UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 x
     Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934for the fiscal year ended December 31, 2008, or ̈
     Transition report pursuant to section 13 or 15(d) of the Securities Exchange act of 1934for the transition period from        to  Commission File No.
0-23015 GREAT CHINA
INTERNATIONAL HOLDINGS, INC. (Exact name of small business issuer as specified in its
charter) Nevada
     
     87-0450232(State or Other Jurisdiction of
Incorporation or Organization)
     
     (IRS Employer Identification No.) C Site 25-26F Presidential Building, No. 69 Heping North Street Heping District, Shenyang 110003, Peoples Republic of China (Address of Principal Executive Offices) Registrant's Telephone Number: 0086-24-22813888 ____________ Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Common Stock, Par Value $0.001 ____________ Indicate by check mark if registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities   Act.   Yes  ̈   Nox Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
    Yes  ̈   Nox Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
     15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
     the registrant was required to file such reports), and (2) has been subject to such filing requirements for
     the past 90 days.   Yes x   No ̈ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
     contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or
     information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
     10-K.   ̈ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
     non-accelerated filer, or a smaller reporting company.   ̈  Large accelerated filer   ̈  Accelerated filer
        ̈  Non-accelerated filer  x  Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange
     Act).   ̈   Nox The aggregate market value of voting stock held by non-affiliates on June 30, 2008, based on the average bid and
asked prices on the last trading day prior to such date, was $12,583,164.  As of March 31, 2009, the Registrant
had outstanding 11,759,966 shares of common stock, par value $0.001. Documents incorporated by reference: None.




Explanatory Note This  Amendment  No. 1 on Form 10-K/A to the  Company's  Annual  Report is made  solely to correct a  typographical
error in the final  Edgar  version  of the  Consolidated  Statements  of Income and Other  Comprehensive  Income as
included in the Companys  Annual Report for the year ended December 31, 2008,  originally  filed on March 31, 2009
(Original  Form  10-K).  Specifically,  the amount for  Interest  and  Finance  Costs line item for 2008 in the
Consolidated  Statements  of Income and Other  Comprehensive  Income  should  have been  ($2,628,464),  rather than
($642,577).  The Total  other  income  amount  for 2008 was  correctly  stated  and is not being  changed by this
Amendment  No. 1 on Form 10-K/A.  There are no other changes to the Original Form 10-K other than the change to the
Consolidated  Statements of Income and Other Comprehensive  Income. Except as required to reflect this change, this
Amendment  No. 1 on Form  10-K/A  does not  attempt  to  modify or update  any other  disclosures  set forth in our
Original Form 10-K.  Furthermore,  this Amendment No. 1 on Form 10-K/A does not purport to provide a general update
or discussion of any other developments of Great China International  Holdings,  Inc.,  subsequent to the filing of
the Original Form 10-K.  Accordingly,  this Amendment No. 1 on Form 10-K/A should be read in  conjunction  with the
Original Form 10-K. CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS This annual report on Form 10-K may contain certain forward-looking statements as such term is defined
by the Securities and Exchange Commission in its rules, regulations and releases, which represent the
Companys expectations or beliefs, including but not limited to, statements concerning the Companys
operations, economic performance, financial condition, growth and acquisition strategies, investments,
and future operational plans.  For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.  Without limiting the generality of
the foregoing, words such as may, will, expect, believe, anticipate, intent, could,
estimate, might, plan, predict or continue or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.  This information may
involve known and unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from the future results, performance or
achievements expressed or implied by any forward-looking statements. This annual report contains forward-looking statements, many assuming that the Company resolves its
outstanding debt obligations and is able to continue as a going concern, including statements regarding,
among other things, (a) negotiating settlement of our outstanding debt obligations, (b) our plans for
developing or participating in the development of real estate projects, (c) our opportunities for
participating in new real estate projects, (d) our growth strategies, (e) anticipated trends in our
industry, (f) our future financing plans, (g) our anticipated need for working capital, (h) the impact
of governmental regulation of the real estate industry in China, and (i) the availability of labor and
materials for project development.  These statements may be found under Item 1. Business, Item 2.
Properties and Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations, as well as in this annual report generally.  Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various factors, including, without
limitation, the risks discussed under Item 1A. Risk Factors and matters described in this annual
report generally.  In light of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this annual report will in fact occur. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our
forward-looking statements.




TABLE OF CONTENTS ITEM NUMBER AND CAPTION
     
     Page Part I8.
     Financial Statements and Supplementary Data
     4Part III15.
     Exhibits and Financial Statement Schedules
        4  3




PART I ITEM 8.     FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA Great
China Holdings financial statements appear at the end of this report beginning
with the Index to Financial Statements on page F-1, following page 5. PART III ITEM 15.      EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES The following
documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K: Exhibit No.

