China's Culture Of Falsified Accounting "Intolerable"

[Henry C.K. Liu]

The report below is an example of residual feudal culture in China despite
50 years of socialist construction.
Feudalism in China has aspects of what modern political science would
label as fascist, socialist and democratic.  As a socio-political
system, feudalism is inherently authoritarian and totalitarian.
However, since feudal cultural ideals have always been meticulously
nurtured by Confucianism to be congruent with the political regime,
social control, while pervasive, is seldom consciously felt as
oppressive by the public.  Or more accurately, social oppression, both
vertical, such as sovereign to subject, and horizontal, such as gender
prejudice, is considered natural for lack of an accepted alternative
vision.
Concepts such as equality, individuality, privacy, personal freedom and
democracy, are deemed anti-social, and only longed for by the
derange-of-mind, such as radical Daoists.  This would be true in large
measure up to modern time when radical Daoists would be replaced by other
radical political and cultural dissidents. (Here a distinction
needs to be made between genuine indigenous dissents from those merely
playing opportunistically for foreign cash).
The imperial system in China took the form of a centralized federalism of
autonomous local lords in which the authority of the sovereign is
symbiotically bound to, but clearly separated from, the authority of the
local lords.  Unless the local lords abused their local authority, the
Emperor's authority over them, while all inclusive in theory, would not
extend beyond federal matters in practice, particularly if the Emperor's
rule is to remain moral within its ritual bounds.  This tradition
continues to the modern time. This condition is easily understandable for
Americans whose Federal government is relatively progressive on certain
issues of national standard with regard to community standards in backward
sections of the union.
Confucianism (Ru Jia), through the code of rites (li), seeks to govern
the behavior and obligation of each person, each social class and each
socio-political unit in society.  Its purpose is to facilitate the smooth
functioning and the perpetuation of the feudal system.
Therefore, the power of the Emperor, though politically absolute, is not
free from the constraints of behavior deemed proper by Confucian values
for a moral sovereign, just as the authority of the local lords is
similarly constrained.  Issues of constitutionality in the U.S. political
milieu become issues of proper rites and befitting morality in Chinese
dynastic politics.  To a large extent, this continues to the modern
Chinese polity.
The ideal Confucian state rests on a stable society over which a virtuous
and benevolent emperor rules by moral persuasion based on a Code of Rites
rather than by law.
Justice would emerge from a timeless morality that governs social
behavior.  Man would be orderly out of self-respect for his own moral
character rather than from fear of punishment prescribed by law.  A
competent and loyal literati-bureaucracy faithful to a just political
order would run the government according to moral principles rather than
following rigid legalistic rules devoid of moral content.

