Economic reforms in the People’s Republic of China are moving that nation toward a market-driven economy. China’s accounting practices must also change to accommodate the needs of potential investors. In an article entitled “Institutional Factors Influencing China’s Accounting Reforms and Standards,” Professor Bing Xiang analyzes the changes in the accounting environment of China during the recent economic reforms and their implications for the development of accounts reforms.

Required:
1. Briefly describe the economic reforms that led to the need for increased external financial reporting in Chine.
2. Conformity with International Accounting Standards was specified as an overriding objective in formulating China’s accounting standards. What is the author’s opinion of this objective?