     Title of Document31.1
        
     Certification of Chief Executive Officer31.2
        
     Certification of Chief Financial Officer32.1
        
     Certifications of Chief Executive Officer and Chief Financial Officer 4




SIGNATURES In
accordance with SEction 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. GREAT CHINA INTERNATIONAL HOLDINGS, INC. Date: April 3, 2009
        
     By:
     
     /s/ Jiang PengJiang Peng, Chairman of the Board(Principal Executive Officer)   Date: April 3, 2009
     
     By:
     
     /s/ Sun DongqingSun Donqing, Chief Financial Officer(Principal Financial and Accounting Officer) 5




INDEX TO FINANCIAL STATEMENTS Consolidated Financial Statements Great China International Holdings, Inc. Page Report of Independent
Registered Public Accounting
Firm...........................................................................................................F-2 Consolidated Balance
Sheet...........................................................................................................
.................................................F-3 Consolidated Statements
of
Operations..........................................................................................................................................F-4 Consolidated Statements
of Stockholders Equity..........................................................................................................................F-5 Consolidated Statements
of Cash
Flows.........................................................................................................................................F-6 Notes to the
Consolidated Financial
Statements.............................................................................................................................F-7 F-1




Report of Independent Registered Public
Accounting Firm Board of Directors and Stockholders of Great China
International Holding, Inc. and subsidiaries, We have  audited the  accompanying  consolidated  balance
 sheets of Great China  International  Holdings, Inc. and  subsidiaries,  as of December  31, 2008 and December 31, 2007,  and the related
 consolidated  statements of operation,  stockholders'  equity, and cash flows for the
years ended December  31,  2008 and 2007.  These  consolidated  financial  statements
 are the  responsibility  of the Company's  management.  Our  responsibility  is to
 express an  opinion  on these  consolidated  financial statements based on our audits. We conducted  our audits in  accordance  with the
 standards of the Public  Company  Accounting  Oversight Board (United  States).  Those
standards  require that we plan and perform the audit to obtain  reasonable assurance
 about whether the  consolidated  financial  statements  are free of material
 misstatement.  An audit  includes  examining,  on a test basis,  evidence  supporting
 the amounts  and  disclosures  in the financial  statements.  An audit also includes
 assessing the accounting  principles  used and significant estimates  made  by
 management,  as well as  evaluating  the  overall  consolidated  financial  statement
presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion,  the consolidated  financial  statements
referred to above present fairly, in all material respects,  the  consolidated  financial
 position  of  Great  China  International   Holdings,   Inc.  and subsidiaries,  as of
December 31, 2008 and 2007, and the related  consolidated results of their operations and
cash flows for the years ended December 31, 2008 and 2007, in conformity  with
 accounting  principals generally accepted in the United States of America. /s/ Kabani & Company, Inc. Los Angeles, California March 27, 2009 F-2




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS
                                    DECEMBER 31, 2008 AND DECEMBER 31, 2007 December 31, 2008
      
     December 31, 2007ASSETSCurrent assets:Cash and cash equivalents

     $8,214,381
        

     $10,044,579Accounts receivable, net
        
        
     222,735
        

     325,058Receivable on disposal of subsidiaries
     --
        

     30,701,957Other receivable, net
     676,938
        

     1,070,863Properties held for resale
     6,228,607
        
 
     7,696,437Total current assets
     15,342,660
        
 
     49,838,893Property and equipment, net
     51,063,104
        
 
     50,632,336Total assets
     $66,405,764
        

     $100,471,229LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Bank loans
     $19,317,925
        

     $25,231,297Accounts payable and accrued expenses
     4,404,447
        

     8,615,415Other payable
     1,694,545
        

     5,723,489Payable to disposed subsidiaries
     768,287
        

     10,494,449Commission payable
     1,784,080
        

     8,898,502Advances from buyers
     1,997,262
        

     2,034,019Taxes payable
     9,107,260
        

     8,552,316Total current liabilities
     39,073,807
        

     69,549,487Long term debt, net
     --
        

     5,486,968Total liabilities
     39,073,807
        

     75,036,455Stockholders' equity:Common stock, $.001 par value 50,000,000 sharesauthorized, 11,759,966  issued and outstandingat December 31, 2008 and December 31, 2007
     11,760
        

     11,760Additional paid in capital
     4,566,156
        

     4,562,855Statutory reserve
     638,128
        

     638,128Other comprehensive income
     2,287,898
        

     1,468,546Retained earnings
     19,828,016
        

     18,753,485Total stockholders' equity
     27,331,957
        

     25,434,773Total liabilities and stockholders' equity
     $66,405,764
        

     $100,471,229 The accompanying notes are integral part of these unaudited consolidated
financial statements. F-3




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 2008
      
     2007RevenuesReal estate sales
        
        
     $
        3,679,044
        

     $4,378,993Rental and management fee income
        
        
     
        6,011,176
        

     
        5,296,635Total revenues
        
        
     
        9,690,220
        

     
        9,675,627Cost of revenues
        
        
     
        4,354,467
        

     
        5,980,853Gross profit
        
     5,335,754
        

     3,694,774Operation expensesSelling expenses
        
        
     
        92,448
        

     
        414,179General and administrative expenses
        
        
     
        3,758,351
        

     
        2,777,646Depreciation and amortization
        
        
     
        2,984,615
        

     
        2,343,721Total operation expenses
        
        
     
        6,835,415
        

     
        5,535,546Loss from operations
        
        
     
        (1,499,661
        )

     
        (1,840,772
        )Other income (expense)Land leveling income
        
        
     
        3,097,374
        

     
        1,929,041Gain on settlement of debt
        
        
     
        1,036,076
        

     11,115,201Interest expense refunded
     1,006,722
        

     --Loss on terminated project
     --
        

     (1,504,604
        )Other income, net
     800,273
        

     (642,577
        )Interest and finance costs
     (2,628,464
        )