Confucian values, because they have been designed to preserve the
existing feudal system, unavoidably would run into conflict with
contemporary ideas reflective of new emerging social conditions.
It is in the context of its inherent hostility toward progress and its
penchant for obsolete nostalgia that Confucian values, rather than
feudalism itself, become culturally oppressive and socially damaging.
When Chinese revolutionaries throughout history, and particularly in the
late 18th and early 19th century, rebelled against the cultural
oppression of reactionary Confucianism, they would simplistically and
conveniently link it synonymously with political feudalism.  These
revolutionaries would succeed in dismantling the formal governmental
structure of political feudalism because it was the more visible
target.  Their success had been due also to the terminal decadence of
the decrepit governmental machinery of dying dynasties, such as the
ruling house of the 3-century-old, dying Qing dynasty (1583-1911).
Unfortunately, these triumphant revolutionaries would remain largely
ineffective in re-molding Confucian dominance in feudal culture, even
among the progressive intelligentsia.
Almost a century after the fall of the feudal Qing dynasty house in
1911, after countless movements of reform and revolution, ranging from
moderate democratic liberalism to extremist Bolshevik radicalism, China
would have yet to find an workable alternative to the feudal political
culture that would be intrinsically sympathetic to its social traditions.
Chinese revolutions, including the modern revolution that would begin in
1911, through its various metamorphosis over the span of almost 4
millennia, in overthrowing successive political regimes of transplanted
feudalism, would repeatedly kill successive infected patients in the
form of virulent governments.  But they would fail repeatedly to
sterilize the infectious virus of Confucianism (Ru Jia) in its feudal
political culture.
The modern destruction of political feudalism would produce
administrative chaos and social instability in China until the founding
of the People's Republic in 1949.  But Confucianism (Ru Jia) would still
appear alive and well as cultural feudalism, even under Communist rule,
and within the Communist Party.  It would continue to instill its victims
with an instinctive hostility towards new ideas, especially if they are of
foreign origin.  Confucianism would adhere to an ideological rigidity that
would amount to blindness to objective problem-solving.
Almost a century of recurring cycles of modernization movements, either
Nationalist or Marxist, would not manage even a slight dent in the
all-controlling precepts of Confucianism in the Chinese mind.
In fact, in 1928, when the Chinese Communist Party would attempt to
introduce a soviet system of government by elected councils in areas of
northern China under its control, many peasants earnestly thought a new
"Soviet" dynasty was being founded by a new Emperor by the name of "So
Viet".
During the Great Proletariat Cultural Revolution of 1966, the debate
between Confucianism (Ru Jia) and Legalism (Fa Jia) would be resurrected
as allegorical dialogue for contemporary political struggle.  Legalist
concepts such as equal justice under law for all and no man being above
the law, are considered by Confucians as aberrations of social morals and
as corruption of good governance. On the eve of the 21st century,
Confucianism would remain alive and well under both governments on Chinese
soil on either side of the Taiwan Strait, regardless of political economic
ideology.  Modern China would still be a society in search of an emperor
figure and a country governed by feudal relationships, but devoid of a
compatible political vehicle that would turn these tenacious, traditional
social instincts towards constructive purposes, instead of allowing them
to manifest themselves as practices of corruption.
General Douglas MacArthur would present post-war Japan, which has been
seminally influenced by Chinese culture for 14 centuries, with the
greatest gift a victor in war has ever presented the vanquished: the
retention of her secularized Emperor, despite the Japanese Emperor's
less-than-benign role in planning the war and in condoning war crimes.
Thus General MacArthur, in preserving a traditional cultural milieu in
which democratic political processes could be adopted without the danger
of a socio-cultural vacuum, would lay the socio-political foundation for
Japan as a post-war economic power.
Of the 3 great revolutions in modern history: the French, the Chinese
and the Russian, each would overthrow feudal monarchial systems to
introduce idealized democratic alternatives that would have difficulty
holding the country together without periods of terror.
The French and Russian Revolutions would both make the fundamental and
tragic error of revolutionary regicide and would suffer decades of social
and political dislocation as a result, with little if any socio-political
benefit in return.  In France, it would not even prevent eventual
restoration imposed externally by foreign victors.
The Chinese revolution in 1911 would not be plagued by regicide, but it
would prematurely dismantle political feudalism before it would have a
chance to develop a workable alternative, plunging the country into
decades of warlordism.
Worse still, it would leave largely undisturbed a Confucian culture
while it would demolish its political vehicle.  The result would be that
8 decades after the fall the last dynastic house, the culture-bound
nation would still be groping for an appropriate and workable political
system, regardless of ideology.
Mao Zedong would understand this problem and would try to combat it by
launching the Great Proletariat Cultural Revolution in 1966.  But, even
after a decade of enormous social upheaval, tragic personal sufferings,
fundamental economic dislocation and unparalleled diplomatic isolation,
the Cultural Revolution would achieve little except serious damage to the
nation's physical and socio-economic infrastructure, to the prestige of
the Party, not to mention the loss of popular support, and total
bankruptcy of revolutionary zeal among even loyal party cadres.
It would be unrealistic to expect the revival of imperial monarchy in
modern China.  Once a political institution is overthrown, all the king's
men cannot put it together again. Nor would it be desirable.
Yet, the modern political system in China, despite its revolutionary
clothing and radical rhetoric, would be still fundamentally feudal, both
in the manner in which power is distributed and in its administrative
structure.
In Chinese politics, loyalty is always preferred over competence.  The
ideal is to have both in a minister.  Failing that, loyalty without
competence is preferred as being less dangerous than competence without
loyalty, the stuff of which successful revolts are made.
Confucianism (Ru Jia), by placing blind faith on a causal connection
between virtue and power, would remain the main cultural obstacle to
modern China's attempt to evolve from a society governed by men into a
society governed by law.
The danger of Confucianism lies not in its aim to endow the virtuous
with power, but in its tendency to label the powerful as virtuous.

Henry C.K. Liu

China's Culture Of Falsified Accounting "Intolerable"

                      SHANGHAI, Jun 17, 1999 -- (Agence France

                      Presse) A Chinese official has blasted as

                      "intolerable" the falsification that has become

                      routine in China's accounting and auditing

                      industries, the official China Securities daily

                      reported Thursday.

                      Vice Treasury Minister Zhang Youcai was

                      quoted as saying that accounting and auditing

                      firms do not object when they discover their

                      clients providing false information and

                      sometimes actively cooperate in cooking the

                      books.

                      "This situation has become quite normal and on

                      the rise," Zhang reportedly told a meeting

                      Wednesday, adding: "It has already reached an

                      intolerable level."

                      "If we do not bring order to the situation in a

                      timely manner, the registered accounting

                      industry and even the whole economy and

                      society will be destroyed," he said.

                      Beijing is already carrying out reforms to cut

                      ownership ties between accountancies and

                      corporate entities that undermine the former's

                      independence.

                      But the vice-minister urged an ethical revamp to

                      end the culture of mutual protection between

                      accountants and their clients.

                      He called for "major efforts" to strengthen

                      supervision and toughen punishments.

                      "The accounting market's core problem is

                      falsification," he said.

                      "Packaging listed companies has become an

                      effort in fabrication," he said, admitting that
local

                      governments sometimes encouraged wrongful

                      practices so as to promote companies in their

                      jurisdiction. ((c) 1999 Agence France Presse)