The European Commission on Thursday praised China's progress towards accounting standards convergence.
China's new Accounting Standard for Business Enterprises (ASBE) is a positive step, said the commission in a report to the European Parliament and the European Securities Committee.
The new standards, which took effect on Jan. 1, 2007, are mandatory for all companies listed in China.
Other Chinese enterprises are also encouraged to apply the standards.
The report found that the ASBE covers nearly all of the topics under the existing International Financial Reporting Standards (IFRS), which the EU has adopted as its accounting standard.
However the report noted some exceptions to the IFRS.
"The Commission encourages the Chinese authorities to continue work on convergence and would welcome a detailed timetable setting out the key stages envisaged to be reached in the near future," the report said.
At a meeting at EU headquarters earlier this month, officials from the EU and China agreed to work towards a final decision by the EU on the equivalence of Chinese accounting standards in mid 2008.
China will become the fourth country, after the United States, Japan and Canada, to have accounting standards equivalent to those in the EU.
Chinese companies listed on European stock markets will then not have to change their annual financial reports.
Source: Xinhua
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