting. In his summary speech made at the closing
ceremony, the ?rst President of the CICPA, Yang Jiwan
(1988, p. 18) reported the responses of Chinese CPAs:
The care and enthusiastic support of the leading
members of the Ministry of Finance has greatly moti-
vated and encouraged all those who participated in
this meeting, giving us the con?dence and strength
to keep pushing ahead with the development of the
public accounting profession, as well as the impetus
to do our utmost in carrying out the tasks of the
CICPA . . .
The participants at this meeting unanimously agreed
that the establishment of the CICPA is the objective
requirement of developing a socialist commodity econ-
omy, and of perfecting the CPA system. It also repre-
sents the common wish of all the CPAs in the country.
It has important meaning and it is imperative.
From Yang’s speech it appeared that, even at a very
early stage of the state-corporatist arrangement, the state
had managed to mobilize the public accountants and
establish hegemonic leadership within the accounting
community.
Another event that was of signi?cance to the mobiliza-
tion of Chinese CPAs took place in 1992. The Second CICPA
National Members’ Congress was held against the political
backdrop (and the hegemonic in?uence) of building social-
ism with Chinese characteristics and the push for speeding
up the pace of the economic reform. This had created
new areas of work for CPAs, and their role was extended
from one of servicing the ?nancial reporting requirements
of sino-foreign enterprises to that of ‘monitoring’ the oper-
ations of SOEs. In an address delivered by the then Vice
Minister of Finance, Zhang Youcai (hereafter referred to
as Zhang), at the opening session of the Congress, Zhang
(1992) elaborated on the state agenda of cutting back
unnecessary intervention in the operation of SOEs. He
explained that, in deepening the economic reform, the
state is to:
. . . focus its energy on ways to perfect the laws and reg-
ulation, to strengthen its macro-level control and nur-
ture the growth of a market that will ?t in with the
macro-requirements of the State (ibid, p. 2).
As for the enterprises, Zhang (1992, p. 2) asserted that:
Enterprises are to work within the scope permitted by
the laws and the system of the State. They are to
conduct their operations independently, be responsible
for their gains and losses as well as their own development,
and exercise self-restraint in accordance with the
requirements of the markets (emphasis added).
In terms of ?nancial management, Zhang (1992, p. 3) clar-
i?ed the implications for both the state and the
enterprises:
From now on one of the directions that reform will take
is to separate the ?nance of the enterprises from the ?s-
cal budget of the state so that the government will focus
on handling its ?scal relation with the enterprises,
while all ?nancial activities of the enterprises are to
be managed solely by the enterprises themselves, with-
out any intervention from the Government. As to
whether an enterprise has been properly managed or has
complied with state policies and requirements, the enter-
prise is required to engage a certi?ed public accountant
to conduct an annual review of its operations. Relying
on the feedback from the certi?ed public accountants,
the government can, on the one hand, supervise an
enterprise’s compliance of state requirements and gain
an understanding of its actual condition. On the other
hand, the government can learn about the reactions of
the enterprise towards the ?scal and ?nancial require-
ments and take prompt measures to ?ne tune its con-
trol over them (emphasis added).
Through his speech, Zhang (1992) made clear to his audi-
ence that the strategic change in the management of SOEs
would require the support of CPAs who, in carrying out the
important task of social supervision,
14
were to become an
intermediary agent between the state and the state-owned
enterprises. Zhang (1992, p. 5) also reaf?rmed the prevailing
ideology of the state and emphasized the importance of
extending the role of CPAs:
Under the new conditions, our thinking and perception
have to be changed to adapt to the shift in work focus.
Given the words of Comrade Deng Xiaoping and the
spirit of the Political Bureau of the CPC Central Commit-
tee, we have to unify our thinking to further quicken the
pace of reform and work solidly hard, refraining from
formalism and any super?cial work. We have to be clear
about the guiding ideology in developing the public
accounting profession, i.e. to build what we have done
on the attestation work provided for foreign investment
enterprises and other related services, and gradually
shift the work focus to exercising social supervision
on other enterprises.
Indeed, the services provided by CPAs had been important
in enabling the dui wai kai fang (opening to the outside)
policy during the 1980s. With the transformation of the
state function in the 1990s, the extension of the scope
of CPA work to state-owned enterprises became impera-
tive. From this perspective, the continued expansion of
the public accounting profession and the ability of CPAs
14
Certi?ed public accountants in China were to assist the state with the
task of social supervision, particularly, in the economic realm. Hence,
within civil society, CPAs were often referred to as the ‘economic police’ as
they had a ‘social monitoring’ role (see Ding, 2001).
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 435
(and the public accounting ?rms) to provide high quality
audits was essential to protect the interest of the state.
Zhang’s (1992) speech was thus important at the time
in that it served not only to reaf?rm the state-corporatist
arrangement, but also to reinforce the consensus built
amongst CPAs, thereby continually mobilizing them into
aligning their functions with the economic agenda of
the state.
Apart from having state of?cials delivered speeches at
its events, the CICPA also sought other avenues to mobilize
Chinese CPAs and to build consensus amongst its member-
ship. Their of?cial publications were important ‘tools’ for
this purpose. For instance, the CPA News – which was ?rst
issued in May 1989 and was initially classi?ed as internal
documents for its membership – provided, in great detail,
the minutes of Council meetings, the speeches of state of?-
cials, updated regulations from the Ministry of Finance, as
well as the working reports of the CICPA, etc. While these
publications served to inform the memberships, they prop-
agated the ideology of the state at the same time. Apart
from such ‘top-down transmission’ (Unger & Chan, 1996,
p. 104), there is also evidence from these publications that
the CICPA had provided avenue for ‘bottom-up transmis-
sion’ (Unger & Chan, 1996, p. 104) – both being important
mechanisms under a state-corporatist arrangement. For
example, shortly after its formation, the CICPA embarked
on a research project entitled The Construction of China’s
Certi?ed Public Accountant System, holding a series of sem-
inars in various parts of China with a number of state of?-
cials, bank representatives, academics and CPAs, as well as
representatives from both local and international public
accounting ?rms.
15
Reports from these seminars, published
in the CPA News, revealed how such events had empowered
the public accountants to advance their ideas, manifesting
the spirit of both bai hua qi fang, bai jia zheng ming (let a hun-
dred ?owers bloom, let a hundred schools of thought con-
tend) and jie fang si xiang, shi shi qiu shi (emancipate the
mind, seek truth from facts). For instance, in the ?rst of these
reports, it was clear that participants at the seminars were
keen to recognize and extend the role that was to be played
by Chinese CPAs in the state’s economic reform agenda (CIC-
PA, 1989b, p. 2):
Participants pointed out that the role of CPAs should not
be limited to servicing dui wai kai fang (opening to the
outside), but should also include dui nei gao huo (revi-
talising the economy). Initially, the main clients of the
CPA industry are sino-foreign enterprises. This is a very
important and necessary starting point, and one that is
still full of challenges. However, if our development
remains focused on sino-foreign enterprises, we will
not be able to keep up with the requirements arising
from the pace of economic changes. In view of the cur-
rent economic and market reform and restructuring, a
number of participants also argued that it is essential
for CPAs to play a more important role.
Suggestions were made on how the state could better co-
ordinate the audits of sino-foreign enterprises
16
and how
CPAs could usefully contribute in monitoring the activities
of state-owned enterprises. Above all, Chinese public accoun-
tants had clearly aligned their ideology with that of the state
and identi?ed the role they were to play in the climate of eco-
nomic and market reforms. Under the state-corporatist
arrangement, the CICPA, in effect, serves as what Unger and
Chan (1996) called a ‘transmission belt’, providing a two-
way conduit between the state and the public accountants,
thereby allowing a harmony of interests to prevail.
Harmony was, however, under threat when members of
a second accounting professional body established in 1992
began to compete ?ercely with members of the CICPA. It
also weakened the state-corporatist structure erected to
mobilize public accountants into supporting the state’s
economic reform agenda. The next section examines this
episode of intra-professional con?icts and looks at how it
was being resolved.
Intra-professional con?icts during the 1990s
Re?ecting on the re-emergence of the public accounting
profession in the early 1980s, Ding Pingzhun (2001, p. 185)
17
describes the state of affairs at the time as san wu (three-
without) – without quali?ed personnel, without experience
and without foundation. There was no clear boundary
between accounting and auditing, with the latter being a rel-
atively new area of work in a socialist country that was
slowly recovering from its political turmoil of the past dec-
ade. While there were experienced book-keeping personnel,
they did not necessarily adopt an independent approach
when undertaking audit tasks (Ding, 2001). The re-establish-
ment of the public accounting profession was made possible
by those accountants who were highly experienced and
reputable but, nonetheless, fairly advanced in their years
(Ding, 2001). Because of such historical circumstances, the
‘over-aged’ population of CPAs and the alarming disparities
in the level of professional standards across the country
had always been issues of concern for the CICPA. The overall
mediocrity of professional and ethical standards that charac-
terized the ?edgling public accounting profession further
manifested itself in the early 1990s amidst increasing
high-pro?le economic fraud and corruption cases involving
CPAs and public accounting ?rms (Ding, 2001). However,
while such incidents gravely damaged the reputation of
the profession, it was only one of the many issues confront-
ing the CICPA. During the 1990s – amidst the desire of the
state to nurture and promote the healthy development of
the public accounting profession and the then Vice Premier,
Zhu Rongji’s determination to raise the standards of China’s
public accountants – the public accounting profession was
plagued by ?erce intra-professional competitions, which
15
Details of these seminars are published in three separate reports in the
CPA News circulated in 1989. The ?rst series of these seminars was held
between February and April 1989 with a total of eight meetings. The second
series was held between August and November with a total of six meetings.
The third and ?nal seminar was held on 17 November, mainly with top
level managers from the Representative Of?ces of international public
accounting ?rms.
16
Discussions at the seminars revealed that sino-foreign enterprises were
repeatedly subject to audit, ?rst by CPAs and then by the tax department,
hence creating a lot of disquiet amongst foreign investors.
17
Ding Pingzhun was ?rst appointed to the position of Deputy Secretary-
General of the CICPA on 27 July 1993, and soon became the Secretary-
General. He retired on 8 January 1999.
436 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
resulted in further compromising the professional and ethi-
cal standards of both CPAs and public accounting ?rms.
While the state-corporatist relationship between the state
and the CICPA appeared to be rather effective in mobilizing
Chinese CPAs thus far, such intra-professional con?icts
proved to be a big challenge to the CICPA, particularly, as
it became embroiled in the power struggles between two
government agencies.
Background to the con?icts
From the founding of the People’s Republic of China in
October 1949 through to August 1983, there was no inde-
pendent government audit institution in China as the eco-
nomic activities of SOEs were centrally controlled and
closely supervised by the relevant ?nance bureaus. How-
ever, following the economic reform and the open door pol-
icy, the Constitution of the People’s Republic of China was
amended at the Fifth Session of the Fifth National People’s
Congress in December 1982. With this amendment, an
auditing supervision system was introduced. According to
article 91 of the amended Constitution (Constitution of
the People’s Republic of China, 1982):
The State Council establishes an auditing body to super-
vise through auditing the revenue and expenditure of
all departments under the State Council and of the local
governments at various levels, and the revenue and
expenditure of all ?nancial and monetary organisations,
enterprises and institutions of the state.
Under the direction of the Premier of the State Council,
the auditing body independently exercises its power of
supervision through auditing in accordance with the
law, subject to no interference by any other administra-
tive organ of any public organisation or individual.
Accordingly, the State Council established the National
Audit Of?ce of the People’s Republic of China (CNAO) in
September 1983.
18
The CNAO was charged with the respon-
sibility of regulating and directing the audit work of the
whole country, including government audit, internal audit
and public audit. Article 109 of the 1982 Constitution further
provided for local auditing bodies to be established by local
people’s governments at and above the county level. As a re-
sult, local audit institutions were set up in succession at pro-
vincial, municipal and county people’s government levels
and audits were carried out gradually all over the country.
However, as economic reforms deepened, the state saw
the need to further improve its audit supervision system.
As a result, the State Council promulgated the Audit Regula-
tions of the People’s Republic of China in October 1988. Article
1 of the Audit Regulations stated that ‘‘[t]hese Regulations are
formulated to improve the audit supervision of ?nancial in-
come and expenditure and related economic activities; to
enforce ?nancial and economic law and discipline; to in-
crease economic performance; to strengthen overall control
and administration; and, to ensure the smooth implementa-
tion of the socialist modernization program (State Council of
the People’s Republic of China, 1988). The supremacy of the
CNAO over the nation’s auditing matters was also af?rmed
as it became ‘the State’s supreme audit of?ce, under the
leadership of the Premier of the State Council’ (State Council
of the People’s Republic of China, 1988, Article 7). The Audit
Regulations also made mention of ‘social audit’
19
organisa-
tions, and empowered such organisations to provide audits
as well as consultancy services in return for a commission
(State Council of the People’s Republic of China, 1988, Article
6). Such a provision had allowed more and more auditing
?rms
20
to be set up under the backing of the CNAO. Under
the climate of deepening economic reform, the number of
auditors continued to increase to provide audit supervision
over SOEs, as well as to facilitate the improvement of eco-
nomic performance and to address corruption in various lev-
els of government. This saw the beginning of a second
accounting professional body in China. On 8 September
1992, the Chinese Association of Certi?ed Public Auditors
(CACPA) was established under the supervision and guid-
ance of the CNAO. The rationale for the founding of the CAC-
PA was explained by one of the interviewees (interviewed
on 26 January, 2007):
The purpose of organising a certi?ed public accountant
profession was to meet the needs of opening to the out-
side world, whereas the purpose for having a certi?ed
public auditor profession was to meet the requirement
of deepening economic reforms . . . What we had were
state-owned enterprises. Economic reforms required
the government to exercise audit supervision over these
enterprises, and the government needed the help of
social audit organisations. This is why we need to set
up a team of certi?ed public auditors to help with the
deepening structural reform.
The establishment of the CACPA, however, had created ten-
sions between the Ministry of Finance (MOF) and the
CNAO. While members of the CACPA were engaged primar-
ily in performing audit work for SOEs, they did offer similar
types of services to those provided by public accounting
?rms – though the latter started by providing services to
enterprises using foreign investment before expanding
their work into the state-owned sector. A situation thus
developed where there were two institutes of public
accountants with overlapping functions, as well as two
types of practitioners – CPAs and certi?ed public auditors
– both strongly competing with each other. Furthermore,
the existence of both auditing ?rms and public accounting
?rms created a lot of confusion (interview with a govern-
ment of?cial, 25 January, 2007). This was further compli-
cated by the differences in the level of professional
standards between practitioners of the two bodies:
Because the two professional bodies were under the
supervision of two different government ministries,
the MOF and the CNAO respectively, their required
18
The CNAO was assigned to be one of the ministries under the State
Council.
19
‘Social audit’ is a special Chinese term, and is equivalent to what is
referred to in western countries as public audit. The term social was used as
China’s auditing system was initially introduced to ful?l the function of
social supervision in line with the requirement of a socialist state.
20
A distinction is to be made between auditing ?rms and public
accounting ?rms. Auditing ?rms were established by certi?ed public
auditors under the backing of the CNAO, while public accounting ?rms
were set up by CPAs and were under the supervision of the MOF.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 437
professional standards were very different. From 1991,
the CICPA had introduced an examination system, but
such kind of certi?cation system was never introduced
by the CACPA. Instead, similar to the certi?cation pro-
cess for CPAs in the past, candidates applying for CACPA
only had to go through an evaluation process, which
was based on working experience with the CNAO or
other government agencies. This created inconsisten-
cies in the level of standards between the two account-
ing bodies. In general, the level of standards of the
CICPA is higher than those of the CACPA. (Interview
with government of?cial, 26 January, 2007)
While the MOF disagreed with the certi?cation process of
public auditors, there was nothing it could do to stop the
CNAO from certifying its own auditors. Such a situation
created a lot of criticism within the accounting profession.
As one of the interviewees observed (interviewed on 26
January, 2007):
While competing in the same market, the entry require-
ment for the CACPA was much too low. Anyone who
wanted to become a certi?ed public accountant would
have to go through examination. It was so hard! But it
was not so with the CACPA! The public auditors could
still get their licences without having to sit any exami-
nation; they could still do the same work as the certi-
?ed public accountants!
Furthermore, when unfair competition
21
arose between
practitioners of the two professional bodies, the CICPA had
no means of disciplining those who acted unprofessionally
if they were under the supervision of the CACPA:
We could only request our CICPA members and public
accounting ?rms not to engage in unfair competition,
but if certi?ed public auditors acted unethically in the
market, we would have no means to discipline them.