     (3,041,236
        )Total other income
     3,311,981
        

     7,855,825Income before income taxes
     1,812,319
        

     6,015,053Provision for income taxes
     401,038
        

     1,514,810Income from operations
     1,411,282
        

     4,500,243Discontinued operationsLoss from operations of subsidiary
     --
        

     (61,271
        )Loss from entity to be discontinued
     (336,751
        )

     (4,060,304
        )Gain from disposal of entity
        
        
     --
        

     23,947,054Income (loss) from discontinued operations
        
        
     (336,751
        )

     19,825,479Net income
        

     $1,074,531
        

     $24,325,722Other comprehensive income:Foreign currency translation adjustment
     819,352
        

     1,000,202Net comprehensive income
     $1,893,882
        

     $25,325,924Net income per share from continued operationsBasic
     $0.12
        

     $0.38Diluted
     $0.12
        

     $0.38Net income (loss) per share from discontinued operationsBasic
     $(0.03
        )

     $1.69Diluted
     $(0.03
        )

     $1.69Net income (loss) per shareBasic
     $0.09
        

     $2.07Diluted
     $0.09
        

     $2.07Weighted average number of shares outstandingBasic
     11,759,966
        

     11,759,966Diluted
     11,759,966
        

     11,759,966 Basic and diluted earnings per share are the same because there is no dilutive effect.The accompanying notes are integral part of these unaudited consolidated financial statements. F-4




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
             STATEMENTS OF CONDENSED CONSOLIDATED STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 Accumulated
     
     
     
     RetainedAdditional
     
     Other
     
     
     
     Earnings
     
     TotalCommon Stock
     
     Paid in
     
     Comprehensive
     
     Statutory
     
     (Accumulated
     
     StockholdersShares
     
     Amount
     
     Capital
     
     Income
     
     Reserve
     
     Deficit)
     
     EquityBalance,
     
     
     
        11,782,036
        
       
     $
        11,783
        
    
     $
        4,542,308
        

     $
        468,344
        

     $
        --
        

     $
        (4,934,109
        )

     $
        88,326December 31, 2006Reconciliation
        
        
     
        (22,070
        )
     
     (23
        )

     23
        

     --
        

     --
        

     --
        

     --of stockStock option
     --
        
     
     --
        

     20,524
        

     --
        

     --
        

     --
        

     20,524to non-employeedirectorTransfer to
     --
        
     
     --
        

     --
        

     --
        

     638,128
        

     (638,128
        )

     --statutory reserveNet income
     --
        
    
     --
        

     --
        

     --
        

     --
        

     24,325,722
        

     24,325,722for the year endedDecember 31, 2007Change inexchange ratefluctation reserve
     --
        
     
     --
        

     --
        

     1,000,202
        

     --
        

     --
        

     
        1,000,202Balance,
     11,759,966
        
    
     11,760
        

     4,562,855
        

     1,468,546
        

     638,128
        

     18,753,485
        

     25,434,773December 31, 2007Stock option
     --
        
     
     --
        

     3,301
        

     --
        

     --
        

     --
        

     3,301to non-employeedirectorNet income
     --
        
     
     --
        

     --
        

     --
        

     --
        

     1,074,531
        

     1,074,531for the year endedDecember 31, 2008Change in exchangerate fluctuation reserve
        
        
     --
        
     
     --
        

     --
        

     819,352
        

     --
        

     --
        

     819,352BalanceDec. 31, 2008
     11,759,966
        
     
     $11,760
        

     $4,566,156
        

     $2,287,898
        

     $638,128
        

     $19,828,016
        

     $27,331,957 F-5




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE TWELVE MONTH PERIODS ENDED DECEMBER 31, 2008 AND 2007 2008

     2007Cash flows from operating activities:Net income
     $1,074,531
        

     $24,325,722Adjustments to reconcile net income to operating activitiesnet cash provided by operating activitiesDepreciation and amortization
     2,984,615
        

     2,343,721Gain on interest expense refunded
     (1,006,722
        )

     --Gain on settlement of debt
        
        
     (1,036,076
        )

     (11,115,201
        )Provision for doubtful accounts
     132,303
        

     3,731,419Loss on termination of project
     --
        

     1,504,604Non-cash stock compensation expense
     3,301
        

     20,524(Increase)/decrease in assets:Accounts receivable and other receivables
     31,150,807
        

     1,916,364Other receivable
     --
        

     (3,135,764
        )Prepaid expenses
     --
        

     778,975Properties held for resale
     1,959,066
        

     3,540,825Increase/(decrease) in liabilities:Accounts payable and accrued expenses
     (24,183,977
        )

     24,358,712Advances from buyers
     (172,907
        )

     (91,924
        )Income and other taxes payable
     304,812
        

     2,242,023Net cash provided by operating activities from continuing operations
     11,209,753
        

     50,420,001Net cash provided by operating activities
     11,209,753
        

     50,420,001Cash flows from investing activities:Construction in progress
        
     (34,543
        )

     8,126,213Purchases of property & equipment
     (53,758
        )

     (7,354,196
        )Sale of property and equipment
     86,286
        

     1,641,649Net cash provided by investing activities from continuing operations
     (2,015
        )

