Such comparison doesn’t mean higher profitability of Chinese enterprises, as a large amount of costs was not reflected in cost, but in profit. For instance, bonus, employees’ pensions, health, R&D and advertisement expenditures should have been cost items, but they were covered by profits. If such artificially high profits of enterprises were paid out as dividends, enterprises could not survive and develop.
Therefore, resolving distortions in cost and profit should be the first task in a series of supporting reforms. This involves upgrading accounting standards. In recent years, continued progress has been made in this regard, for instance, adoption of many practices. Further international comparison may help us detect the remaining problems.