And this had created a negative impact on the regula-
tion of the profession as well as on the overall macro-
economic situation of the country. (Interview with
government of?cial, 26 January, 2007)
Indeed, as early as 1989, numerous examples of unprofes-
sional conduct involving certi?ed public auditors and
auditing ?rms had been brought to the attention of the
CICPA (1989c). More alarmingly, many of the examples of
unfair competition reported were instigated by the CNAO
at the local government level.
22
Unlike intra-professional con?icts documented in most
other countries (see, for example, Caramanis, 1999; Poul-
laos, 1994; Richardson, 1987; Walker, 2004), the battle be-
tween the CICPA and the CACPA was in reality a ?ght for
power between two government ministries. As Ji (2001,
p. 103) commented, the fundamental issue was not about
how many accounting professional bodies existed in the
country, but rather a question of ‘who should have the
power to regulate and control the public auditing market’?
The two professional bodies, being quasi-government
agencies, were being used by the MOF and the CNAO as
‘battle vehicles’ (ibid, p. 103) in their competition for con-
trol over the macro-economic management and ?nancial
supervisory matters of the country. It was obvious that
the corporatist structure erected by the state was being
weakened as a result of such con?icts. In particular, it
had a serious impact on the ability of the CICPA to ful?l
its role as a corporatist association, in terms of overseeing
the healthy development of the public accounting
profession.
Resolution of the con?icts: The hegemonic leadership of Zhu
Rongji and the building of consensus
Constituting what Gramsci calls ‘common sense’ is the
Confucian ‘way of thinking’, which provides Chinese peo-
ple with moral guidelines and rules of practical conduct.
Under Confucianism, and as explained in Unger and Chan
(1996), giving primacy to private interests is regarded as
equivalent to sel?shness. Individual and sectoral interests
should, therefore, be compromised for the greater good,
as delineated by a higher leadership (Unger & Chan,
1996). Such principle was the key to resolving the con?icts
between the CICPA and the CACPA. It required not only the
subordination of the interests of the part to those of the
whole and of immediate to long-term interest,
23
but also
‘a consensus overseen by the moral authority of the leader-
ship’ (ibid, p. 99) – in other words, the exercising of hege-
monic leadership by the state. In this respect, as will be
seen later in this section, Zhu Rongji – the Vice Premier of
the State Council and governor of the People’s Bank of China
at the time – was found to have a signi?cant hegemonic
in?uence over the CICPA and the public accounting profes-
sion at large. The consensus building process was further as-
sisted by the constant appeal to a notion of interests that
was deeply ingrained in the culture as well as in the social
norms of the Chinese people.
The intra-professional con?icts and the many associ-
ated problems were resolved in 1995 when the CICPA
and the CACPA merged to become one institute. In a joint
notice
24
issued by the MOF and the CNAO on 19 June
1995, it was clearly stated that the two bodies were to
merge and the combined institute would become known
as the Chinese Institute of Certi?ed Public Accountants (CIC-
PA). While the newly constituted institute would come un-
der the supervision of both the MOF and the CNAO, its
21
In competing for business, an auditing ?rm would, for example, offer
kickbacks to those individuals or government departments who helped
them secure audit jobs. Another example given in a CPA seminar involved
an auditing ?rm offering consultancy for a client whose audited ?nancial
statements had been found to have problems by a public accounting ?rm.
In so doing, the client was able to avoid having their audit reports quali?ed
(CICPA., 1989c).
22
For example, the local CNAO agencies would use their administrative
in?uence to direct business to auditing ?rms. In return, such agencies
would be rewarded with a proportion of the revenue earned by the auditing
?rms (CICPA, 1989c).
23
Believed to be fundamental to the operation of a socialist system, such
principles were being reinforced by Deng Xiaoping. Deng Xiaoping, (1979)
points out that, under a socialist system, ‘personal interests must be
subordinated to collective one, the interests of the part to those of the
whole, and immediate to long-term interests . . .Were we to do the opposite
and pursue personal, local or immediate interests at the expense of the
others, both sets of interests would inevitably suffer’.
24
This joint notice was entitled Joint Notice on Issues Related to the
Combination of the CICPA and CACPA.
438 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
permanent of?ce was to be established under the MOF (Joint
Notice on Issues Related to the Combination of the Chinese
Institute of Certi?ed Public Accountants & Ministry of Fi-
nance, 1995, paragraphs 1 and 5). Paragraph 4 of the joint
notice also made provision for those certi?ed public auditors
quali?ed before 31 December 1993 to obtain a CPA certi?-
cate and to become a member of the CICPA.
Such a decisive arrangement, however, could not have
been reached without the direct intervention of Zhu Rongji
(hereafter referred to as Zhu). According to one of the
interviewees (interviewed on 18 January 2007), Zhu played
an important role in the merger of the CICPA and the
CACPA:
From the time when Zhu Rongji was the Vice Premier to
the time when he became Premier, Zhu Rongji was par-
ticularly concerned about the development of the CPA
profession. Without him, the merger between the CICPA
and the CACPA would not have happened.
We could successfully merge the two bodies, because
this was the order from Zhong Nan Hai.
25
Zhu Rongji
cared, and many of the things he said provided the direc-
tion for regulating the public accounting profession. He
told the Ministry of Finance that CPAs were the founda-
tions for a market economy, that it was an extremely
important task to nurture the public accounting profes-
sion. He also said that accounting reform and the devel-
opment of the public accounting profession were
crucial to the future of the nation. (emphasis added)
Indeed, it was under the aegis of Zhu Rongji that the State
Council ordered the merger of the CICPA and the CACPA
(CICPA, 1995; Ministry of Finance & the National Audit Of-
?ce, 1995). According to the of?cial history published by
the CICPA, Zhu was ‘always concerned’ about the develop-
ment of the public accounting profession, emphasizing, in
particular, the requirement for a high standard of profes-
sionalism – in terms of ‘keeping good faith and integrity,
abiding by a code of professional ethics, adhering to
accounting standards, and making no false accounts’
26
(CICPA & Accounting Society of China, 2002, p. 2). His
well-known quote, propagated in a number of CICPA of?cial
publications as well as communicated to the Chinese public
accountants on many occasions (see, for example, CICPA,
2002, 1999; Wang, 1995), conveyed a very powerful mes-
sage to members of the public accounting profession. Zhu
states that:
China’s public accounting profession serves as a founda-
tion for a socialist market economy and concerns the
future and fortune of the nation; the development of
the profession is a great undertaking of lasting impor-
tance (CICPA., 1999, p. 27).
Zhu was, in effect, linking the cementing ideology of Deng
(i.e. of building socialism with Chinese characteristics) and
the state’s strategic push for transforming into a socialist
market economy with the importance of the public
accounting profession. To ensure the success of the eco-
nomic reforms, Zhu understood the need as well as the
importance of raising the level of standard of public
accountants (see, for example, CICPA, 1999, p. 40). He
was, therefore, speci?cally concerned about the healthy
and continual development of the public accounting pro-
fession (Ding, 2001). So while other Chinese leaders also
attached great importance to the profession,
27
it was Zhu’s
deep understanding of its role (as well as the requirement of
having high level of standards) within the overall strategic
plan of building socialism with Chinese characteristics that
won him the consent of Chinese public accountants. His
hegemonic in?uence within the accounting community
can be seen, for example, in responses to his speech deliv-
ered at the 1995 National Conference on Accounting Work.
The speech, which provided suggestions on readjusting
and restoring the order of accountancy work, was reported
to have received unanimous support from the participants
at the meeting. Participants also agreed that Zhu had great
insights into the issues they faced in their work, and they
were determined to put Zhu’s suggestions into practice (re-
ported in Accounting Research, 1995, vol. 12, pp. 2–5). Such
responses, it can be argued, also re?ect the ‘moralistic
father-knows-best paternalism’ (Unger & Chan, 1996, p.
99) said to have been embedded within the Chinese way
of thinking.
Having instigated the merger, Zhu also monitored its
progress closely and continued to exert his in?uence
throughout the merging process (see, Ding, 2001, p. 362,
373). The latter was particularly evident in the written
statement he issued at the special meeting of the CPA rep-
resentatives held on 5 June 1996, 1 year after the decision
to merge. Strategically, the timing of Zhu’s statement was
important as the progress made in combining the local
institutes
28
of the CICPA and the CACPA was far from desir-
able – in particular, because the number of certi?ed public
auditors in existence at the time was relatively high in com-
parison to the number of CPAs (see, Ding, 2001). The need to
accommodate a huge number of certi?ed public auditors
with perceived lower level of standards created many con-
?icts between the local MOF and CNAO agencies, which
were the real power behind the two professional bodies.
This accentuated their power struggles and further hindered
25
‘Zhong Nan Hai’, also known as the Sea Palaces, literally translates as
the Central and Southern Seas. It had been home to the highest ranking
members of the Communist Party (such as Mao Zedong and Zhou Enlai) and
now the Central Committee of the Communist Party, the State Council, the
Central People’s Government and the Military Commission of the Party
Central Committee all operate from there.
26
This was expressed in 16 Chinese characters, making up four catchy
phrases, each with four characters.
27
For example, at the Special National Congress of the CICPA held in June
1996, it was recorded that the meeting was ‘highly thought of’ by the
leaders of the state and other related state departments. According to an
of?cial publication of the CICPA, these leaders inscribed encouraging words
or made written speeches for the meeting, ‘which demonstrated the loving
care and support of the Party’s Central Committee, the State Council and
related departments to the certi?ed public accountancy profession’ (CICPA,
1999, p. 40).
28
The local institutes are local organizations of the CICPA and the CACPA
located in a province, in an autonomous region, or in a municipality directly
under the central government. For example, in accordance with the ?rst
CICPA charter, a local institute can be set up in a province, in an
autonomous region, or in a municipality directly under the central
government where there are more than 20 CPAs and more than two public
accounting ?rms (CICPA, 1989a).
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 439
the progress of the merger (Ding, 2001, p. 26). Understand-
ing the source of the con?icts, Zhu urged the MOF and the
CNAO to vigorously support and create the conditions
whereby CPAs and public accounting ?rms could effectively
carry out their functions (Zhu Rongji, 1996). He also rein-
forced the purpose of unifying the public accounting profes-
sion, linking the importance of the merger to the role
expected of the CICPA in terms of effective management
and co-ordination of the work of both CPAs and public
accounting ?rms (Zhu Rongji, 1996). Zhu further appealed
to the participants at the meeting to speed up the merging
process and to work towards raising the professional stan-
dards for both CPAs and public accounting ?rms (Zhu Rongji,
1996).
In response to Zhu’s statement, and following consulta-
tion with the CICPA, the MOF and the CNAO issued a sec-
ond joint notice
29
on 15 December 1996, targeting the
mergers of the local institutes of both professional bodies
and setting out the timeframe for their completion (Ding,
2001, p. 373; see, also, Joint Notice on Speeding Up the Com-
bination of Local Institutes of the Chinese Institute of Certi-
?ed Public Accountants & the National Audit Of?ce, 1996). In
this notice, the local government agencies were asked ‘to
prioritise the merger in their working agenda and to act in
accordance with: (1) the instruction of Zhu; (2) the ?rst joint
notice; and, (3) the spirit of the agreement made at the spe-
cial CPAs representatives meeting’ (Joint Notice on Speeding
Up the Combination of Local Institutes of the Chinese Insti-
tute of Certi?ed Public Accountants & the National Audit Of-
?ce, 1996, paragraph 1). They were also urged to consider
the collective interests and to compromise for the sake of
unifying the public accounting profession. The latter was
said to be crucial for the country in its process of transform-
ing into a socialist market economy (Joint Notice on Speed-
ing Up the Combination of Local Institutes of the Chinese
Institute of Certi?ed Public Accountants & the National
Audit Of?ce, 1996, paragraph 1).
The issuance of the second joint notice was indeed an
important step for ending the stalemate at the local insti-
tutes’ level. By December 1997, one a half year after the
delivery of Zhu’s statement, signi?cant progress was re-
ported to have been made in the merging process (Ding,
2001, p. 373). In his working report presented at the CICPA
Council meeting in 1997, the then Secretary General of the
CICPA, Ding Pingzhun, formally acknowledged the impor-
tance of Zhu’s involvement, stating his concern over the
merger of the CICPA and the CACPA as ‘an important guar-
antee for advancing the merging process towards the right
direction’ (Ding, 2001, p. 373).
While the hegemonic leadership of Zhu – with persis-
tent focus on building socialism with Chinese characteristics
– was important to the successful implementation of the
merger, it was made more effective through a process of
consensus building. According to Ding (2001, p. 362), the
merger of the CICPA and the CACPA was broadly carried
out in three steps: (1) the issuance of joint notices; (2)
the merging of the permanent of?ces of the institutes;
and (3) the convening of a special meeting of CPA repre-
sentatives. The ?rst of these steps signi?ed the reaching
of consensus with regard to the general direction of the
merger, whereas the second and the third steps both re-
lated to the practicalities of the merging process (Ding,
2001). The sequence of these events was signi?cant in that
it highlighted the priority attached to consensus building.
While providing the blueprint for the merger of the CICPA
and the CACPA, the ?rst joint notice also made explicit the
consensus that was reached ‘at the top’. This can be seen in
its preamble where it was revealed that agreement to the
merger, although instructed by the State Council, was
reached after discussions between the MOF and the CNAO
(Ministry of Finance & the National Audit Of?ce, 1995, pre-
amble). Indeed, being government ministries and the
power behind the two professional bodies, their support
of the merger and their agreement on its details were cru-
cial to its execution. The ?nal paragraph of the joint notice
further ‘?ltered down’ the consensus by urging local insti-
tutes of the two professional bodies to implement the mer-
ger in accordance with the spirit manifested in the notice
(Ministry of Finance & the National Audit Of?ce, 1995, par-
agraph 7).
For the successful implementation of the merger be-
tween the CICPA and the CACPA, as well as for the state-
corporatist mechanism to function properly in the future,
consensus building at the CICPA leadership level was also
crucial. As re?ected in the minutes of the CICPA Council
meeting held in 1995, the response of the Council mem-
bers to the ?rst joint notice appeared to be very positive.
Recorded in the minutes was a speech delivered by the
then Vice-Minister of Finance, Zhang Youcai, who was also
the honorary President of the CICPA at the time. Linking
the merger with the ideology of the state, Zhang pointed
out that the joint notice complied with the spirit of the
Decision regarding the development of market intermedi-
ary organisations, and satis?ed: (1) the ideological princi-
ple of shi shi qiu shi (seeking truth from facts); (2) the
requirement of a socialist market economy; and, (3) the
practical circumstances facing social auditing in China
(CICPA, 1995, p. 2). He further described the agreement
to merge as a ‘hard-earned achievement’ (CICPA, 1995, p.
2), and one that Zhu Rongji paid particular attention to.
The minutes revealed the unanimous support of the Coun-
cil members over the merger issue and reported their total
agreement with Zhang. Not only did the Council members
concur that the merger represented an important mile-
stone in the development of the Chinese public accounting
profession (CICPA, 1995, p. 2), they also expressed their
determination to advance the merger agenda (CICPA,
1995, p. 4). The minutes of the Council meeting also cited
the Council members’ unanimous decision to carry out
the merger with rigor, both from an ideological as well as
an organisational level (CICPA, 1995, p. 3). The ideological
aspect was of crucial importance, as it involved building
consensus, particularly in understanding that the merger
was necessary in furthering the development of the public
accounting profession and, more importantly, that it was a
long-term strategy rather than a temporary measure (CIC-
PA, 1995, p. 3). With regard to the pursuance of long-term
interests, Zhang particularly emphasized that a common
29
This second joint notice was entitled Joint Notice on Speeding up the
Combination of Local Institutes of the Chinese Institute of Certi?ed Public
Accountants and the Chinese Association of Certi?ed Public Auditors.
440 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
understanding of such principle must be reached (CICPA,
1995, p. 3). Certainly, on both cultural and political levels,
the ideological thinking whereby immediate interests are
to be subordinated to long-term interests was not unfamil-
iar to the Council members. Indeed, in the case of resolving
the intra-professional con?icts, it was through reaching
consensus on pursuing the long-term interests of the pro-
fession that the CICPA was prepared to accept the compro-
mises it had to make in the merger process. As noted by
one of the interviewees (government of?cial interviewed
on 26 January, 2007):
At that point in time, the CICPA did make a big compro-
mise. Even though it was the CACPA who felt like being
lost in the process, the CICPA did make a big compro-
mise to achieve the merging. What was the biggest
compromise? We awarded all certi?ed public auditors
the title of CPA unconditionally. You have to understand
we had approximately 28,000 practising CPAs then. And
there were approximately 25,000 certi?ed public audi-
tors. Out of these 25,000, most of them did not have
to take professional exams to obtain their certi?cate.