     2,413,667Net cash used in investing activities of discontinued operations
     --
        

     (30,701,958
        )Net cash provided by (used in) investing activities
     (2,015
        )

     (28,288,291
        )Cash flows from financing activities:Loan repayments
     (13,261,157
        )

     (14,676,812
        )Advances to directors and affiliated companies
     --
        

     (430,262
        )Net cash used in financing activities from continuing operations
     (13,261,157
        )

     (15,107,074
        )Net cash used in financing activities from discontinued operations
     --
        

     --Net cash used in financing activities
     (13,261,157
        )

     (15,107,074
        )Effect of exchange differences
     223,222
        

     1,250,198Net increase (decrease) in cash and cash equivalents
     (1,830,198
        )

     8,274,835Cash and cash equivalents, beginning of period
        
        
     
        10,044,579
        

     
        1,769,744Cash and cash equivalents, end of period
     $8,214,381
        

     $10,044,579Supplemental disclosures of cash flow information:Interest paid
     $3,943,418
        

     $2,382,280Income taxes
     $401,038
        

     $521,211 The accompanying notes are integral part of these unaudited consolidated
financial statements. F-6




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
     Description of business Nature of organization Great China  International  Holdings,
 Inc., (the Company) was incorporated in the State of Nevada      on December 4, 1987,
 under the name of Quantus  Capital,  Inc.,  and in 1992, it changed its name to      Red
Horse  Entertainment  Corporation.  On September 15, 2005, the Company  changed its name
to Great      China International Holdings, Inc. Shenyang  Xinchao Property  Company
Limited  (Shengyang  Xinchao) was registered on August 16, 2005      in  Shenyang,
 Liaoning  Province,  in  the  PRC  with  a  registered  capital  of  $12,330,456  (RMB
     100,000,000)  and a defined  period of  existence  of 11 years to August  15,  2016.
 Shenyang  Yindu      Property  Company  Limited  (Yindu)  was  registered  on  August
 16,  2005 in  Shenyang,  Liaoning      Province,  in the PRC with a registered  capital
of $6,615,228 (RMB  50,000,000) and a defined period      of  existence  of 11 years to
August 15,  2016.  Xinchao  and Yindu were  formed to develop a certain      tract of
property  located in the Heping District of Shenyang,  and will feature a construction
 area      of almost 500,000 square meters with a linear site area of approximately
 101,000 square meters.  The      local  government  of Heping  District  of  Shenyang
 received  back the land use  rights of the Xita      project  because of new  developing
 plan of the district.  Heping  District  refunded the land usage      right paid by
Xinchao and reimbursed the  development  cost incurred by Xinchao.  The Company decided
     to discontinue  Shenyang  Xinchao and Yindu on October 2008. As of December  15,2008
Shenyang Xinchao      and  Yindu  were  discontinued.  The  assets  and  liabilities
 were  decided  by  the  directors  to      transferred to Shenyang Maryland
International Industry Co., Limited. Beijing Xinchao Property Company
Limited  (Beijing  Xinchao) was registered in Beijing on March 27,      2008.  Beijing
 Xinchao was 100% owned by Shenyang  Xinchao  with a registered  capital  amounting to
     $4,255,440  (RMB  29,800,000)  and a defined  period of  existence  of 10 years.
 Bijing  Xinchao was      disposed on May 2008 in the amount of  $4,255,440  and no
gain/loss  was  recognized in the disposal.      The disposal amount was fully received
 as of  December 31, 2008. On August 7, 2007,  the Company
 completed  the  acquisition  of all of the issued  share  capital of      Loyal Best
Property  Development  Limited (Loyal Best),  a Hong Kong limited  company,  from
Gentle      Knight Limited (GKL). Loyal Best is the sole owner of an
entity  called  Shenyang  Loyal Best Hunnan  Property  Development      Limited  (Shenyang
 Loyal  Best),  a  wholly  owned  foreign  enterprise  that  is  a  party  to  a
     Confirmation  Letter of Auction with respect to a parcel of land located at the
center area of Hunnan      New Zone in the city of Shenyang, China (the Project).
 Immediately after acquisition,  the Company      decided to sell Loyal Best at a gain. The Company,  through its
 wholly-owned  subsidiary -  Silverstrand,  transferred  100% of the issued      share
capital of Loyal Best  Property  Development  Limited to  Celebrities  Real estate
 Development      Group Co.,  Ltd. in exchange for the payment of  approximately  $48.70
 million (360 million  Chinese      yuan).  The  transaction  was closed on December 15,
2007. As of December 31, 2008, the Company fully      received the selling amount of
disposal of Loyal Best. F-7




