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East and West followed different paths in the development of accounting until the early 20th century when Western debit-credit bookkeeping was introduced to China. By that time, Chinese accounting had already enjoyed a long and distinctive history.
Initially, a single-entry system was used to record transactions with ru, indicating receipts of revenue, and chu, payments of expenditure. This single-entry bookkeeping only accounted for changes (either increases or decreases). A full-blown, double-entry bookkeeping method did not surface in China until the mid-17th century.
The Opium War of 1840 forced the Chinese government to open its doors to Western commercial interests. Foreign businesses were the first to apply Western-style, double-entry bookkeeping in China.
Debit-credit bookkeeping gained ground in China in the early 20th century, but the road it traversed thereafter was by no means smooth. It underwent several decades of turbulent development due to various political and socioeconomic reasons. During the 1920s and the 1930s, traditional Chinese bookkeeping coexisted with the Western method.
After the founding of the new China in 1949, the political climate was filled with antiWest, anti-capitalism sentiment. This enmity was fueled not only by ideological considerations but also by the international Cold War environment and by the concern that the new government was in danger of subversion by Western-backed forces. To mobilize the country, the government called upon the Chinese people to destroy the old political and socioeconomic establishments and to build a new, socialist China. Originated from the West, debit-credit bookkeeping was a natural target for destruction. Replacing it with some type of indigenous Chinese bookkeeping method was seen as something larger than bookkeeping itself. It carried a symbolic meaning with political, ideological, and cultural implications that Chinese socialist accounting was fundamentally distinct from Western, capitalist accounting.
The extremism, misconception, and confusion surrounding the debate over bookkeeping methods in China vanished gradually after the end of the Cultural Revolution in 1976.