But we regarded such a compromise a worthwhile
one. For in as little as ?ve years’ time, the CPA member-
ship had structurally re-adjusted: most of the CPAs
quali?ed under the evaluation system (i.e. who were
previously certi?ed public auditors) were older com-
rades. They had to have over 30 years of working expe-
rience, which made them 50 or 60 years old. Many of
them had retired from the state-owned enterprises
before undertaking the work of a CPA. After the merging
of the CICPA and the CACPA, we continually regulate the
quality of our team. Now we have a team of profession-
als who are young. So, at one point in time, we had
indeed sacri?ced a great deal, and a lot of the CPAs per-
ceived this move as negative. But after the develop-
ments of these few years . . . we have now got a much
better team of CPAs as compared to the past.
Despite the short-term drawback of having to ‘absorb’ all
the certi?ed public auditors with a perceived lower stan-
dard of quali?cation, the CICPA was determined to focus
on the long-term positive development, which could only
be made possible if the whole profession was to be
united.
The consensus built at the CICPA leadership level was
further transmitted down to the local institutes’ level,
being reinforced also by the second joint notice issued by
the MOF and the CNAO. As discussed earlier, the issuance
of this latter joint notice saw an important breakthrough
in the merging of the two institutes. The uni?cation pro-
cess, which included the merger of the local institutes of
the two bodies, took nearly 3 years to complete (CICPA,
1998). From 1999, the name CACPA and the title of certi-
?ed public auditor was no longer used in China. The suc-
cessful merger between the CICPA and the CACPA not
only dissolved the intra-professional con?icts that plagued
the public accounting profession, but also restrained the
intra-government power struggle between the MOF and
the CNAO, preventing their ‘warfare’ from becoming more
intense.
Discussion and conclusion
Taking into account the differences in culture and in the
system of power in China, the theoretical underpinning of
this study employs a (state) corporatist framework and
combines with Gramsci’s concept of hegemony. The cou-
pling of these two concepts offers a ‘new’ dimension for
analysing the state-accounting profession axis in China,
i.e. one that is capable of highlighting the particular power
relation between the state and the Chinese public account-
ing profession, while at the same time illuminating the
ideological in?uence of the state in the professionalization
process.
The state-accounting profession dynamic in China dur-
ing the 1990s is best understood to be one of cooperation
and ‘harmony’. It was a period when the state – and espe-
cially Zhu Rongji – took an active interest in the develop-
ment of the accounting profession, emphasizing, in
particular, the requirement for a high standard of profes-
sionalism. On the economic front, the state endeavored
to loosen its administrative grip over SOEs and resorted
to bridge the gap in control through the use of corporatist
mechanism. In this regard, the CICPA has all the hallmarks
of a state corporatist association. It was to assist the state
in managing CPAs and public accounting ?rms, both of
which were perceived by the state (and state of?cials for
that matter) to have an important role in monitoring the
activities of SOEs. More importantly, the CICPA had the
task of communicating policy lines of the state to its mem-
bership and, in the process, mobilizing and steering Chi-
nese public accountants into aligning their functions with
the economic agenda of the state.
In seeking cooperation and thereby maintaining the
effectiveness of the corporatist mechanism, both the state
and the CICPA were seen to have placed a lot of emphasis
on consensus building. In this respect, the process of
achieving organized consensus was aided by a powerful
‘tool’, i.e. the political ideologies of Deng Xiaoping. During
the 1990s, Deng Xiaoping’s concept of building socialism
with Chinese characteristics became a dominant conception
of reality for the Chinese people and the country em-
barked, at full speed, on the transformation into a socialist
market economy. Under such political and ideological cli-
mate, the public accounting profession became even more
important to the state in its economic reform agenda. The
importance of the public accounting profession in the over-
all strategic plan of building socialism with Chinese charac-
teristics was being repeatedly af?rmed by state leaders
(and Zhu Rongji in particular) in of?cial publications, as
well as in public meetings of Chinese public accountants.
In this way, the state, working in partnership with the CIC-
PA, was able to mobilize Chinese public accountants in
supporting both the dui wai kai fang (opening to the out-
side) and dui nei gao huo (revitalizing the economy)
policies.
Cooper (1995, p. 179) describes power as being more
powerful ‘if it is invisible, disseminated throughout the
texture of social life and thus ‘‘naturalized’’ as custom, ha-
bit or ‘‘spontaneous’’ practice’. Indeed, in the case of China,
political ideologies serve as the ‘invisible power’ of the
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 441
state in the process of social control and in the construc-
tion of a particular social order. While changes in political
ideologies are re?ected in successive amendments to the
Constitution of the People’s Republic of China, various
strategies were also adopted to foster the alignment of ide-
ology between the state and the Chinese people – from
broadcasting Mao’s of?cial revolutionary doctrines using
loudspeakers that sit on people’s rooftops (Li, 2003) to
the modern day use of the media; from the display of polit-
ical slogans on public billboards and banners to incorporat-
ing into the educational curriculum the ideology of state
leaders. Through these diversi?ed means, ideologies of
state leaders became very much embedded within social
discourses, forming, also, part of the mental framework
through which the Chinese people ‘make sense of, de?ne,
?gure out and render intelligible the way society works’
(Hall, 1982, p. 59). This was clearly evident in the account-
ing discourses analysed in this study. Not only were refer-
ences to political and policy slogans found to be frequently
made, they were often used as rationales for justifying
action.
Intra-professional competition has been the theme of
much critical research. Argued to be one of the ‘pervasive
themes in professional organization’ (Walker, 2004, p.
127), such rivalries are often ‘sustained and bitter’ (Cara-
manis, 1999, p. 153). Research has also shown that intra-
professional competition can be an important ‘driver’ for
accountants to organize into professional institutions, par-
ticularly in situations where professional accountants have
‘no capacity to enforce an internal demarcation of the
occupation’ (Walker, 2004, p. 153), and have thus ‘sought
to differentiate the superior professional from the inferior
non-professional through the conferment of institutional
membership or non-membership’ (Walker, 2004, p. 153)
– as was the case in the United Kingdom. The result of such
a tactic is that, while exclusionary closure was achieved
and intra-occupational status hierarchy solidi?ed, a single
occupation inevitably becomes segmented, with each seg-
ment constantly and continuously competing with each
other in an attempt to expand its in?uence, as well as to
defend and maintain its status.
Like many other countries where intra-professional
competition has featured in the accounting professionali-
zation process, the Chinese public accounting profession
was no exception. What was unusual about the Chinese
experience, however, was the particular circumstances
and outcome of the intra-professional ‘battle’ between
the CICPA and the CACPA. For example, while the standards
set by the CICPA were much higher than that required by
the CACPA, such professional ‘superiority’ did not translate
into any competitive advantage for the CICPA. On the con-
trary, the lower requirement for entry into the CACPA
made it easier for practitioners to obtain a CACPA licence
and practise as a certi?ed public auditor, rather than as a
certi?ed public accountant. This created a situation where
the number of certi?ed public auditors increased at a dis-
proportionate rate as compared to the number of CPAs,
thus worsening the competition between the two profes-
sional bodies. The outcome of the intra-professional com-
petition between the CICPA and the CACPA is particularly
revealing. Unlike the experiences in most western
countries, the Chinese accountants did not proactively pur-
sue a strategy of exclusionary closure. The answer to
resolving the con?icts and the directive to eliminating
the intra-professional competition came from the state,
and it was to be achieved through the merger of the two
institutes. From this investigation, it can be seen that the
two Chinese professional accounting bodies would not
have merged without the direct intervention of the State
Council and, in particular, the authoritative (and hege-
monic) leadership of Zhu Rongji. The merging process
was further facilitated through a process of consensus
building. Apart from agreements reached between the
MOF and the CNAO with regard to the merger, the align-
ment of ideology between the state and the CICPA Council
members was also crucial, not only in terms of achieving
organized consensus, but also in the top-down transmis-
sion of such consensus to members of the CICPA. While
this re?ects the top-down approach as well as the harmony
aspect of state-corporatism, it also highlights the role of
the state in instigating an ‘exclusionary closure’ that saw
the eradication of a parallel accounting organization.
Instead of sustained professional segmentation, as was
the case in western countries, the intra-professional con-
?ict actually led to the uni?cation of the public accounting
profession in China – an outcome which made the Chinese
experience rather unique. Such an outcome provides a
glimpse of the way Chinese society works which could ulti-
mately be attributed to a different system of power, its
ideological in?uences, and the cultural values that Chinese
people use to map their world.
Acknowledgements
The author would like to acknowledge the helpful com-
ments of two anonymous reviewers.
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444 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
doc_904713546.pdf
The dynamic nature of the state-accounting profession relationship has been mostly
explored within a western democratic and capitalist context. Taking into account the
unique culture and the system of power in China, this paper contributes by examining
the influence of the state over the Chinese public accounting profession during the
1990s. Utilizing a corporatist framework and combined with Gramsci’s concept of hegemony,
this paper provides insights into the power relation between the state and the
accounting profession, as well as illuminates the ideological influence of the state in the
development of the profession.
Analyzing the state-accounting profession dynamic: Some insights
from the professionalization experience in China
Helen Yee
?
Centennial College, Hong Kong University, 3 Wah Lam Path, Pokfulam, Hong Kong
a b s t r a c t
The dynamic nature of the state-accounting profession relationship has been mostly
explored within a western democratic and capitalist context. Taking into account the
unique culture and the system of power in China, this paper contributes by examining
the in?uence of the state over the Chinese public accounting profession during the
1990s. Utilizing a corporatist framework and combined with Gramsci’s concept of hege-
mony, this paper provides insights into the power relation between the state and the
accounting profession, as well as illuminates the ideological in?uence of the state in the
development of the profession. The empirical investigation also pays particular attention
to the intra-professional con?icts that took place in the 1990s and provides further insights
into the dynamic of the state-accounting profession relationship in that era.
Ó 2012 Elsevier Ltd. All rights reserved.
Introduction
Within academic circles, there have been numerous dis-
cussions on how the function and the role of the state are
perceived (Jessop, 1977; Lehman, 1992; Lindblom, 1982;
Miller, 1990; Offe & Ronge, 1984; Tinker, 1984). For in-
stance, there are the functional conceptions of the state
as a common-bene?t organization and a con?ict resolver
(Lindblom, 1982) that plays an active role in managing so-
cial con?icts and dispersing social tensions (Lehman,
1992). More critical views of the state, such as those con-
sidered within the Marxist tradition, see the state as an
instrument of class rule; a system of political domination;
or, a factor of cohesion that regulates the struggle between
antagonistic classes while maintaining, at the same time,
the continued domination of the ruling class (Jessop,
1977). Nevertheless, despite differences in conceptions of
the role of the state, evidence has indicated that, in ful?ll-
ing its various functions, the state has been intricately in-
volved with the development and regulation of
institutions such as the accounting profession (see, for
example, Bailey, 1992; Chua & Poullaos, 1993, 1998; Chua
& Sinclair, 1994; Loft, 1986; MacDonald & Richardson,
2004; Poullaos, 1993, 1994; Puxty, 1990; Richardson,
1989; Robson, Willmott, Cooper, & Puxty, 1994; Sian,
2006; Walker & Shackleton, 1995; Willmott, 1986).
Accounting institutions (and accounting practices for that
matter) are said to play a particularly important role in
assisting the state with supporting market mechanisms;
managing economic policies; planning national economic
resources; regulating particular industrial and commercial
sectors; implementing price and wage control; combating
trade union power; as well as reinforcing power relations
(Burchell, Clubb, Hopwood, Hughes, & Nahapiet, 1980;
Miller, 1990; Sikka & Willmott, 1995a). From this perspec-
tive, it can be argued that examination of the dynamic rela-
tionship between the state and the accounting profession
can be used bene?cially to illuminate broader social issues
such as distribution of power; competition for social
resources; con?icts and struggles within society; as well
as the role of the state in adjudicating amongst interests.
0361-3682/$ - see front matter Ó 2012 Elsevier Ltd. All rights reserved.http://dx.doi.org/10.1016/j.aos.2012.04.003
Abbreviations: CACPA, Chinese Association of Certi?ed Public Audi-
tors; CICPA, Chinese Institute of Certi?ed Public Accountants; CNAO,
National Audit Of?ce of the People’s Republic of China; CPA, Certi?ed
public accountant; CPC, Communist Party of China; CRS, Contract
Responsibility System; MES, Modern Enterprise System; MOF, Ministry
of Finance; SOEs, State-owned enterprises; WTO, World Trade
Organization.
?
Tel.: +852 37626200; fax: + 852 25512298.
E-mail address: [email protected]
Accounting, Organizations and Society 37 (2012) 426–444
Contents lists available at SciVerse ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
For this reason, this paper will focus on investigating the
state-accounting profession dynamic. More speci?cally,
emphasis is placed on examining this dynamic within the
context of the development of the public accounting pro-
fession in a non-western and, supposedly, non-capitalist
society, to wit, China.
In terms of the development of the Chinese public
accounting profession, one of the remarkable features,
since its re-emergence in the 1980s, is its phenomenal
growth and development over a relatively short period of
time – especially when compared with experiences in wes-
tern countries. Considering the plight of Chinese accoun-
tants under Mao Zedong’s regime and the extraordinary
turnaround of their fortunes after Deng Xiaoping (hereafter
referred to as Deng) rose to power in the late 1970s, it is
conceivable that the state, and the state leaders for that
matter, might have had an important in?uence over the
development of the accounting profession in China. Fur-
thermore, given the vast differences between the ideolog-
ical principles of the two leaders – with Mao emphasizing
the primacy of class struggle, public ownership and central
planning, and Deng more concerned with economic devel-
opment, marketization and mixed-ownership (Ezzamel,
Xiao, & Pan, 2007) – the shift from one regime to the other
would have unavoidably changed the political and ideolog-
ical discourse, impacting on all aspects of Chinese society,
including the rise and fall of the occupation of accounting.
It is, therefore, the aim of this paper to uncover the role
and the importance of the state (and state leaders) in the
professionalization process of Chinese public accountants.
Previous studies on the development of the Chinese
public accounting profession, such as Hao (1999) and Yee
(2009), have examined the dynamic interaction between
the state and the profession in the 1980s. This paper seeks
to contribute by further examining such dynamic in the
1990s. The paper also highlights a particular episode which
happened during that period when the ?edgling Chinese
public accounting profession experienced intense intra-
professional competition – this being a phenomenon com-
monly found within the ‘internal dynamic’ (Klegon, 1978,
p. 268) of the professionalization process and one that
has been the subject of much critical research in western
countries (see, for example, Caramanis, 1999; Poullaos,
1994; Walker, 2004).
In accounting research, a number of critical writers (see,
for example, Cooper, Puxty, Lowe, & Willmott, 1989; Puxty,
Willmott, Cooper, & Lowe, 1987; Richardson, 1989; Walker
& Shackleton, 1995) have utilized a corporatist framework
to examine the relationships between the state and the
accounting profession in advanced capitalist economies
such as the US, Germany, Sweden, Canada and the UK.
Focussing on the experience in the UK, Cooper et al. (1989)
suggest that the corporatist model can usefully illustrate
‘the historically contingent, materialist basis and dialectical
relationship between the state and the profession’ (p. 246).
However, corporatismis not without its weaknesses. In par-
ticular, there have been considerable discussions in the lit-
erature that point to the ‘profound lack of agreement’
(Panitch, 1980, p. 159) on the usage of the concept and on
its de?nition (see, also, Schmitter, 1977a; Walker & Shackl-
eton, 1995), with writers impressing ‘reservations, criti-
cisms, extensions, and corrections upon its use’ (Schmitter,
1977a, p. 4). Aware of suchanissue, critical accounting writ-
ers have often utilized the corporatist framework in modi-
?ed form, or in conjunction with other concepts (Walker &
Shackleton, 1995; see also, Cooper et al., 1989; Richardson,
1989 for example). Likewise, this paper is informed by an
approach that makes use of a corporatist framework, but
combines it with Gramsci’s (1971) concept of hegemony.
Corporatism, as referred to in this paper, is understood
as a system of interest intermediation, or, in accordance
with Schmitter’s (1974, p. 86) interpretation, ‘a particular
modal or ideal-typical institutional arrangement for link-
ing the associationally organized interests of civil society
with the decisional structures of the state’. Distinguishing
it from pluralism, Schmitter (1974) de?nes the ideal-type
corporatism
1
as:
. . . a system of interest representation in which the con-
stituent units are organized into a limited number of
singular, compulsory, noncompetitive, hierarchically
ordered and functionally differentiated categories, rec-
ognized or licensed (if not created) by the state and
granted a deliberate representational monopoly within
their respective categories in exchange for observing
certain controls on their selection of leaders and articu-
lation of demands and supports.