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company engages in the
development and sale of high quality real estate properties and developed residential and
commercial properties includes Maryland building, President Buildings, Qiyuan new
village, Peacock Garden, and Chenglong Garden. The Company also engages in rental of
commercial buildings in the City of Shenyang, China. Shenyang Maryland, the Companys
indirect wholly-owned subsidiary, was one of the first private property developers and
retailers in China. 2.
     Summary of significant accounting policies The accompanying  consolidated
 financial statements have been prepared in conformity with accounting      principles
 generally  accepted in the United States of America.  The Companys  functional
 currency      is the Chinese Renminbi (CNY); however the accompanying  consolidated
 financial statements have been      translated and presented in United States Dollars
($) on the basis set forth below. The following is a summary of
significant accounting policies: Principles of Consolidation  The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant inter-company
transactions and balances within the Company are eliminated in consolidation. Allowance for Doubtful Accounts -
The Company maintains reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and other
receivable and analyzes historical bad debts, customer concentrations, customer
credit worthiness, current economic trends and changes in customer payment
patterns to evaluate the adequacy of these reserves. As of December 31, 2008
and December 31, 2007, the Company reserved $5,664,081 and $5,174,895
respectively. Properties held for sale  The
Company capitalizes as properties held for sale, the direct construction
and development costs, property taxes, interest incurred on costs related to land
under development and other related costs (i.e. engineering, surveying,
landscaping, etc.) until the property reaches its intended use. As of December
31, 2008 and December 31, 2007, properties held for sale amounted to $6,228,607
and $7,696,437, respectively. Properties held for rental  Properties
include buildings held for rental and land use rights, which are being
depreciated over the estimated useful lives of the related assets. Depreciation is
computed on the straight-line basis over 20-26 years. Property and equipment  Property
and equipment is being depreciated over the estimated useful lives of the
related assets. Depreciation is computed on the straight-line basis over useful lives
as follows: Buildings
     8-26 yearsLeasehold improvements
     20 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixtures
     5 years F-8




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of  December  31,  2008 and
 December  31, 2007  Property,  Plant & Equipment  consist of the      following: 12-31-2008

     12-31-2007 Building
     
     
     $
        63,220,533
        
     $
        58,605,918Automobile
     1,079,326
        
     1,115,768Office equipment & Furniture
     409,965
        
     948,066Others
        
        
     
        74,506
        
     
        10,93064,784,330
        
     60,680,682Accumulated depreciation
        
        
     
        (13,721,226
        )
     
        (10,048,346
        )Property and equipment, net
        
        
     $
        51,063,104
        
     $
        50,632,336 Depreciation expense end of December
31,2008 ,and 2007 totaled $2,984,615 and $2,343,721      respectively. Repairs and maintenance costs are
normally charged to the statement of operations in the year in      which they are
incurred. In situations where it can be clearly demonstrated that the expenditure
     has resulted in an increase in the future economic benefits expected to be obtained
from the use of      the asset, the expenditure is capitalized as an additional cost of
the asset. Property and equipment  are evaluated
 annually for any  impairment in value.  Where the  recoverable      amount of any
property and equipment is determined to have declined  below its carrying  amount,  the
     carrying  amount is reduced to reflect the decline in value.  There were no
 property  and  equipment      impairments recognized during 2008 ,2007. As of December  31,  2008 fixed
 assets  totaling  $27,667,572  have been  pledged as  securities  to      various banks
in respect of borrowings totaling $19,317,925 Construction-in-progress  Properties
currently under development are accounted for as
construction-in-progress. Construction-in-progress is recorded at acquisition
cost, including land rights cost, development expenditure, professional fees
and the interest expenses capitalized during the course of construction for the
purpose of financing the project. Upon completion and readiness for use of the
project, the cost of construction-in-progress is to be transferred to
properties held for sale. Construction-In-Progress  is valued
at the lower of cost or market.  Management  evaluates the market      value of its
 properties on a quarterly  basis by comparing  selling  prices of its  properties  with
     those  of other  equivalent  properties  in the  vicinity  offered  by other
 developers  reduced  by      anticipated  selling costs and associated taxes. In the
case of construction in progress,  management      takes into  consideration  the
 estimated  cost to complete the project when making the lower of cost      or market
calculation. As of December 31, 2008 and December
31, 2007, the Company had $35,177 and $0 construction-in-progress balance respectively. F-9




