It's been called the land of the missing accountants. The sorry state of the accountancy profession in China is the Legacy of the Cultural Revolution's war on capitalism, reports the Financial Times.

During the Cultural Revolution, accountants were among the hundreds of thousands of professionals who were denounced, sent off into exile or even killed. To make things worse, China's accountants for years used a Soviet-style book-keeping system designed for a highly-centralized and rigidly controlled economy. True, China has embraced change but it's left China with a serious skills shortage.

This is the backdrop to China's pledge to move its auditing standards into line with international standards by 2008. Significantly, it's been stated that China's accounting rules will not be accepted as equivalent to the global norm.

It also provides some context to China's desire to cultivate its own accounting industry and wean itself away from the Big Four who have targeted China for growth and big bucks.

And it might add some background to the problems that Ernst & Young and PricewaterhouseCoopers have encountered in China.

The development of better accounting standards is absolutely critical if the new Middle Kingdom is to develop good bank, equity, bond and venture capital markets. Let's hope they get there. The future of a more integrated global economy depends on it.