While corporatism has been mostly studied within a
Western liberal capitalist context (see, for example,
Lehmbruch, 1977; Panitch, 1980), Schmitter (1974) con-
tends that corporatism is neither a characterization of a
particular political system nor a distinctive product of a
particular political culture. Rather, it is compatible with
several different regime-types and party systems, with dif-
ferent varieties of ruling ideology and levels of political
mobilization, and also with varying scopes of public policy
(Schmitter, 1974, p. 92). In other words, corporatist mech-
anisms can be embedded not only in polity with a liberal
parliamentarian state, but, equally, in authoritarian Third
World government or dictatorial Communist Party regime
(Unger & Chan, 1996).
Within a corporatist framework, the state would deter-
mine which organized functional interests are to be recog-
nized as ‘legitimate’. Apart from engaging with the state
(mostly, at the leadership level) in the policy-making pro-
cesses, these organized groups are often mobilized to par-
ticipate in the implementation of state policy.
Conceptualizing within this context, the use of the concept
of hegemony is useful as a means of understanding how, in
the absence of, or in conjunction with, coercion from the
state, consent can be established and maintained in a cor-
poratist arrangement.
The remainder of this paper is organized as follows. The
next section looks at professionalization and the state-
accounting profession dynamic as portrayed and under-
stood in a western context. It brie?y discusses two theoret-
1
It is recognised, even by Schmitter (1974; see also Schmitter, 1977a)
himself, that no empirically extant system of interest representation may
perfectly reproduce all the dimensions as described in the de?nition.
However, Schmitter’s (most elaborate) de?nition of the ideal-type corpo-
ratism provides a useful starting point for subsequent discussions of the
concept and is the most oft-quoted de?nition referred to in the literature.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 427
ical perspectives that have been useful in interpreting the
state-accounting profession relationship in western demo-
cratic societies, and highlights the recent trend in account-
ing professionalization that has been studied by
researchers. The following section then proceeds to explain
why the particular power relation between the state and
organized accounting groups can be very different in China
as compared to western democratic countries. The theoret-
ical concepts for explaining the Chinese phenomenon are
explained in this section. With regard to corporatism,
two subtypes of corporatist arrangement are distinguished,
i.e. state and societal corporatism, with China being lo-
cated within the former. In terms of the concept of hege-
mony, the focus is on the consensual ideological aspect
whereby ideology is said to play an important role in the
process of social control and as a mode of domination.
Thereafter, the remaining sections of the paper present
the analysis. The empirical study examines the state-
accounting profession dynamic during the 1990s within
its wider political and economic environment. It highlights
the political and ideological in?uence of Deng Xiaoping,
and the new form of consciousness – encapsulated in the
concept of building socialism with Chinese characteristics –
he created. It also illuminates the state-corporatist
arrangement between the state and the Chinese Institute
of Certi?ed Public Accountants (CICPA), and how the latter
assist the state in steering its memberships into aligning
their functions with the prevailing ideology of the state.
In terms of the intra-professional competition, it reveals
how the power relation between the state and the public
accounting profession impacted on the outcome of the
con?icts at the time. To conclude the paper, a discussion
of the key insights gained from the investigation is pre-
sented in the ?nal section.
Analyzing professionalization and the state-accounting
profession dynamic: The western context
Embedded in much of the critical research on the devel-
opment of the accounting profession, and particularly
those in the UK and the US, is a pluralistic conception of
the state and of the system of power in western societies.
This perceives the state to be the foci for competing de-
mands (Miliband, 1973), legitimized and vested with
power by the citizenry through institutions such as univer-
sal suffrage, and political machineries such as free and reg-
ular elections (Lindblom, 1982). Individuals, in advancing
their interests and in asserting their political demands,
are said to achieve a greater in?uence when organized into
coherent group (Dahl, 1961; Truman, 1955) – although no
one group is said to dominate all or most key decisions in a
democratic political system (Key, 1964; Polsby, 1960).
Re?ecting this conceptualization, critical writers depict
professional associations as interest groups, or more po-
tently, as ‘inescapably political bodies’ (Willmott, 1986, p.
574), who derive power ‘from their organisational capac-
ity’ and who seek to ‘continuously secure from the market
and the state the right to control and regulate the supply
of, and in?uence the demand for, accounting labor’ (Will-
mott, 1986, p. 574). Professionalization, too, is portrayed
as being driven mainly by economic self-interest and as a
strategy of collective social advancement – the main plot
of which is to constitute an institutional structure for the
purpose of protecting market advantage or a threatened
economic monopoly (see for example, Anderson, Edwards,
& Chandler, 2005; Kedslie, 1990; Lee, 1995, 2001, 2002;
Macdonald, 1984, 1985, 1995; Miranti, 1986, 1988, 1990;
Previts & Merino, 1998; Walker, 1991; Walker & Shackl-
eton, 1995, 1998; Willmott, 1986). Accordingly, the role
of the state is often examined within the context of how
professions sought ‘to use the state merely to give it priv-
ileges, and to back up its power of monopolization and of
self-regulation over its members’ (Collins, 1990, p. 16).
The competing demands made upon the state and how
the state in?uences the outcome of the professionalization
process is particularly highlighted in studies that look at
inter- and intra-professional rivalries. Having an af?nity
with these types of interrogations are two conceptualiza-
tions that are quite distinct, yet both lend themselves to
examining the purposive action of professionals and pro-
fessional organizations. There is, ?rst of all, the Weberian
notion of social closure with its focus on social mobility
and market control. Research that draws on this notion de-
picts elite accountants and their occupational associations
as ‘legally privileged groups’ (Weber, 1968/1978, p. 342)
that ‘sought to constitute and control a market for their
expertise’ (Larson, 1977, p. xvi). Particularly useful for
examining the many struggles faced by professional asso-
ciations in their early years of existence, such theoretical
approach not only illuminates the self-interest aspect of
professional organizations, but, more importantly, the
highly political nature of the professionalization process.
It illustrates, amongst other things, the ‘expanding role of
the modern state in regulating social and economic life’
(Willmott, 1986, p. 556) and the mutual dependence that
cements the state-profession relationship as ‘the activities
of each party are simultaneously supported and restricted
by the other’ (Willmott, 1986, p. 564). While some describe
this interdependence relationship as being ‘close and
indulgent’ (Sikka & Willmott, 1995a, p. 362), there are oth-
ers who recognize the state to be ‘a particularly dangerous
foe or a particularly helpful friend’, depending on ‘the spe-
ci?c struggles that the agencies were engaged in and the
interests they wished to ?nely and ‘‘fairly’’ balance’ (Chua
& Poullaos, 1998, p. 164; see, also, Chua & Poullaos, 1993).
The second conceptualization comes from Abbott’s
work in The System of Professions (1988). Arguing that pro-
fessions constitute an ‘interdependent system’ (Abbott,
1988, p. 2), Abbott’s emphasis is on jurisdiction and how
competitive forces (both externally and internally) work
to shape the jurisdictional boundaries. Researchers have
drawn upon and extend Abbott’s work to usefully highlight
how professions defend, maintain, extend and modify their
jurisdictions (e.g. Sikka & Willmott, 1995b; Walker, 2004).
With the recent shift in research focus from professional
associations to professional ?rms, this conceptualization
has added a new level of understanding to both intra-
and inter-professional rivalry (Anderson-Gough, Grey, &
Robson, 2002; Arnold, 2005; Cooper & Robson, 2006,
2009; Covaleski, Dirsmith, & Rittenberg, 2003; Dezalay &
Garth, 2004), re?ecting, at the same time, that the
accounting professionalization project has entered a new
428 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
phase – from one of local monopoly to that of building a
global cartel. Indeed, as mega international ?rms (such as
the Big Four) developed into multidisciplinary practices,
they emerged as powerful and in?uential ‘interest groups’,
with strategic interests in extending and consolidating
their jurisdictions in a global market (Arnold, 2005; Cara-
manis, 2002). While capable of in?uencing national state
policies, these transnational ?rms also play important roles
as members of major international trade lobbies, working
closely with powerful international actors (such as the
WTO and OECD) in the globalization of professional ser-
vices (Arnold, 2005). In a geographic and a disciplinary
sense, they have assuredly outgrown the jurisdictional
boundaries of their professional associations as well as the
regulatory boundaries established by the state/profession
compact (Greenwood & Suddaby, 2006; Suddaby, Cooper,
& Greenwood, 2007). While, at the transnational level, the
state remains a somewhat important player, international
professional ?rms have now replaced professional associa-
tions as active participants of the professional project,
prompting some researchers to appeal ‘for a greater link be-
tween studies of accounting professionalization and regula-
tion, and the activities of the professional ?rms’ (Cooper &
Robson, 2006, p. 432). Furthermore, with a globalization
agenda, these ?rms not only seek to ‘maintain strong links
with the major states in which they have a signi?cant pro-
portion of their operations’ (Caramanis, 2002, p. 403), but,
more importantly, they attempt to leverage the suprana-
tional authority of powerful international actors (Arnold,
2005).
So while previous research supports the argument ‘that
‘‘professions’’ are the dynamic outcome of the mutual
interaction and transformation of state and profession’
(Chua & Poullaos, 1993, p. 724), the professionalization
process, as depicted in recent research, has become much
more complex in a globalized context. It involves the mobi-
lizing of political power as well as the evoking of support
from a range of actors, of which the state is but one.
Understanding the Chinese context: State corporatism
and ideological hegemony
Whilst, in western democratic countries interest groups
compete for the attention of a pluralist state; in China, the
authoritarianism associated with the Communist Party re-
gime, together with the promotion of socialist democracy
and the in?uence of traditional culture, combined to shape
a very different system of power distinctive from the kind
of interest group dynamics experienced in the west. The
relationship, and thereby the interaction, between orga-
nized accounting groups
2
and the state can thus be very dif-
ferent in China as compared to western societies. In this
regard, one particular concept that offers strong explanatory
value for China has been explored by Unger and Chan
(1996). In analysing the system of political (and social) orga-
nization in China, Unger and Chan (1996) observe the trend
in the state’s political arrangements during the 1980s and
the 1990s, and theorize the Chinese polity at the time within
a corporatist framework. More speci?cally, they depict the
Chinese phenomenon under the rubric of state corporatism.
State corporatism
According to Unger and Chan (1996), state corporatism
lies at the other end of the spectrum from societal corporat-
ism – the latter being most commonly found in western
democratic countries, such as Australia and the UK. While
both state and societal corporatism involve an actively
interventionist state, acting on the premise that it is the
guardian of the common good and of a national interest
that supersedes parochial interests (Unger & Chan, 1996),
they are the vehicles for very different power and in?uence
relations, and the products of very different political, social
and economic processes (Schmitter, 1974, 1977b). Under
societal corporatism, for example, corporate bodies are
seen to emerge organically within civil society (Richard-
son, 1989), with their leaders beholden to their member-
ships instead of the state (Unger & Chan, 1996). On the
contrary, under state corporatism, corporatist organiza-
tions are created and maintained by the state, and the
weight of decision-making power is also said to lie very
heavily on the side of the state (Unger & Chan, 1996).
In general, the state takes a more top-down approach
under state corporatism. It is said to assume more power
and exert more in?uence over corporatist organizations –
from the creation of the particular occupational–vocational
category, the granting of state recognition, the selection
and appointment of leaders, through to the imposition of
state-decreed administrative dependence. In order that
representational monopoly can be established, the state –
apart from its continuous mediation and arbitration –
may even intervene by eradicating multiple or parallel
organizations (Schmitter, 1974).
Apart from being recognized as a system of interest rep-
resentation, state corporatism has also been argued by
some to be a form of social control. Cohen (1982, p. 48),
for example, argues that state corporatism is an institu-
tional arrangement that enables the Brazilian governmen-
tal elites to put its working class in a situation of utter
dependence on the state. Cohen (1982, p. 48) de?nes state
corporatism as:
. . . a system by which the state structures, subsidizes,
and controls the groups whose interests are to be repre-
sented – a system of sanctions and incentives that
molds the behaviour of social groups in accordance
with the goals of the state rather than with their own
interests.
By recognizing and subsidizing only the corporatist un-
ion, effectively turning it into a bureaucratic welfare
agency of the state, the Brazilian government was able to
pre-empt the formation of a more autonomous labor
2
While international accounting ?rms play an increasingly important
role in recent times in the continued professionalization of the accounting
profession in western countries, they did not have much in?uence in China
during the 1990s. The state was extremely cautious in allowing interna-
tional accounting ?rms to set up their businesses in China, and thus sought
to control such foreign in?uence by recognising only sino-foreign joint
venture accounting ?rms. It would be worth investigating this somewhat
uneasy relationship between the state and the international accounting
?rms, as well as the impact these ?rms had on the development of the
public accounting profession after 2001, following China’s admission to the
WTO. This time frame is, however, outside the scope of the paper.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 429
movement, minimize industrial con?icts, and lock its
workers into a vicious circle of dependence – an outcome,
according to Cohen (1982, p. 57), that is ‘precisely as Bra-
zilian elites have always wanted’.
Discussing corporatism in East Asia, Unger and Chan
(1996) argue that countries such as Japan, Taiwan and
South Korea all share a cultural bias favorable to corporat-
ist structures. Deeply entrenched in their value system is
the Confucian philosophy, which encourages the pursu-
ance of Yi (justice and righteousness) and the forsaking of
self-interest in the enhancement of the greater good. The
latter, understood to be ‘ideally manifested in a consensus
overseen by the moral authority of the leadership’ and ‘re-
?ected in a moralistic father-knows-best paternalism’ (Un-
ger & Chan, 1996, p. 99), is particularly conducive to the
implementation of a state-corporatist regime (Unger &
Chan, 1996). With Confucianism being diffused into every
aspect of the Chinese way of living, there is no doubt that
China, too, share the same cultural advantage of its East
Asian neighbors when it comes to pursuing a state-corpo-
ratist solution.
Arguably, according to Unger and Chan (1996), a sort of
proto-corporatism was already in existence during Mao’s
rule. However, it was not until after his death that state
corporatist bodies were allowed to revive as peak organi-
zations and were rapidly ‘gaining a representative author-
ity within government channels that they never had been
able to hope for under Mao’ (Unger & Chan, 1996, p.
104). As will be discussed in the empirical section of this
paper, the political and economic climate in China after
Mao and, in particular, during the 1990s, has made the
strengthening of the corporatist arrangements an impor-
tant strategy for the state. The Chinese Institute of Certi?ed
Public Accountants (CICPA), established in 1988 under the
jurisdiction of the Ministry of Finance (MOF), was one such
corporatist association.
Ideological hegemony
While cultural belief emanating from Confucianism can
serve to promote a state-corporatist regime, the stability of
such political structure does depend on the ability of the
state to persuade corporatist bodies to fall in line with its
agenda. The Brazilian case studied by Cohen (1982), for
example, suggests that, while state corporatism was used
to put the working class in a situation of dependence, the
state also has to encourage a corresponding form of
consciousness – one that perceives the state to be a ‘benev-
olent leviathan’ – to reinforce and perpetuate the state-
corporatist relationship.
Similarly, in the case of China, whether the state-corpo-
ratist structure – rejuvenated during the 1980s and 1990s
– can remain stable and effective depends largely on the
state’s ability to achieve and maintain organized consen-
sus. As Unger and Chan (1996) succinctly point out, har-
mony is ‘the catchword of a corporatist system regardless
of whether this harmony is truly consensual or imposed
from above’ (p. 97). To examine this facet of the corporatist
arrangement – in particular, how the Chinese state ap-
proaches the issue of consensus mobilization – and the
power relation between the state and corporatist associa-
tions such as the CICPA, this paper combines the corporat-
ist framework with Gramsci’s (1971) concept of hegemony.
This concept, which has been successfully employed to
illuminate the ideological in?uence of the state in the UK
(Cooper, 1995) and, more recently, in China (Yee, 2009),
is particularly useful in highlighting how consent is being
‘manufactured’ within society. The incorporation of the
concept of hegemony within a corporatist framework has
also proved to be valuable in examining the relationship
between the state and the accounting profession in Canada
(Richardson, 1989). At the simplest level, Gramsci’s con-
cept of hegemony postulates that ‘man is not ruled by force
alone, but also by ideas’ (Bates, 1975, p. 351). In more
sophisticated terms, hegemony can be characterized as
the ‘spontaneous consent given by the great masses of
the population to the general direction imposed on social
life by the dominant fundamental group’ (Femia, 1986, p.
32), whereby ‘those who are consenting must somehow
be truly convinced that the interests of the dominant group
are those of society at large, that the hegemonic group
stands for a proper social order in which all men are justly
looked after’ (Femia, 1986, p. 32). While Gramsci also re-
fers to the coercive aspect of state power – whereby the
state is said to exercise direct domination through its coer-
cive apparatuses such as the armed forces, the police and
the law courts – it is the consensual ideological aspect that
takes on an important dimension in the concept of
hegemony.