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue Recognition Real estate sales Real estate sales are reported in
 accordance  with the  provisions of SFAS No. 66,  Accounting  for      Sales of
Real  Estate.  Profit from the sales of  development  properties,  less 5% business
tax, is      recognized  by the  full  accrual  method  when  the sale is  consummated.
 A sale is not  considered      consummated  until (1) the parties are bound by the terms
of a contract,  (2) all  consideration  has      been  exchanged,  (3) any permanent
 financing of which the seller is responsible  has been arranged,      (4) all
 conditions  precedent  to  closing  have  been  performed,  (5) the  seller  does  not
 have      substantial  continuing  involvement  with the  property,  and (6) the  usual
 risks and  rewards  of      ownership have been  transferred to the buyer.  Sales
 transactions not meeting all the conditions of      the full accrual method are
accounted for using the deposit  method of accounting.  Under the deposit      method,
 all costs are capitalized as incurred,  and payments received from the buyer are
recorded as      a deposit  liability.  Real  estate  rental  income,  less 5%  business
 tax,  is  recognized  on the      straight-line basis over the terms of the tenancy
agreements. For land  sales,  the Company
 recognizes  the revenue  when title of the land  development  right is      transferred
and collectability is assured. For the reimbursement on
 infrastructure  costs, the Company  recognizes the income (loss),  which is      at the
fair market value agreed  between the Company and the PRC  government,  when they enter
into a      binding agreement with the government agreeing on the reimbursement. Real Estate Capitalization and Cost
Allocation Real  estate  held for  development
 or sale  consists  of  residential  and  commercial  units under      construction and
units completed. Real  estate  held for  development
 or sale is stated at cost or  estimated  net  realizable  value,      whichever  is
 lower.  Costs  include  land and land  improvements,  direct  construction  costs  and
     development  costs,  including  predevelopment  costs,  interest on indebtedness,
 real estate taxes,      insurance,  construction  overhead and indirect  project  costs.
 Selling and  advertising  costs are      expensed as incurred.  Total estimated costs of
multi-unit  developments  are allocated to individual      units based upon specific
identification methods. If the real estate is  determined  to
be impaired,  it will be written down to its fair market value.      Real  estate  held
 for  development  or  sale  costs  include  the  cost of land  use  rights,  land
     development and home  construction  costs,  engineering  costs,  insurance costs,
 wages, real estate      taxes,  and interest related to development and  construction.
 All costs are accumulated by specific      projects and allocated to  residential  and
 commercial  units within the  respective  projects.  The      Company  leases the land
for the  residential  unit sites  under land use rights with  various  terms      from
the  government of the PRC. The Company  evaluates the carrying  value for  impairment
 based on      the undiscounted  future cash flows of the assets.  Write-downs of
inventory deemed impaired would be      recorded  as  adjustments  to the cost  basis.
 No  depreciation  is  provided  for  construction  in      progress. Capitalization of Interest In accordance with SFAS 34, interest
incurred during construction is capitalized to construction in progress. All other
interest is expensed as incurred. During the twelve month periods ended December 31,
2008, the Company did not have any construction fees need to be capitalized. F-10




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other income Other income  consists of land
 leveling  income,  which was  one-time  service  performed  which was      requested by
our customers and gain on settlement of debt.  These  revenues are  recognized  when the
     services  have been  performed and the settled  amount has been paid in accordance
 with the terms of      the agreement. Foreign currencies - The Companys
principal country of operations is in The Peoples Republic of China. The
financial position and results of operations of the Company are determined using the
local currency (Renminbi or Yuan) as the functional
currency. The results of operations denominated in foreign currency are
translated at the average rate of exchange during the reporting period. Assets and  liabilities  of the
Company  have been  translated  at year- end  exchange  rates,  while      revenues and
expenses  have been  translated  at average  exchange  rates in effect  during the year.
     Resulting  cumulative  translation  adjustments  have been  recorded  as other
 comprehensive  income      (loss) as a separate component of stockholders' equity. Equity  denominated  in the
functional  currency is translated at the historical  rate of exchange at      the time
of capital contribution.  All translation  adjustments resulting from the translation of
the      financial  statements  into the  reporting  currency  (US  Dollars)
 are dealt with as an  exchange      fluctuation reserve in shareholders equity. Earnings Per Share  Basic
earnings per share is computed by dividing net income by the weighted-average number
of common shares outstanding during the period. Diluted earnings per share is
computed by dividing net income by the weighted-average number of common shares and
dilutive potential common shares outstanding during the period. As of December 31, 2008 and 2007,
 there were no outstanding  securities or other  contracts to issue      common stock,
such as options,  warrants or conversion rights,  which would have a dilutive effect on
     earnings per share as the effect of options outstanding at that time was anti-
dilutive. Fair value of financial
instruments  The carrying amounts of certain financial instruments,
including cash, accounts receivable, commercial notes receivable, other
receivables, accounts payable, commercial notes payable, accrued expenses,
and other payables approximate their fair values as at December 31, 2008 and
2007, because of the relatively short-term maturity of these instruments. Use of estimates  The
preparation of financial statements in accordance with generally accepted
accounting principles require management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Concentrations of business and
credit risk  Financial instruments that potentially subject the Company
to concentrations of credit risk are cash, accounts receivable and other
receivables arising from its normal business activities. The Company places its
cash in what it believes to be credit-worthy financial institutions. The Company
has a diversified customer base, most of which are in China. The Company  controls credit risk
related to accounts  receivable  through credit  approvals,  credit      limits and
 monitoring  procedures.  The Company  routinely  assesses the  financial  strength of
its      customers  and,  based upon  factors  surrounding  the credit  risk,
 establishes  an  allowance,  if      required,  for uncollectible  accounts and, as a
consequence,  believes that its accounts  receivable      credit risk exposure beyond
such allowance is limited. Recent accounting pronouncements In September 2006, FASB issued SFAS 157 Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that require
or permit F-11