To Gramsci, ideology means more than a system of
ideas. It has a material existence in the practical activities
of men and women, providing them with rules of practical
conduct and moral behavior (Simon, 1982). Elster (1986, p.
169) de?nes ideology as ‘a ?gure of thought shared by
many people and caused by whatever is common in their
situation’. Shared ideological beliefs can arise simulta-
neously and take root spontaneously in the minds of many
people when they are exposed to similar external in?u-
ences and are subjected to similar psychological processes.
Alternatively, ideologies can be initiated by one person and
then permeate through to other people who, for various
reasons, are inclined to accept them (for example, through
socialization processes). Ideologies can, therefore, be so en-
trenched that they are hard to rebut.
Distinguishing between historically organic ideologies
that are necessary to a given social formation and ideolo-
gies that are arbitrary, rationalistic and ‘willed’, Gramsci
elaborates on the concept of ideology in his Prison Note-
books (Forgacs, 1988, p. 199):
To the extent that ideologies are historically necessary
they have a validity which is ‘psychological’; they ‘orga-
nize’ human masses, they form the terrain on which
men move, acquire consciousness of their position,
struggle, etc. (SPN 367)
3
Interpreting from within this context, Williams (1960,
p. 587) suggests that, by hegemony, Gramsci was alluding
to:
3
SPN represents Selection from the Prison Notebooks, edited and
translated by Quintin Hoare and Geoffrey Nowell Smith, Lawrence and
Wishart, London, 1971.
430 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
an order in which a certain way of life and thought is
dominant, in which one concept of reality is diffused
throughout society, in all its institutional and private
manifestations, informing with its spirit all taste,
morality, customs, religious and political principles,
and all social relations, particularly in their intellectual
and moral connotation.
As the basis of creating a dominant conception of
reality, Gramsci argues that there must be ‘a cultural–so-
cial unity through which a multiplicity of dispersed wills,
with heterogeneous aims, are welded together with a
single aim’ (SPN 349, quoted in Simon, 1982, p. 60). In
this sense, what is crucial about an ideology is not its
truth or falsity, but rather it is ‘its ef?cacy in binding to-
gether a bloc of diverse social elements, and in acting as
cement or as an agent of social uni?cation’ (Simon, 1982,
p. 60).
For the state to secure consent, or advances towards
hegemony, it needs to build up an ideological system that
can act as the cementing ideology. When such ideology be-
comes ingrained into the cultural values and social norms
of the mass of people in society – often through incorpora-
tion into the educational systemand socialization practices
– it constitutes what Gramsci calls ‘common sense’. In
other words, it is absorbed and naturalized and, therefore,
becomes ‘the uncritical and largely unconscious way’ (Si-
mon, 1982, p. 63) through which people ‘?gure out’ both
the world and society.
In China, ideological hegemony has long been an impor-
tant aspect of state control. Confucianism, which was for-
mally adopted as the of?cial moral and political ideology
of the state during the Han Dynasty, is an excellent exam-
ple of an ideological system that was used successfully as
cementing ideology (see discussion in Yee, 2009). The Con-
fucian ‘way of thinking’ captured the self-understanding
and ideology of the Chinese people and became an impor-
tant part of the Chinese culture. Such ideological terrain
was, in fact, so powerfully structured that, despite dra-
matic social and political changes in China in the last cen-
tury, the in?uence of Confucianism within Chinese society
remains profound. Similarly, in modern China, the Com-
munist regime under the leadership of Mao Zedong, and
subsequently Deng Xiaoping, had sought to legitimise its
power through ideological practices that serve to inculcate
and in?ltrate the consciousness of individuals in society.
State leaders – Mao and Deng, in particular – engaged in
what Gramsci refers to as ‘intellectual and moral reform’,
propagating their ideologies through the use of ‘catchy’
campaign slogans. For example, bai hua qi fang, bai jia
zheng ming (let a hundred ?owers bloom, let a hundred
schools of thought contend) was a well-known slogan
introduced by Mao in 1956 to encourage intellectuals to
speak out and discuss the country’s problems. By the effec-
tive use of language, the Chinese leaders were able to
encapsulate complex ideas, as well as government policies,
and ingrain them into the everyday living of the Chinese
people. In this respect, ideology and language can be said
to be closely linked, and the potency of the Chinese lan-
guage as a tool in facilitating the process of social control
cannot be underestimated.
Introduction to the empirical study
The empirical investigation of this paper focuses on the
accounting professionalization experience in China during
the 1990s. Such development is to be interpreted within
its historical context, and is to be combined with an
examination of the wider political and economic climate.
The data comes from a variety of primary sources includ-
ing internal publications of the CICPA (such as the CPA
News), written records of political and accounting dis-
courses (such as minutes of meeting and speeches made
by Deng Xiaoping and other Chinese of?cials holding
key positions within the state), articles published in the
public media (such as newspaper), legislative documents
(including Constitution), as well as a number of interviews
conducted with relevant people (eight in total), most of
whom have had a signi?cant role in the professionaliza-
tion process.
4
A new ideological system under Deng Xiaoping
The certi?ed public accountant (CPA) system in China
only re-emerged in the 1980s. From not having any role
under a socialist regime and being discriminated against
in society, the occupation of public accountants experi-
enced an extraordinary turnaround and became formally
recognized as an important ‘profession’ by the state (Yee,
2009). This change in fate was very much in?uenced by
the political ideologies of Deng Xiaoping, who played the
role of what Gramsci calls ‘organic intellectual’. As Simon
(1982) notes, ideological practice ‘possesses its own agents
in the shape of intellectuals who specialize in the elabora-
tion of organic ideologies and in the task of moral and
intellectual reform’ (p. 59). According to Gramsci, these
intellectuals are to give a fundamental social group
‘homogeneity and an awareness of its own function not
only in the economic but also in the political and social
?elds’ (SPN 5, quoted in Simon, 1982, p. 59). By engaging
in moral and intellectual reform, Deng managed to build
a new ideological system centred, ?rst of all, around his
four-word motto, jie fang si xiang (emancipating the
mind),
5
and then on his concept of building socialism with
Chinese characteristics. Writing on the megatrends in China,
Naisbitt and Naisbitt (2010, p. 11) highlight the signi?cance
of the emancipation of the mind:
4
These interviews were semi-structured focused interviews conducted
mainly in 2007. The interviewees were selected because of their knowledge
of the profession and/or their direct involvement in the development of the
public accounting profession. Some of them were interviewed more than
once because of the considerable amount of ?rst hand knowledge they
possessed. Two of the interviewees were highly ranked of?cials in the
CICPA (one of them, in particular, had a very important role in the 1990s,
implementing a number of policies that had profound impact on the
development of the public accounting profession as a whole). Other
interviewees included: a senior of?cial working in a ministry-level
government institution that regulates the securities market; two Chinese
partners and one senior staff from international accounting ?rms; two
researchers, both of whom have many years of working experience in the
CICPA, with one of them having more than 10 years of research experience
studying the development of the public accounting profession.
5
This is a propaganda slogan ?rst used by Deng in 1978.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 431
The dimension of Deng Xiaoping’s call for emancipating
the minds of the people can be captured only in the con-
text of the time: almost 1 billion people divided in a
class struggle had to be united in the common goal of
transforming the country. The destructive forces of the
Cultural Revolution had to be turned into constructive
energy for building a new China. The transformation
had to start with allowing people to reclaim their own
thinking. The liberation of minds from indoctrination
to emancipation was the ?rst and most important pillar
of the transformation of China.
Indeed, as highlighted in the Minutes of the 1980 Na-
tional Conference on Accounting Work organized by the
Ministry of Finance, the detrimental impact of the Cultural
Revolution – in particular, the in?uence of leftist political
ideologies propagated by the Gang of Four
6
– continued
to hamper the revival of accounting work in the late
1970s. Not only was accounting not recognized as important
by many institutions and departments, accounting person-
nel who tried to do their work were sometimes being perse-
cuted and even killed (Minutes of the 1980 National
Conference on Accounting Work & Finance, 1981). Deng Xia-
oping’s call to expose and criticize the Gang of Four (Deng
Xiaoping, 1978a) and, more importantly, to emancipate the
mind (Deng Xiaoping, 1978b) was crucial in changing the
mentality of Chinese people, including the accountants
themselves. Indeed, many accountants who suffered (both
physically and mentally) during the Cultural Revolution la-
ter became the backbone of the public accounting profession
when it was re-established in 1980.
To rebuild China and its near collapsed economy, Deng
continued his intellectual and moral reform in the 1980s,
propagating the concept of building socialism with Chinese
characteristics to create a new form of consciousness that
would powerfully gripped the mind of the mass of the peo-
ple in China in the years to come. In his opening speech on
1 September 1982 at the Twelfth National Congress of the
Communist Party of China, Deng Xiaoping (1982) intro-
duced this concept for the ?rst time, strategically linking
it with the country’s unique historical condition:
In carrying out our moderisation program we must pro-
ceed from Chinese realities. Both in revolution and in
construction we should also learn from foreign coun-
tries and draw on their experience, but mechanical
copying and application of foreign experience and mod-
els will get us nowhere. We have had many lessons in
this respect. We must integrate the universal truth of
Marxism with the concrete realities of China, blaze a
path of our own and build a socialism with Chinese char-
acteristics – that is the basic conclusion we have reached
after reviewing our long historical experience (emphasis
added).
Building socialism with Chinese characteristics encapsu-
lated many of Deng’s other ideologies. Amongst them,
the revitalizing of the economy and opening to the outside
(dui nei gao huo, dui wai kai fang),
7
as well as the reforming
of both economic and political structures. Not only did Deng
introduce the idea of opening the economy to foreign inves-
tors, he was prepared to combine socialism with a market
economy, allowing some people to become prosperous ?rst
‘in accordance with their hard work and greater contribu-
tions to society’ (Deng Xiaoping, 1978b). This new ideologi-
cal system, though revolutionary in a socialist society, began
to diffuse throughout society in the 1980s, motivating as
well as mobilizing Chinese people towards the transforma-
tion of their backward economy. After living through years
of poverty and hardship during the Cultural Revolution, Chi-
nese accountants were amongst those who could see the
reversal of their plight, and the potential role they were to
play under Deng’s ideological and political leadership.
8
The public accounting profession and state-corporatist
arrangement
Indeed, the shift in political ideology under Deng’s era,
with emphasis placed on economic reforms and opening
to the outside, had provided opportunities for the Chinese
accountants as well as the conditions for the development
of China’s own public accounting profession. With the ini-
tiatives taken by the state, the CICPA, which is the national
organization responsible for all affairs relating to CPAs, was
established in November 1988. The CICPA has all the hall-
marks of a state corporatist organization. For while the
CICPA enjoyed state recognition, it was supervised and in-
structed by the Ministry of Finance (MOF) and local gov-
ernment ?nancial departments (CICPA, 1989a). The
minutes of the inaugural Council meeting of the CICPA also
revealed that the ?rst honorary chairman of the Institute
was an of?cial of the MOF (CICPA, 1988). According to its
?rst Charter, the CICPA was to serve as a bridge between
the state and certi?ed public accountants (CPAs), re?ecting
the wishes and requirements of the latter on the one hand,
and communicating the state’s policy and decisions on the
other (CICPA, 1989a, article 4). Furthermore, its role was to
assist the various state agencies in the management of
both CPAs and public accounting ?rms (CICPA, 1989a, arti-
cle 4).
To reaf?rm the state’s recognition and further establish
the legitimacy of the Chinese public accounting profession,
the state made use of its coercive apparatus and promul-
gated the Law of the People’s Republic of China on Certi?ed
Public Accountants (hereafter referred to as the CPA Law)
in October 1993. The CPA Law became operational in
6
Many scholars have written about the serious disruption to the
development of accounting during the Cultural Revolution. Van Hoepan
(1995), for example, described it as ‘the most dangerous expression of
discrimination against accountancy in Chinese modern history’ (p. 363).
The Gang of Four believed that accounting was unnecessary and asserted
that ‘even if we do not perform accounting for 10 years, money (i.e.
resources or wealth) can never go to foreign hands’ (Van Hoepan, 1995, p.
363).
7
This so called ‘eight-character policy’ sums up Deng Xiaoping’s reform
policy initiated in the late 1970s. It became a propaganda slogan, and was
popularised and embedded into social discourses.
8
For example, even as early as 1978, the Chinese government under the
leadership of Deng promulgated the Regulation on the Authorities of
Accounting Staff. In the preface to the Regulation, it was stated that there
would be higher expectations of accounting work under the new condi-
tions, and that every region, department and unit should have as a key task
the exposure and criticism of the Gang of four, as well as the strengthening
of accounting work (State Council of the People’s Republic of China, 1978).
432 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
January 1994, marking another new stage in the develop-
ment of the profession – in terms of further re?ning the le-
gal and regulatory framework upon which the work of
certi?ed public accountants (CPAs) and public accounting
?rms was based. As observed by one of the interviewees
(government of?cial interviewed on 31 January 2007):
Amongst the intermediary occupations, only lawyers
and CPAs have their own legislation. Not only does this
legislation [CPA Law] serve to de?ne and protect the
scope of work of the CPAs, it also de?nes the functions
and responsibilities of the CICPA, as well as specifying
CPAs’ legal responsibilities. It is very comprehensive.
Because of such legislation, CPAs also felt that their
work was recognised by society and, at the same time,
protected by law.
Clearly, the state had taken an active interest in the
public accounting profession, supporting and controlling
its development through the state-corporatist structure.
As will be seen in the next section of the paper, the political
and economic climate in the 1990s required the state to
further strengthen this state-corporatist mechanism.
The maintenance of hegemony and the building of
socialism with Chinese characteristics
While the early 1990s saw a transition of leadership
from Deng Xiaoping to Jiang Zemin (hereafter referred to
as Jiang), the new generation of leadership remained com-
mitted to the ideologies, as well as the reform direction, set
out by Deng. This is evidenced in the 14th National Con-
gress of the CPC held in 1992, where Jiang delivered a re-
port indicating the Party’s unswerving attitude ‘in
furthering the emancipation of mind (jie fang si xiang) of
all Party comrades as well as all people of the nation; in
grasping favorable opportunities to speed up the pace of
reform, opening up and modernization construction; and,
in striving to win the great victory for the cause of socialism
with Chinese characteristics (Jiang Zemin, 1992, emphasis
added). This clearly re?ected the prevailing state ideology
at the time, and was to be the Communist Party’s strategic
direction for the ensuing 5 years.
While, in the late 1970s and in the 1980s, the four-word
motto of ‘emancipating the mind’ (jie fang si xiang) had
very important implications for advancing Deng’s agenda
for China and for countering the problems inherited from
the past, building socialism with Chinese characteristics be-
came the new cementing ideology in the 1990s. It was en-
shrined in the 1993 Constitution as a theory that underlay
the construction of socialist modernization (Constitution of
the People’s Republic of China, 1993, Preamble). For the
very ?rst time in the history of the Communist Party rule,
the establishment of a market economy was upheld as
China’s reform goal. Article 15 of the 1993 Constitution
was amended to avow that ‘[t]he state practices socialist
market economy’. Such an ‘important ideological break-
through’, according to Hassard, Sheehan, Zhou, Terpstra-
Tong, and Morris (2007, p. 57), marked the start of a new
reform era. More signi?cantly, it provided a reconciliatory
answer to the fundamental question of ‘what is socialism
and how to build socialism?’, thereby settling unambigu-
ously China’s future economic direction and legitimizing
the country’s transformation into a socialist market econ-
omy. Thus, on the one hand, the concept of building social-
ism with Chinese characteristics provided the intellectual
and moral direction for the Chinese people, creating for
them a ‘new’ common conception of the world; on the
other hand, it enabled the new generation of collective
leadership under Jiang Zemin to af?rm its social authority
and, thereby, maintain the hegemony which Deng had
worked arduously to achieve.
Gramsci (1971) recognizes that hegemony, once at-
tained, can never be taken for granted. It requires persis-
tent efforts ‘to conserve and defend the existing
structure’ (SPN 178, quoted in Simon, 1982, p. 38). Indeed,
structural contradictions that could endanger the hege-
monic leadership began to emerge during the 1990s, even
as Jiang formulated the Party line, principles and policies in
accordance with the cementing ideology of Deng Xiaoping.
On the economic front, in particular, the weaknesses of the
Contract Responsibility System (CRS),
9
which was initiated
in the 1980s, were becoming increasingly apparent in the
early 1990s. Problems such as ‘short termism’ in the pursuit
of pro?t, lack of responsibility on the part of the manage-
ment over losses, as well as abuse of state assets due to
ambiguous property rights (Hassard et al., 2007), had all
contributed to the demise of the system. Nevertheless, it
was the failure in reducing government intervention in the
operations of the state-owned enterprises (SOEs) that cre-
ated the major barrier to the successful implementation of
the CRS. The reason for this problem was illuminated in a
speech
10
given by the then Vice Minister of Finance, Zhang
Youcai (1992, p. 2), at the National Members’ Congress of
the CICPA in 1992:
. . .
though having all along been an important issue on
the reform agenda, is not a matter with an easy solution
if it is to be dealt with satisfactorily. Notwithstanding
that, in reforming China’s state-owned enterprises, a
clear principle has been laid down very early on that
enterprises and the government are to be separated.
The progress made so far has been slow. A major reason
is that the transformation in the functions of the gov-
ernment is lagging behind. Various levels of govern-
ment still see the organisation of production and the
operation of state-owned enterprises as their main
function; they are yet to transform their role to one that
is to aim at the overall management of the national
economy as well as the markets, and at serving the
development of the economy. Hence, the dif?culty in
moving ahead with the structural transformation and
9
The Contract Responsibility System was originally trialled in the
agricultural sector in rural areas (Hassard et al., 2007). It is a production
responsibility system where work was contracted out to household units,
with their remuneration linked to the production levels. According to
Hassard et al. (2007), the CRS was actively promoted by the state during the
second half of the 1980s. The system was expanded into urban areas
involving the reform of large industrial state-owned enterprises (SOEs).
10
This speech delivered at the National Members’ Congress of the CICPA
was timely, as the Congress was held not long after Deng Xiaoping’s
inspection tour to South China.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 433
the little headway made in cutting down on the admin-
istrative intervention.
According to Gramsci (1971), such conjunctural con-
?icts, if not understood and dealt with properly, could gen-
erate an organic crisis
11
that would, in turn, destabilize the
systemof alliances that forms the basis of hegemony. As part
of the solution to this problem, the state turned to its coer-
cive apparatus, issuing the Regulations on Transforming the
Management Mechanism of State-Owned Industrial Enterprises
in July 1992, in an attempt to expand the autonomy of enter-
prises and to further separate government administration
from their management. Notwithstanding, the many unre-
solved problems of the CRS pointed to the need for a new re-
form strategy.
With the push for a socialist market economy, the state
began to experiment with corporatization. Supporting this
latter initiative was a landmark document, the Decision on
Issues Concerning the Establishment of a Socialist Market
Economic Structure (hereafter referred to as the Decision),
adopted in November 1993 at the Third Plenary Session of
the 14th CPC Central Committee. The Decision re-af?rmed
the prevailing ideology, stating the practice of a socialist
market economy to be an important component of the The-
ory of Building Socialism with Chinese Characteristics (Com-
munist Party of China, 1993). It also reinforced the
fundamental ideology of jie fang si xiang, shi shi qiu shi
(emancipate the mind, seek truth from facts),
12
the essence
of which was to ‘promote the enthusiastic exploration of
new paths and the daring trial of new experiments’ (Com-
munist Party of China, 1993). Emphasis was again placed
on the reform of SOEs. Furthermore, the establishment of a
Modern Enterprise System (MES)
13
with public ownership
as the mainstay was formally pledged. The Decision particu-
larly highlighted the corporatisation of SOEs as ‘a bene?cial
trial in the building of a Modern Enterprise System’, and one
that was highly conducive to clarifying property rights, sep-
arating government and enterprise operations, as well as
transforming the management structure of enterprises
(Communist Party of China, 1993). Multiple forms of owner-
ship, including limited liability or joint-stock companies,
were allowed under the MES. It was believed that such a sys-
tem, if implemented, would resolve some of the structural
contradictions, as well as ‘relieving the state from the bur-
den of unlimited liability, facilitate the raising of funds as
well as diversifying the risks involved’ (Communist Party
of China, 1993).
Strengthening state corporatism: Hegemonic leadership
and consensus mobilization
While state corporatism was commonly used as a
mechanism for strengthening the state’s grip over the
economy and society, it was not the case with China. Unger
and Chan (1996) observe that state corporatism, as prac-
ticed in China, was used instead as a mechanism for allow-
ing the state’s grip to be loosened. It embodied ‘a shift from
a Party command system that dominated directly’ to ‘one
that dominates partly through surrogates’ (Unger & Chan,
1996, p. 105), with the latter assisting the state in the
implementation of public policy as well as communicating
government policy lines to their memberships (Unger &
Chan, 1996). Under the political and economic climate of
the 1990s, and amidst the desire of the state to loosen its
administrative control over SOEs, such state-corporatist
arrangement was perceived by the Communist regime as
an appropriate measure to resolve conjunctural con?icts.
To strengthen this corporatist mechanism, hegemonic
leadership was paramount and the state faced the impor-
tant task of consensus mobilization centred, particularly,
on its cementing ideology of building socialism with Chinese
characteristics and the eight-character policy of dui wai kai
fang, dui nei gao huo (opening to the outside and revitaliz-
ing the economy). In this regard, the CICPA, being a corpo-
ratist association, had the function of assisting the state in
steering its memberships into aligning their functions with
the prevailing (cementing) ideology of the state, as well as
with the economic reform agenda. As was re?ected in its
?rst Charter, apart from providing professional training, it
was one of the responsibilities of the CICPA to organize
the launching of quality ideological education (CICPA,
1989a, article 5, emphasis added).
Even before the Decision was adopted, the political ide-
ologies of Deng had already ‘?ltered down’ the government
ranks and the important role that could be played by CPAs
in both dui wai kai fang (opening to the outside) and dui nei
gao huo (revitalizing the economy) was increasingly recog-
nized by state of?cials (Zhang Youcai, 1992). Working in
partnership with the CICPA, who organized meetings of
public accountants, state of?cials made explicit the sup-
port of the state in the development of the profession.
The importance and the expectation of the role to be
played by Chinese CPAs were repeatedly conveyed to
them. At the inaugural meeting of the CICPA, for example,
the then State Councillor and Minister of Finance, Wang
Bingqian (1988), speci?cally linked the role of CPAs with
the prevailing ideology of the state and the policy of dui
wai kai fang, dui nei gao huo (opening to the outside and
revitalizing the economy). He empowered his audience
by saying that:
Certi?ed public accountant is both an estimable and
valuable occupation. A certi?ed public accountant
should have a sense of pride and responsibility, and
should strive to bring into play his/her role in the
11
The term ‘conjunctural’ is used to refer to ‘the current situation’ (Simon,
1982, p. 38), or to ‘a given moment’ (Forgacs, 1988, p. 427). ‘Organic crisis’,
on the other hand, refers to ‘a crisis of the whole system, in which
contradictions in the economic structure have repercussions through the
superstructures’ (Forgacs, 1988, p. 427).
12
Shi shi qiu shi was Mao’s fundamental Marxist viewpoint, and was the
essence of Mao Zedong Thought. In a speech at the All-Army Conference in
June 1978, Deng (1978a) re-af?rmed and explained this motto: ‘‘‘Facts’’ are
all the things that exist objectively, ‘‘truth’’ means their internal relations,
that is, the laws governing them, and ‘‘to seek’’ means to study. We should
proceed from the actual conditions inside and outside the country, the
province, county or district, and derive from them, as our guide to actions,
laws which are inherent in them and not imaginary, that is, we should ?nd
the internal relations of the events occurring around us’.
13
The establishment of the MES was the key to the state’s economic
reform agenda (particularly in relation to state-owned enterprises) in the
second half of the 1990s. The core feature of the MES is corporatisation and,
according to Hassard et al. (2007), it signalled, ‘for the ?rst time, that the
public ownership of SOEs could be diversi?ed through various forms of
ownership change, including privatization’ (p. 58).
434 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
socio-economic activities of society, thereby contribut-
ing to the construction of socialist modernisation (p. 3).
Apart from Wang Bingqian, many other top of?cials at-
tended and spoke at the inaugural meeting, re?ecting the
importance attached to the establishment of the CICPA. In-
deed, attendance of top political ?gures in meeting as such
carries symbolic meaning that serves to strengthen the
state-corporatist structure (Jeong, 1997). Furthermore,
the ‘friendliness’ exhibited by these of?cials can lead par-
ticipants ‘to believe that they are closely connected to
the state’ and that ‘their voices are sincerely heard’ (Jeong,
1997, p. 167). Such was, in fact, the case at the CICPA inau-
gural meeting. In his summary speech made at the closing
ceremony, the ?rst President of the CICPA, Yang Jiwan
(1988, p. 18) reported the responses of Chinese CPAs:
The care and enthusiastic support of the leading
members of the Ministry of Finance has greatly moti-
vated and encouraged all those who participated in
this meeting, giving us the con?dence and strength
to keep pushing ahead with the development of the
public accounting profession, as well as the impetus
to do our utmost in carrying out the tasks of the
CICPA . . .
The participants at this meeting unanimously agreed
that the establishment of the CICPA is the objective
requirement of developing a socialist commodity econ-
omy, and of perfecting the CPA system. It also repre-
sents the common wish of all the CPAs in the country.
It has important meaning and it is imperative.
From Yang’s speech it appeared that, even at a very
early stage of the state-corporatist arrangement, the state
had managed to mobilize the public accountants and
establish hegemonic leadership within the accounting
community.
Another event that was of signi?cance to the mobiliza-
tion of Chinese CPAs took place in 1992. The Second CICPA
National Members’ Congress was held against the political
backdrop (and the hegemonic in?uence) of building social-
ism with Chinese characteristics and the push for speeding
up the pace of the economic reform. This had created
new areas of work for CPAs, and their role was extended
from one of servicing the ?nancial reporting requirements
of sino-foreign enterprises to that of ‘monitoring’ the oper-
ations of SOEs. In an address delivered by the then Vice
Minister of Finance, Zhang Youcai (hereafter referred to
as Zhang), at the opening session of the Congress, Zhang
(1992) elaborated on the state agenda of cutting back
unnecessary intervention in the operation of SOEs. He
explained that, in deepening the economic reform, the
state is to:
. . . focus its energy on ways to perfect the laws and reg-
ulation, to strengthen its macro-level control and nur-
ture the growth of a market that will ?t in with the
macro-requirements of the State (ibid, p. 2).
As for the enterprises, Zhang (1992, p. 2) asserted that:
Enterprises are to work within the scope permitted by
the laws and the system of the State. They are to
conduct their operations independently, be responsible
for their gains and losses as well as their own development,
and exercise self-restraint in accordance with the
requirements of the markets (emphasis added).
In terms of ?nancial management, Zhang (1992, p. 3) clar-
i?ed the implications for both the state and the
enterprises:
From now on one of the directions that reform will take
is to separate the ?nance of the enterprises from the ?s-
cal budget of the state so that the government will focus
on handling its ?scal relation with the enterprises,
while all ?nancial activities of the enterprises are to
be managed solely by the enterprises themselves, with-
out any intervention from the Government. As to
whether an enterprise has been properly managed or has
complied with state policies and requirements, the enter-
prise is required to engage a certi?ed public accountant
to conduct an annual review of its operations. Relying
on the feedback from the certi?ed public accountants,
the government can, on the one hand, supervise an
enterprise’s compliance of state requirements and gain
an understanding of its actual condition. On the other
hand, the government can learn about the reactions of
the enterprise towards the ?scal and ?nancial require-
ments and take prompt measures to ?ne tune its con-
trol over them (emphasis added).
Through his speech, Zhang (1992) made clear to his audi-
ence that the strategic change in the management of SOEs
would require the support of CPAs who, in carrying out the
important task of social supervision,
14
were to become an
intermediary agent between the state and the state-owned
enterprises. Zhang (1992, p. 5) also reaf?rmed the prevailing
ideology of the state and emphasized the importance of
extending the role of CPAs:
Under the new conditions, our thinking and perception
have to be changed to adapt to the shift in work focus.
Given the words of Comrade Deng Xiaoping and the
spirit of the Political Bureau of the CPC Central Commit-
tee, we have to unify our thinking to further quicken the
pace of reform and work solidly hard, refraining from
formalism and any super?cial work. We have to be clear
about the guiding ideology in developing the public
accounting profession, i.e. to build what we have done
on the attestation work provided for foreign investment
enterprises and other related services, and gradually
shift the work focus to exercising social supervision
on other enterprises.
Indeed, the services provided by CPAs had been important
in enabling the dui wai kai fang (opening to the outside)
policy during the 1980s. With the transformation of the
state function in the 1990s, the extension of the scope
of CPA work to state-owned enterprises became impera-
tive. From this perspective, the continued expansion of
the public accounting profession and the ability of CPAs
14
Certi?ed public accountants in China were to assist the state with the
task of social supervision, particularly, in the economic realm. Hence,
within civil society, CPAs were often referred to as the ‘economic police’ as
they had a ‘social monitoring’ role (see Ding, 2001).
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 435
(and the public accounting ?rms) to provide high quality
audits was essential to protect the interest of the state.
Zhang’s (1992) speech was thus important at the time
in that it served not only to reaf?rm the state-corporatist
arrangement, but also to reinforce the consensus built
amongst CPAs, thereby continually mobilizing them into
aligning their functions with the economic agenda of
the state.
Apart from having state of?cials delivered speeches at
its events, the CICPA also sought other avenues to mobilize
Chinese CPAs and to build consensus amongst its member-
ship. Their of?cial publications were important ‘tools’ for
this purpose. For instance, the CPA News – which was ?rst
issued in May 1989 and was initially classi?ed as internal
documents for its membership – provided, in great detail,
the minutes of Council meetings, the speeches of state of?-
cials, updated regulations from the Ministry of Finance, as
well as the working reports of the CICPA, etc. While these
publications served to inform the memberships, they prop-
agated the ideology of the state at the same time. Apart
from such ‘top-down transmission’ (Unger & Chan, 1996,
p. 104), there is also evidence from these publications that
the CICPA had provided avenue for ‘bottom-up transmis-
sion’ (Unger & Chan, 1996, p. 104) – both being important
mechanisms under a state-corporatist arrangement. For
example, shortly after its formation, the CICPA embarked
on a research project entitled The Construction of China’s
Certi?ed Public Accountant System, holding a series of sem-
inars in various parts of China with a number of state of?-
cials, bank representatives, academics and CPAs, as well as
representatives from both local and international public
accounting ?rms.
15
Reports from these seminars, published
in the CPA News, revealed how such events had empowered
the public accountants to advance their ideas, manifesting
the spirit of both bai hua qi fang, bai jia zheng ming (let a hun-
dred ?owers bloom, let a hundred schools of thought con-
tend) and jie fang si xiang, shi shi qiu shi (emancipate the
mind, seek truth from facts). For instance, in the ?rst of these
reports, it was clear that participants at the seminars were
keen to recognize and extend the role that was to be played
by Chinese CPAs in the state’s economic reform agenda (CIC-
PA, 1989b, p. 2):
Participants pointed out that the role of CPAs should not
be limited to servicing dui wai kai fang (opening to the
outside), but should also include dui nei gao huo (revi-
talising the economy). Initially, the main clients of the
CPA industry are sino-foreign enterprises. This is a very
important and necessary starting point, and one that is
still full of challenges. However, if our development
remains focused on sino-foreign enterprises, we will
not be able to keep up with the requirements arising
from the pace of economic changes. In view of the cur-
rent economic and market reform and restructuring, a
number of participants also argued that it is essential
for CPAs to play a more important role.
Suggestions were made on how the state could better co-
ordinate the audits of sino-foreign enterprises
16
and how
CPAs could usefully contribute in monitoring the activities
of state-owned enterprises. Above all, Chinese public accoun-
tants had clearly aligned their ideology with that of the state
and identi?ed the role they were to play in the climate of eco-
nomic and market reforms. Under the state-corporatist
arrangement, the CICPA, in effect, serves as what Unger and
Chan (1996) called a ‘transmission belt’, providing a two-
way conduit between the state and the public accountants,
thereby allowing a harmony of interests to prevail.
Harmony was, however, under threat when members of
a second accounting professional body established in 1992
began to compete ?ercely with members of the CICPA. It
also weakened the state-corporatist structure erected to
mobilize public accountants into supporting the state’s
economic reform agenda. The next section examines this
episode of intra-professional con?icts and looks at how it
was being resolved.