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS fair value  measurements,  the Board
having previously  concluded in those accounting  pronouncements      that fair value is
the relevant measurement attribute.  Accordingly,  this Statement does not require
     any new fair value measurements.  However, for some entities,  the application of
this Statement will      change  current  practice.  This  Statement is effective for
financial  statements  issued for fiscal      years  beginning  after  November 15, 2007,
 and interim  periods  within  those  fiscal  years.  The      management is currently
evaluating the effect of this pronouncement on financial statements. In September  2006,  FASB issued SFAS
158  Employers  Accounting  for Defined  Benefit  Pension and      Other
 Postretirement  Plansan  amendment  of FASB  Statements  No. 87, 88, 106,  and
 132(R)  This      Statement  improves  financial  reporting by  requiring  an
employer to recognize  the over funded or      under funded status of a defined benefit
 postretirement  plan (other than a  multiemployer  plan) as      an asset or liability
 in its  statement  of  financial  position  and to  recognize  changes in that
     funded  status in the year in which the  changes  occur  through  comprehensive
 income of a business      entity or changes in unrestricted  net assets of a
not-for-profit  organization.  This Statement also      improves  financial  reporting by
requiring an employer to measure the funded  status of a plan as of      the date of its
year-end statement of financial position,  with limited exceptions.  An employer with
     publicly traded equity  securities is required to initially  recognize the funded
status of a defined      benefit  postretirement  plan and to provide  the  required
 disclosures  as of the end of the fiscal      year ending after  December 15, 2006.  An
employer  without  publicly  traded  equity  securities  is      required to recognize
the funded status of a defined benefit  postretirement  plan and to provide the
     required  disclosures  as of the end of the fiscal  year  ending  after June 15,
 2007.  However,  an      employer  without   publicly  traded  equity   securities  is
 required  to  disclose  the  following      information  in the notes to financial
 statements  for a fiscal year ending after December 15, 2006,      but before June 16,
 2007,  unless it has applied the  recognition  provisions  of this  Statement in
     preparing those financial statements: a.        A brief
description of the provisions of this Statement b.        The date
that adoption is required c.        The date
the employer plans to adopt the recognition provisions of this Statement, if earlier. The  requirement  to measure  plan
assets and benefit  obligations  as of the date of the  employers      fiscal
year-end  statement of financial  position is effective for fiscal years ending after
December      15, 2008.  The  management  is currently  evaluating  the effect of this
 pronouncement  on financial      statements. In  December  2007,  the FASB  issued
 SFAS No.  160,  Noncontrolling  Interests  in  Consolidated      Financial
 Statements.  This  Statement  amends  ARB  51 to  establish  accounting  and
 reporting      standards for the noncontrolling  (minority)  interest in a subsidiary
and for the  deconsolidation      of a  subsidiary.  It clarifies  that a  noncontrolling
 interest in a  subsidiary  is an ownership      interest  in the  consolidated  entity
 that  should be  reported  as  equity  in the  consolidated      financial statements.
 SFAS No. 160 is effective for the Companys fiscal year beginning October 1,
     2009. Management is currently evaluating the effect of this pronouncement on
financial statements. In March 2008, the FASB issued FASB
Statement No. 161,  Disclosures  about  Derivative  Instruments      and  Hedging
 Activities.  The new  standard  is  intended  to improve  financial  reporting  about
     derivative  instruments  and  hedging  activities  by  requiring  enhanced
 disclosures  to  enable      investors  to  better  understand  their  effects  on an
 entitys  financial  position,  financial      performance,  and cash flows. It is
effective for financial  statements issued for fiscal years and      interim  periods
 beginning  after November 15, 2008, with early  application  encouraged.  The new
     standard also improves transparency about the location and amounts of derivative
 instruments in an      entitys financial  statements;  how derivative  instruments
and related hedged items are accounted      for under  Statement  133;  and how
 derivative  instruments  and related  hedged  items affect its      financial position,
 financial performance,  and cash flows. Management is currently evaluating the
     effect of this pronouncement on financial statements. In December 2007, the FASB issued
SFAS No. 141(R), Business Combinations. This Statement replaces SFAS No. 141,
Business Combinations. This Statement retains the fundamental requirements  in Statement  141 F-12




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that the acquisition  method of
 accounting  (which  Statement 141      called the  purchase  method)  be used for all
 business  combinations  and for an  acquirer  to be      identified  for  each  business
 combination.   This  Statement  also  establishes  principles  and      requirements
 for how the acquirer:  a) recognizes  and measures in its  financial  statements  the
     identifiable  assets acquired,  the liabilities  assumed,  and any  noncontrolling
 interest in the      acquiree;  b) recognizes and measures the goodwill  acquired in the
business  combination or a gain      from a bargain  purchase  and c)  determines  what
 information  to disclose to enable users of the      financial  statements  to evaluate
the nature and  financial  effects of the business  combination.      SFAS No. 141(R)
will apply  prospectively  to business  combinations for which the acquisition date
     is on or after  Companys  fiscal  year  beginning  October 1, 2009.  While the
Company has not yet      evaluated  this  statement  for  the  impact,  if  any,  that
 SFAS  No.  141(R)  will  have on its      consolidated  financial  statements,  the
Company will be required to expense  costs related to any      acquisitions  after
 September 30, 2009. The management is currently  evaluating the effect of this
     pronouncement on financial statements. In May 0f  2008,  FSAB  issued  SFASB
 No.162,  The  Hierarchy  of  Generally  Accepted  Accounting      Principles.  The
pronouncement  mandates the GAAP hierarchy reside in the accounting  literature as
     opposed to the audit  literature.  This has the practical  impact of elevating  FASB
 Statements of      Financial  Accounting  Concepts in the GAAP hierarchy.  This
pronouncement will become effective 60      days  following  SEC  approval.  The company
 does not believe this  pronouncement  will impact its      financial statements. In May  of  2008,  FASB  issued
 SFASB  No.  163,  Accounting  for  Financial  Guarantee  Insurance      Contracts-an
 interpretation  of FASB  Statement  No. 60. The scope of the  statement is limited to
     financial  guarantee  insurance (and  reinsurance)  contracts.  The  pronouncement
is effective for      fiscal years  beginning  after December 31, 2008.  The company does
not believe this  pronouncement      will impact its financial statements. Reclassifications  Certain
amounts in the 2007 financial statements have been reclassified to conform to
the 2008 presentation. These reclassifications had on effect on previously reported
results of operations or retained earnings. 3.
     Receivable on disposal of subsidiaries The amount of  receivable  on
disposal of  subsidiaries  as of Dcember 31, 2008 and December 31, 2007      are $0 and
$30,701,957.  respectively.  The receivable  balance was non interest  bearing,
 unsecured      and due on demand.  The Company  received  the entire  balance on
disposal  of  subsidiary  amounting      $30,701,957 in the year ended
December 31, 2008. 4.
     Properties held for resale Properties held for resale at
December 31, 2008 and December 31, 2007 by project is as follows: 12-31-2008