Intra-professional con?icts during the 1990s
Re?ecting on the re-emergence of the public accounting
profession in the early 1980s, Ding Pingzhun (2001, p. 185)
17
describes the state of affairs at the time as san wu (three-
without) – without quali?ed personnel, without experience
and without foundation. There was no clear boundary
between accounting and auditing, with the latter being a rel-
atively new area of work in a socialist country that was
slowly recovering from its political turmoil of the past dec-
ade. While there were experienced book-keeping personnel,
they did not necessarily adopt an independent approach
when undertaking audit tasks (Ding, 2001). The re-establish-
ment of the public accounting profession was made possible
by those accountants who were highly experienced and
reputable but, nonetheless, fairly advanced in their years
(Ding, 2001). Because of such historical circumstances, the
‘over-aged’ population of CPAs and the alarming disparities
in the level of professional standards across the country
had always been issues of concern for the CICPA. The overall
mediocrity of professional and ethical standards that charac-
terized the ?edgling public accounting profession further
manifested itself in the early 1990s amidst increasing
high-pro?le economic fraud and corruption cases involving
CPAs and public accounting ?rms (Ding, 2001). However,
while such incidents gravely damaged the reputation of
the profession, it was only one of the many issues confront-
ing the CICPA. During the 1990s – amidst the desire of the
state to nurture and promote the healthy development of
the public accounting profession and the then Vice Premier,
Zhu Rongji’s determination to raise the standards of China’s
public accountants – the public accounting profession was
plagued by ?erce intra-professional competitions, which
15
Details of these seminars are published in three separate reports in the
CPA News circulated in 1989. The ?rst series of these seminars was held
between February and April 1989 with a total of eight meetings. The second
series was held between August and November with a total of six meetings.
The third and ?nal seminar was held on 17 November, mainly with top
level managers from the Representative Of?ces of international public
accounting ?rms.
16
Discussions at the seminars revealed that sino-foreign enterprises were
repeatedly subject to audit, ?rst by CPAs and then by the tax department,
hence creating a lot of disquiet amongst foreign investors.
17
Ding Pingzhun was ?rst appointed to the position of Deputy Secretary-
General of the CICPA on 27 July 1993, and soon became the Secretary-
General. He retired on 8 January 1999.
436 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
resulted in further compromising the professional and ethi-
cal standards of both CPAs and public accounting ?rms.
While the state-corporatist relationship between the state
and the CICPA appeared to be rather effective in mobilizing
Chinese CPAs thus far, such intra-professional con?icts
proved to be a big challenge to the CICPA, particularly, as
it became embroiled in the power struggles between two
government agencies.
Background to the con?icts
From the founding of the People’s Republic of China in
October 1949 through to August 1983, there was no inde-
pendent government audit institution in China as the eco-
nomic activities of SOEs were centrally controlled and
closely supervised by the relevant ?nance bureaus. How-
ever, following the economic reform and the open door pol-
icy, the Constitution of the People’s Republic of China was
amended at the Fifth Session of the Fifth National People’s
Congress in December 1982. With this amendment, an
auditing supervision system was introduced. According to
article 91 of the amended Constitution (Constitution of
the People’s Republic of China, 1982):
The State Council establishes an auditing body to super-
vise through auditing the revenue and expenditure of
all departments under the State Council and of the local
governments at various levels, and the revenue and
expenditure of all ?nancial and monetary organisations,
enterprises and institutions of the state.
Under the direction of the Premier of the State Council,
the auditing body independently exercises its power of
supervision through auditing in accordance with the
law, subject to no interference by any other administra-
tive organ of any public organisation or individual.
Accordingly, the State Council established the National
Audit Of?ce of the People’s Republic of China (CNAO) in
September 1983.
18
The CNAO was charged with the respon-
sibility of regulating and directing the audit work of the
whole country, including government audit, internal audit
and public audit. Article 109 of the 1982 Constitution further
provided for local auditing bodies to be established by local
people’s governments at and above the county level. As a re-
sult, local audit institutions were set up in succession at pro-
vincial, municipal and county people’s government levels
and audits were carried out gradually all over the country.
However, as economic reforms deepened, the state saw
the need to further improve its audit supervision system.
As a result, the State Council promulgated the Audit Regula-
tions of the People’s Republic of China in October 1988. Article
1 of the Audit Regulations stated that ‘‘[t]hese Regulations are
formulated to improve the audit supervision of ?nancial in-
come and expenditure and related economic activities; to
enforce ?nancial and economic law and discipline; to in-
crease economic performance; to strengthen overall control
and administration; and, to ensure the smooth implementa-
tion of the socialist modernization program (State Council of
the People’s Republic of China, 1988). The supremacy of the
CNAO over the nation’s auditing matters was also af?rmed
as it became ‘the State’s supreme audit of?ce, under the
leadership of the Premier of the State Council’ (State Council
of the People’s Republic of China, 1988, Article 7). The Audit
Regulations also made mention of ‘social audit’
19
organisa-
tions, and empowered such organisations to provide audits
as well as consultancy services in return for a commission
(State Council of the People’s Republic of China, 1988, Article
6). Such a provision had allowed more and more auditing
?rms
20
to be set up under the backing of the CNAO. Under
the climate of deepening economic reform, the number of
auditors continued to increase to provide audit supervision
over SOEs, as well as to facilitate the improvement of eco-
nomic performance and to address corruption in various lev-
els of government. This saw the beginning of a second
accounting professional body in China. On 8 September
1992, the Chinese Association of Certi?ed Public Auditors
(CACPA) was established under the supervision and guid-
ance of the CNAO. The rationale for the founding of the CAC-
PA was explained by one of the interviewees (interviewed
on 26 January, 2007):
The purpose of organising a certi?ed public accountant
profession was to meet the needs of opening to the out-
side world, whereas the purpose for having a certi?ed
public auditor profession was to meet the requirement
of deepening economic reforms . . . What we had were
state-owned enterprises. Economic reforms required
the government to exercise audit supervision over these
enterprises, and the government needed the help of
social audit organisations. This is why we need to set
up a team of certi?ed public auditors to help with the
deepening structural reform.
The establishment of the CACPA, however, had created ten-
sions between the Ministry of Finance (MOF) and the
CNAO. While members of the CACPA were engaged primar-
ily in performing audit work for SOEs, they did offer similar
types of services to those provided by public accounting
?rms – though the latter started by providing services to
enterprises using foreign investment before expanding
their work into the state-owned sector. A situation thus
developed where there were two institutes of public
accountants with overlapping functions, as well as two
types of practitioners – CPAs and certi?ed public auditors
– both strongly competing with each other. Furthermore,
the existence of both auditing ?rms and public accounting
?rms created a lot of confusion (interview with a govern-
ment of?cial, 25 January, 2007). This was further compli-
cated by the differences in the level of professional
standards between practitioners of the two bodies:
Because the two professional bodies were under the
supervision of two different government ministries,
the MOF and the CNAO respectively, their required
18
The CNAO was assigned to be one of the ministries under the State
Council.
19
‘Social audit’ is a special Chinese term, and is equivalent to what is
referred to in western countries as public audit. The term social was used as
China’s auditing system was initially introduced to ful?l the function of
social supervision in line with the requirement of a socialist state.
20
A distinction is to be made between auditing ?rms and public
accounting ?rms. Auditing ?rms were established by certi?ed public
auditors under the backing of the CNAO, while public accounting ?rms
were set up by CPAs and were under the supervision of the MOF.
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 437
professional standards were very different. From 1991,
the CICPA had introduced an examination system, but
such kind of certi?cation system was never introduced
by the CACPA. Instead, similar to the certi?cation pro-
cess for CPAs in the past, candidates applying for CACPA
only had to go through an evaluation process, which
was based on working experience with the CNAO or
other government agencies. This created inconsisten-
cies in the level of standards between the two account-
ing bodies. In general, the level of standards of the
CICPA is higher than those of the CACPA. (Interview
with government of?cial, 26 January, 2007)
While the MOF disagreed with the certi?cation process of
public auditors, there was nothing it could do to stop the
CNAO from certifying its own auditors. Such a situation
created a lot of criticism within the accounting profession.
As one of the interviewees observed (interviewed on 26
January, 2007):
While competing in the same market, the entry require-
ment for the CACPA was much too low. Anyone who
wanted to become a certi?ed public accountant would
have to go through examination. It was so hard! But it
was not so with the CACPA! The public auditors could
still get their licences without having to sit any exami-
nation; they could still do the same work as the certi-
?ed public accountants!
Furthermore, when unfair competition
21
arose between
practitioners of the two professional bodies, the CICPA had
no means of disciplining those who acted unprofessionally
if they were under the supervision of the CACPA:
We could only request our CICPA members and public
accounting ?rms not to engage in unfair competition,
but if certi?ed public auditors acted unethically in the
market, we would have no means to discipline them.
And this had created a negative impact on the regula-
tion of the profession as well as on the overall macro-
economic situation of the country. (Interview with
government of?cial, 26 January, 2007)
Indeed, as early as 1989, numerous examples of unprofes-
sional conduct involving certi?ed public auditors and
auditing ?rms had been brought to the attention of the
CICPA (1989c). More alarmingly, many of the examples of
unfair competition reported were instigated by the CNAO
at the local government level.
22
Unlike intra-professional con?icts documented in most
other countries (see, for example, Caramanis, 1999; Poul-
laos, 1994; Richardson, 1987; Walker, 2004), the battle be-
tween the CICPA and the CACPA was in reality a ?ght for
power between two government ministries. As Ji (2001,
p. 103) commented, the fundamental issue was not about
how many accounting professional bodies existed in the
country, but rather a question of ‘who should have the
power to regulate and control the public auditing market’?
The two professional bodies, being quasi-government
agencies, were being used by the MOF and the CNAO as
‘battle vehicles’ (ibid, p. 103) in their competition for con-
trol over the macro-economic management and ?nancial
supervisory matters of the country. It was obvious that
the corporatist structure erected by the state was being
weakened as a result of such con?icts. In particular, it
had a serious impact on the ability of the CICPA to ful?l
its role as a corporatist association, in terms of overseeing
the healthy development of the public accounting
profession.
Resolution of the con?icts: The hegemonic leadership of Zhu
Rongji and the building of consensus
Constituting what Gramsci calls ‘common sense’ is the
Confucian ‘way of thinking’, which provides Chinese peo-
ple with moral guidelines and rules of practical conduct.
Under Confucianism, and as explained in Unger and Chan
(1996), giving primacy to private interests is regarded as
equivalent to sel?shness. Individual and sectoral interests
should, therefore, be compromised for the greater good,
as delineated by a higher leadership (Unger & Chan,
1996). Such principle was the key to resolving the con?icts
between the CICPA and the CACPA. It required not only the
subordination of the interests of the part to those of the
whole and of immediate to long-term interest,
23
but also
‘a consensus overseen by the moral authority of the leader-
ship’ (ibid, p. 99) – in other words, the exercising of hege-
monic leadership by the state. In this respect, as will be
seen later in this section, Zhu Rongji – the Vice Premier of
the State Council and governor of the People’s Bank of China
at the time – was found to have a signi?cant hegemonic
in?uence over the CICPA and the public accounting profes-
sion at large. The consensus building process was further as-
sisted by the constant appeal to a notion of interests that
was deeply ingrained in the culture as well as in the social
norms of the Chinese people.
The intra-professional con?icts and the many associ-
ated problems were resolved in 1995 when the CICPA
and the CACPA merged to become one institute. In a joint
notice
24
issued by the MOF and the CNAO on 19 June
1995, it was clearly stated that the two bodies were to
merge and the combined institute would become known
as the Chinese Institute of Certi?ed Public Accountants (CIC-
PA). While the newly constituted institute would come un-
der the supervision of both the MOF and the CNAO, its
21
In competing for business, an auditing ?rm would, for example, offer
kickbacks to those individuals or government departments who helped
them secure audit jobs. Another example given in a CPA seminar involved
an auditing ?rm offering consultancy for a client whose audited ?nancial
statements had been found to have problems by a public accounting ?rm.
In so doing, the client was able to avoid having their audit reports quali?ed
(CICPA., 1989c).
22
For example, the local CNAO agencies would use their administrative
in?uence to direct business to auditing ?rms. In return, such agencies
would be rewarded with a proportion of the revenue earned by the auditing
?rms (CICPA, 1989c).
23
Believed to be fundamental to the operation of a socialist system, such
principles were being reinforced by Deng Xiaoping. Deng Xiaoping, (1979)
points out that, under a socialist system, ‘personal interests must be
subordinated to collective one, the interests of the part to those of the
whole, and immediate to long-term interests . . .Were we to do the opposite
and pursue personal, local or immediate interests at the expense of the
others, both sets of interests would inevitably suffer’.
24
This joint notice was entitled Joint Notice on Issues Related to the
Combination of the CICPA and CACPA.
438 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
permanent of?ce was to be established under the MOF (Joint
Notice on Issues Related to the Combination of the Chinese
Institute of Certi?ed Public Accountants & Ministry of Fi-
nance, 1995, paragraphs 1 and 5). Paragraph 4 of the joint
notice also made provision for those certi?ed public auditors
quali?ed before 31 December 1993 to obtain a CPA certi?-
cate and to become a member of the CICPA.
Such a decisive arrangement, however, could not have
been reached without the direct intervention of Zhu Rongji
(hereafter referred to as Zhu). According to one of the
interviewees (interviewed on 18 January 2007), Zhu played
an important role in the merger of the CICPA and the
CACPA:
From the time when Zhu Rongji was the Vice Premier to
the time when he became Premier, Zhu Rongji was par-
ticularly concerned about the development of the CPA
profession. Without him, the merger between the CICPA
and the CACPA would not have happened.
We could successfully merge the two bodies, because
this was the order from Zhong Nan Hai.
25
Zhu Rongji
cared, and many of the things he said provided the direc-
tion for regulating the public accounting profession. He
told the Ministry of Finance that CPAs were the founda-
tions for a market economy, that it was an extremely
important task to nurture the public accounting profes-
sion. He also said that accounting reform and the devel-
opment of the public accounting profession were
crucial to the future of the nation. (emphasis added)
Indeed, it was under the aegis of Zhu Rongji that the State
Council ordered the merger of the CICPA and the CACPA
(CICPA, 1995; Ministry of Finance & the National Audit Of-
?ce, 1995). According to the of?cial history published by
the CICPA, Zhu was ‘always concerned’ about the develop-
ment of the public accounting profession, emphasizing, in
particular, the requirement for a high standard of profes-
sionalism – in terms of ‘keeping good faith and integrity,
abiding by a code of professional ethics, adhering to
accounting standards, and making no false accounts’
26
(CICPA & Accounting Society of China, 2002, p. 2). His
well-known quote, propagated in a number of CICPA of?cial
publications as well as communicated to the Chinese public
accountants on many occasions (see, for example, CICPA,
2002, 1999; Wang, 1995), conveyed a very powerful mes-
sage to members of the public accounting profession. Zhu
states that:
China’s public accounting profession serves as a founda-
tion for a socialist market economy and concerns the
future and fortune of the nation; the development of
the profession is a great undertaking of lasting impor-
tance (CICPA., 1999, p. 27).
Zhu was, in effect, linking the cementing ideology of Deng
(i.e. of building socialism with Chinese characteristics) and
the state’s strategic push for transforming into a socialist
market economy with the importance of the public
accounting profession. To ensure the success of the eco-
nomic reforms, Zhu understood the need as well as the
importance of raising the level of standard of public
accountants (see, for example, CICPA, 1999, p. 40). He
was, therefore, speci?cally concerned about the healthy
and continual development of the public accounting pro-
fession (Ding, 2001). So while other Chinese leaders also
attached great importance to the profession,
27
it was Zhu’s
deep understanding of its role (as well as the requirement of
having high level of standards) within the overall strategic
plan of building socialism with Chinese characteristics that
won him the consent of Chinese public accountants. His
hegemonic in?uence within the accounting community
can be seen, for example, in responses to his speech deliv-
ered at the 1995 National Conference on Accounting Work.
The speech, which provided suggestions on readjusting
and restoring the order of accountancy work, was reported
to have received unanimous support from the participants
at the meeting. Participants also agreed that Zhu had great
insights into the issues they faced in their work, and they
were determined to put Zhu’s suggestions into practice (re-
ported in Accounting Research, 1995, vol. 12, pp. 2–5). Such
responses, it can be argued, also re?ect the ‘moralistic
father-knows-best paternalism’ (Unger & Chan, 1996, p.
99) said to have been embedded within the Chinese way
of thinking.
Having instigated the merger, Zhu also monitored its
progress closely and continued to exert his in?uence
throughout the merging process (see, Ding, 2001, p. 362,
373). The latter was particularly evident in the written
statement he issued at the special meeting of the CPA rep-
resentatives held on 5 June 1996, 1 year after the decision
to merge. Strategically, the timing of Zhu’s statement was
important as the progress made in combining the local
institutes
28
of the CICPA and the CACPA was far from desir-
able – in particular, because the number of certi?ed public
auditors in existence at the time was relatively high in com-
parison to the number of CPAs (see, Ding, 2001). The need to
accommodate a huge number of certi?ed public auditors
with perceived lower level of standards created many con-
?icts between the local MOF and CNAO agencies, which
were the real power behind the two professional bodies.
This accentuated their power struggles and further hindered
25
‘Zhong Nan Hai’, also known as the Sea Palaces, literally translates as
the Central and Southern Seas. It had been home to the highest ranking
members of the Communist Party (such as Mao Zedong and Zhou Enlai) and
now the Central Committee of the Communist Party, the State Council, the
Central People’s Government and the Military Commission of the Party
Central Committee all operate from there.
26
This was expressed in 16 Chinese characters, making up four catchy
phrases, each with four characters.
27
For example, at the Special National Congress of the CICPA held in June
1996, it was recorded that the meeting was ‘highly thought of’ by the
leaders of the state and other related state departments. According to an
of?cial publication of the CICPA, these leaders inscribed encouraging words
or made written speeches for the meeting, ‘which demonstrated the loving
care and support of the Party’s Central Committee, the State Council and
related departments to the certi?ed public accountancy profession’ (CICPA,
1999, p. 40).
28
The local institutes are local organizations of the CICPA and the CACPA
located in a province, in an autonomous region, or in a municipality directly
under the central government. For example, in accordance with the ?rst
CICPA charter, a local institute can be set up in a province, in an
autonomous region, or in a municipality directly under the central
government where there are more than 20 CPAs and more than two public
accounting ?rms (CICPA, 1989a).
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 439
the progress of the merger (Ding, 2001, p. 26). Understand-
ing the source of the con?icts, Zhu urged the MOF and the
CNAO to vigorously support and create the conditions
whereby CPAs and public accounting ?rms could effectively
carry out their functions (Zhu Rongji, 1996). He also rein-
forced the purpose of unifying the public accounting profes-
sion, linking the importance of the merger to the role
expected of the CICPA in terms of effective management
and co-ordination of the work of both CPAs and public
accounting ?rms (Zhu Rongji, 1996). Zhu further appealed
to the participants at the meeting to speed up the merging
process and to work towards raising the professional stan-
dards for both CPAs and public accounting ?rms (Zhu Rongji,
1996).
In response to Zhu’s statement, and following consulta-
tion with the CICPA, the MOF and the CNAO issued a sec-
ond joint notice
29
on 15 December 1996, targeting the
mergers of the local institutes of both professional bodies
and setting out the timeframe for their completion (Ding,
2001, p. 373; see, also, Joint Notice on Speeding Up the Com-
bination of Local Institutes of the Chinese Institute of Certi-
?ed Public Accountants & the National Audit Of?ce, 1996). In
this notice, the local government agencies were asked ‘to
prioritise the merger in their working agenda and to act in
accordance with: (1) the instruction of Zhu; (2) the ?rst joint
notice; and, (3) the spirit of the agreement made at the spe-
cial CPAs representatives meeting’ (Joint Notice on Speeding
Up the Combination of Local Institutes of the Chinese Insti-
tute of Certi?ed Public Accountants & the National Audit Of-
?ce, 1996, paragraph 1). They were also urged to consider
the collective interests and to compromise for the sake of
unifying the public accounting profession. The latter was
said to be crucial for the country in its process of transform-
ing into a socialist market economy (Joint Notice on Speed-
ing Up the Combination of Local Institutes of the Chinese
Institute of Certi?ed Public Accountants & the National
Audit Of?ce, 1996, paragraph 1).
The issuance of the second joint notice was indeed an
important step for ending the stalemate at the local insti-
tutes’ level. By December 1997, one a half year after the
delivery of Zhu’s statement, signi?cant progress was re-
ported to have been made in the merging process (Ding,
2001, p. 373). In his working report presented at the CICPA
Council meeting in 1997, the then Secretary General of the
CICPA, Ding Pingzhun, formally acknowledged the impor-
tance of Zhu’s involvement, stating his concern over the
merger of the CICPA and the CACPA as ‘an important guar-
antee for advancing the merging process towards the right
direction’ (Ding, 2001, p. 373).
While the hegemonic leadership of Zhu – with persis-
tent focus on building socialism with Chinese characteristics
– was important to the successful implementation of the
merger, it was made more effective through a process of
consensus building. According to Ding (2001, p. 362), the
merger of the CICPA and the CACPA was broadly carried
out in three steps: (1) the issuance of joint notices; (2)
the merging of the permanent of?ces of the institutes;
and (3) the convening of a special meeting of CPA repre-
sentatives. The ?rst of these steps signi?ed the reaching
of consensus with regard to the general direction of the
merger, whereas the second and the third steps both re-
lated to the practicalities of the merging process (Ding,
2001). The sequence of these events was signi?cant in that
it highlighted the priority attached to consensus building.
While providing the blueprint for the merger of the CICPA
and the CACPA, the ?rst joint notice also made explicit the
consensus that was reached ‘at the top’. This can be seen in
its preamble where it was revealed that agreement to the
merger, although instructed by the State Council, was
reached after discussions between the MOF and the CNAO
(Ministry of Finance & the National Audit Of?ce, 1995, pre-
amble). Indeed, being government ministries and the
power behind the two professional bodies, their support
of the merger and their agreement on its details were cru-
cial to its execution. The ?nal paragraph of the joint notice
further ‘?ltered down’ the consensus by urging local insti-
tutes of the two professional bodies to implement the mer-
ger in accordance with the spirit manifested in the notice
(Ministry of Finance & the National Audit Of?ce, 1995, par-
agraph 7).
For the successful implementation of the merger be-
tween the CICPA and the CACPA, as well as for the state-
corporatist mechanism to function properly in the future,
consensus building at the CICPA leadership level was also
crucial. As re?ected in the minutes of the CICPA Council
meeting held in 1995, the response of the Council mem-
bers to the ?rst joint notice appeared to be very positive.
Recorded in the minutes was a speech delivered by the
then Vice-Minister of Finance, Zhang Youcai, who was also
the honorary President of the CICPA at the time. Linking
the merger with the ideology of the state, Zhang pointed
out that the joint notice complied with the spirit of the
Decision regarding the development of market intermedi-
ary organisations, and satis?ed: (1) the ideological princi-
ple of shi shi qiu shi (seeking truth from facts); (2) the
requirement of a socialist market economy; and, (3) the
practical circumstances facing social auditing in China
(CICPA, 1995, p. 2). He further described the agreement
to merge as a ‘hard-earned achievement’ (CICPA, 1995, p.
2), and one that Zhu Rongji paid particular attention to.
The minutes revealed the unanimous support of the Coun-
cil members over the merger issue and reported their total
agreement with Zhang. Not only did the Council members
concur that the merger represented an important mile-
stone in the development of the Chinese public accounting
profession (CICPA, 1995, p. 2), they also expressed their
determination to advance the merger agenda (CICPA,
1995, p. 4). The minutes of the Council meeting also cited
the Council members’ unanimous decision to carry out
the merger with rigor, both from an ideological as well as
an organisational level (CICPA, 1995, p. 3). The ideological
aspect was of crucial importance, as it involved building
consensus, particularly in understanding that the merger
was necessary in furthering the development of the public
accounting profession and, more importantly, that it was a
long-term strategy rather than a temporary measure (CIC-
PA, 1995, p. 3). With regard to the pursuance of long-term
interests, Zhang particularly emphasized that a common
29
This second joint notice was entitled Joint Notice on Speeding up the
Combination of Local Institutes of the Chinese Institute of Certi?ed Public
Accountants and the Chinese Association of Certi?ed Public Auditors.
440 H. Yee / Accounting, Organizations and Society 37 (2012) 426–444
understanding of such principle must be reached (CICPA,
1995, p. 3). Certainly, on both cultural and political levels,
the ideological thinking whereby immediate interests are
to be subordinated to long-term interests was not unfamil-
iar to the Council members. Indeed, in the case of resolving
the intra-professional con?icts, it was through reaching
consensus on pursuing the long-term interests of the pro-
fession that the CICPA was prepared to accept the compro-
mises it had to make in the merger process. As noted by
one of the interviewees (government of?cial interviewed
on 26 January, 2007):
At that point in time, the CICPA did make a big compro-
mise. Even though it was the CACPA who felt like being
lost in the process, the CICPA did make a big compro-
mise to achieve the merging. What was the biggest
compromise? We awarded all certi?ed public auditors
the title of CPA unconditionally. You have to understand
we had approximately 28,000 practising CPAs then. And
there were approximately 25,000 certi?ed public audi-
tors. Out of these 25,000, most of them did not have
to take professional exams to obtain their certi?cate.
But we regarded such a compromise a worthwhile
one. For in as little as ?ve years’ time, the CPA member-
ship had structurally re-adjusted: most of the CPAs
quali?ed under the evaluation system (i.e. who were
previously certi?ed public auditors) were older com-
rades. They had to have over 30 years of working expe-
rience, which made them 50 or 60 years old. Many of
them had retired from the state-owned enterprises
before undertaking the work of a CPA. After the merging
of the CICPA and the CACPA, we continually regulate the
quality of our team. Now we have a team of profession-
als who are young. So, at one point in time, we had
indeed sacri?ced a great deal, and a lot of the CPAs per-
ceived this move as negative. But after the develop-
ments of these few years . . . we have now got a much
better team of CPAs as compared to the past.
Despite the short-term drawback of having to ‘absorb’ all
the certi?ed public auditors with a perceived lower stan-
dard of quali?cation, the CICPA was determined to focus
on the long-term positive development, which could only
be made possible if the whole profession was to be
united.
The consensus built at the CICPA leadership level was
further transmitted down to the local institutes’ level,
being reinforced also by the second joint notice issued by
the MOF and the CNAO. As discussed earlier, the issuance
of this latter joint notice saw an important breakthrough
in the merging of the two institutes. The uni?cation pro-
cess, which included the merger of the local institutes of
the two bodies, took nearly 3 years to complete (CICPA,
1998). From 1999, the name CACPA and the title of certi-
?ed public auditor was no longer used in China. The suc-
cessful merger between the CICPA and the CACPA not
only dissolved the intra-professional con?icts that plagued
the public accounting profession, but also restrained the
intra-government power struggle between the MOF and
the CNAO, preventing their ‘warfare’ from becoming more
intense.
Discussion and conclusion
Taking into account the differences in culture and in the
system of power in China, the theoretical underpinning of
this study employs a (state) corporatist framework and
combines with Gramsci’s concept of hegemony. The cou-
pling of these two concepts offers a ‘new’ dimension for
analysing the state-accounting profession axis in China,
i.e. one that is capable of highlighting the particular power
relation between the state and the Chinese public account-
ing profession, while at the same time illuminating the
ideological in?uence of the state in the professionalization
process.
The state-accounting profession dynamic in China dur-
ing the 1990s is best understood to be one of cooperation
and ‘harmony’. It was a period when the state – and espe-
cially Zhu Rongji – took an active interest in the develop-
ment of the accounting profession, emphasizing, in
particular, the requirement for a high standard of profes-
sionalism. On the economic front, the state endeavored
to loosen its administrative grip over SOEs and resorted
to bridge the gap in control through the use of corporatist
mechanism. In this regard, the CICPA has all the hallmarks
of a state corporatist association. It was to assist the state
in managing CPAs and public accounting ?rms, both of
which were perceived by the state (and state of?cials for
that matter) to have an important role in monitoring the
activities of SOEs. More importantly, the CICPA had the
task of communicating policy lines of the state to its mem-
bership and, in the process, mobilizing and steering Chi-
nese public accountants into aligning their functions with
the economic agenda of the state.
In seeking cooperation and thereby maintaining the
effectiveness of the corporatist mechanism, both the state
and the CICPA were seen to have placed a lot of emphasis
on consensus building. In this respect, the process of
achieving organized consensus was aided by a powerful
‘tool’, i.e. the political ideologies of Deng Xiaoping. During
the 1990s, Deng Xiaoping’s concept of building socialism
with Chinese characteristics became a dominant conception
of reality for the Chinese people and the country em-
barked, at full speed, on the transformation into a socialist
market economy. Under such political and ideological cli-
mate, the public accounting profession became even more
important to the state in its economic reform agenda. The
importance of the public accounting profession in the over-
all strategic plan of building socialism with Chinese charac-
teristics was being repeatedly af?rmed by state leaders
(and Zhu Rongji in particular) in of?cial publications, as
well as in public meetings of Chinese public accountants.
In this way, the state, working in partnership with the CIC-
PA, was able to mobilize Chinese public accountants in
supporting both the dui wai kai fang (opening to the out-
side) and dui nei gao huo (revitalizing the economy)
policies.
Cooper (1995, p. 179) describes power as being more
powerful ‘if it is invisible, disseminated throughout the
texture of social life and thus ‘‘naturalized’’ as custom, ha-
bit or ‘‘spontaneous’’ practice’. Indeed, in the case of China,
political ideologies serve as the ‘invisible power’ of the
H. Yee / Accounting, Organizations and Society 37 (2012) 426–444 441
state in the process of social control and in the construc-
tion of a particular social order. While changes in political
ideologies are re?ected in successive amendments to the
Constitution of the People’s Republic of China, various
strategies were also adopted to foster the alignment of ide-
ology between the state and the Chinese people – from
broadcasting Mao’s of?cial revolutionary doctrines using
loudspeakers that sit on people’s rooftops (Li, 2003) to
the modern day use of the media; from the display of polit-
ical slogans on public billboards and banners to incorporat-
ing into the educational curriculum the ideology of state
leaders. Through these diversi?ed means, ideologies of
state leaders became very much embedded within social
discourses, forming, also, part of the mental framework
through which the Chinese people ‘make sense of, de?ne,
?gure out and render intelligible the way society works’
(Hall, 1982, p. 59). This was clearly evident in the account-
ing discourses analysed in this study. Not only were refer-
ences to political and policy slogans found to be frequently
made, they were often used as rationales for justifying
action.
Intra-professional competition has been the theme of
much critical research. Argued to be one of the ‘pervasive
themes in professional organization’ (Walker, 2004, p.
127), such rivalries are often ‘sustained and bitter’ (Cara-
manis, 1999, p. 153). Research has also shown that intra-
professional competition can be an important ‘driver’ for
accountants to organize into professional institutions, par-
ticularly in situations where professional accountants have
‘no capacity to enforce an internal demarcation of the
occupation’ (Walker, 2004, p. 153), and have thus ‘sought
to differentiate the superior professional from the inferior
non-professional through the conferment of institutional
membership or non-membership’ (Walker, 2004, p. 153)
– as was the case in the United Kingdom. The result of such
a tactic is that, while exclusionary closure was achieved
and intra-occupational status hierarchy solidi?ed, a single
occupation inevitably becomes segmented, with each seg-
ment constantly and continuously competing with each
other in an attempt to expand its in?uence, as well as to
defend and maintain its status.
Like many other countries where intra-professional
competition has featured in the accounting professionali-
zation process, the Chinese public accounting profession
was no exception. What was unusual about the Chinese
experience, however, was the particular circumstances
and outcome of the intra-professional ‘battle’ between
the CICPA and the CACPA. For example, while the standards
set by the CICPA were much higher than that required by
the CACPA, such professional ‘superiority’ did not translate
into any competitive advantage for the CICPA. On the con-
trary, the lower requirement for entry into the CACPA
made it easier for practitioners to obtain a CACPA licence
and practise as a certi?ed public auditor, rather than as a
certi?ed public accountant. This created a situation where
the number of certi?ed public auditors increased at a dis-
proportionate rate as compared to the number of CPAs,
thus worsening the competition between the two profes-
sional bodies. The outcome of the intra-professional com-
petition between the CICPA and the CACPA is particularly
revealing. Unlike the experiences in most western
countries, the Chinese accountants did not proactively pur-
sue a strategy of exclusionary closure. The answer to
resolving the con?icts and the directive to eliminating
the intra-professional competition came from the state,
and it was to be achieved through the merger of the two
institutes. From this investigation, it can be seen that the
two Chinese professional accounting bodies would not
have merged without the direct intervention of the State
Council and, in particular, the authoritative (and hege-
monic) leadership of Zhu Rongji. The merging process
was further facilitated through a process of consensus
building. Apart from agreements reached between the
MOF and the CNAO with regard to the merger, the align-
ment of ideology between the state and the CICPA Council
members was also crucial, not only in terms of achieving
organized consensus, but also in the top-down transmis-
sion of such consensus to members of the CICPA. While
this re?ects the top-down approach as well as the harmony
aspect of state-corporatism, it also highlights the role of
the state in instigating an ‘exclusionary closure’ that saw
the eradication of a parallel accounting organization.
Instead of sustained professional segmentation, as was
the case in western countries, the intra-professional con-
?ict actually led to the uni?cation of the public accounting
profession in China – an outcome which made the Chinese
experience rather unique. Such an outcome provides a
glimpse of the way Chinese society works which could ulti-
mately be attributed to a different system of power, its
ideological in?uences, and the cultural values that Chinese
people use to map their world.
Acknowledgements
The author would like to acknowledge the helpful com-
ments of two anonymous reviewers.
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