     12-31-2007 Qiyun New Village
     
     
     $
        854,183
        
     $
        1,595,366Peacock Garden
     176,180
        
     231,244Chenglong Garden
     4,536,993
        
     5,250,960President Building
     218,829
        
     204,801Maryland Building
     268,575
        
     251,358Others
        
     
        173,847
        
     
        162,708Total
        
     $
        6,228,607
        
     $
        7,696,437 F-13




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company introduced a Five-year
Trial  Accommodation  Scheme (the Scheme) to attract potential
     buyers  when  initial  sales at the  project did not meet  expectations.  Under the
Scheme,  property      buyers  were  required to pay a 10%  refundable  deposit  based on
the sale price of the  property or      $7,329  (RMB50,000) and another 20%, based on the
sale price of the property which is non-refundable,      over 5 years by monthly
 installments,  totaling 30% throughout  the trial period.  The remaining 70%      of the
 consideration  shall be due and payable  immediately after the trial period when the
property      buyers  exercise  their option  whether or not to complete the purchase.
 If the buyer chooses not to      buy the property,  the 10%  refundable  deposit or
$7,329 (RMB 50,000) will be refunded to the buyers      (less any unpaid  rental due) and
monthly  installments  received  over the 5-year  trial period will      have been
recognized as rental income in the year in which they arose. As of December 31, 2008 and December
31, 2007,  $668,305,  and $733,774 worth of properties  held for      sale in Qiyun New
Village  were  occupied by  individuals  who agreed to buy the  properties  without
     having  fully paid the  purchase  consideration.  $299,731  and $196,103 was
included in advance from      buyers for this Scheme as of December 31, 2008 and December
31, 2007. 5.
     Accounts payable and accrued expenses Accounts payable and accrued expenses
comprised of following as of December 31, 2008 and December      31, 2007: 12-31-2008

     12-31-2007 Accounts payable
     
     
     $
        4,249.300
        
     $
        6,090,281Payroll and welfare payable
     97,367
        
     71,090Interest and other accrued expenses
     57,780
        
     2,454,044Total
     $4,404,447
        
     $8,615,415  6.
     Tax payables Tax payables consist of the following
as of December 31, 2008 and December 31, 2007: 12-31-2008

     12-31-2007 Income tax payable
     
     
     $
        5,857,279
        
     $
        5,944,954Business tax
     1,021,519
        
     519,634Land VAT payable
     2,204,240
        
     2,069,781Other levies
     
        24,222
        
     
        17,947Total
     $
        9,107,260
        
     $
        8,552,316  7.
     Payable to disposed subsidiary-restated The Company has a payable to a
disposed subsidiary, Loyal Best Property Development Limited,      amounting to
$10,494,449 as of December 31, 2007. Subsequently, the Company paid
$9,726,162 to Loyal Best and had a balance due as of December 31, 2008 in the amount of
$768,287. F-14




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8.
     Short-term loans Short-term loans as of December 31,
2008 and December 31, 2007 are comprised as follow: Nature
     Due on
     Interest per Annum
     12-31-2008Bank loan
     
     
     
        10-13-2009
        
     
        10.395%
        
     
        13,455,125Bank loans
        
        
     
        6-12-2009
        
     
        9.477%
        
     
        5,862,800Total
        
        

        
        

        
        
     $
        19,317,925    Nature
     Due on
     Interest per Annum
     12-31-2007Bank loan  in default
     
     
     
        12-31-2004
        
     
        7.56%
        
     $
        7,544,582Bank loan  in default
     12-21-2005
        
     9,7929%
        
     $2,386,831Bank loan
     10-23-2008
        
     10.206%
        
     14,814,815Mortgage loans
        
     
        till 6-12-2023
        
     4.2%
        
     
        485,069Total
        
        

        
        

        
        
     $
        25,231,297 The Company  acted as an agent and
 borrowed  mortgage  loans  amounting  $485,069 as of December 31,      2007 under its
employees name using  properties held by the Company.  All balances of mortgage
loans      were cleared as of March 31, 2008 and the pledged  assets were  released too.
As of December 31, 2008      and December  31,  2007,  the carrying  values of stock of
 properties  of $0 and $484,764  have been      pledged for the Companys mortgage
loans. As of December 31, 2008 and 2007, the
Company  incurred  interest  expense  amounting  $2,697,041 and      $3,450,746
respectively. On June 22,  2006 the  Company
 entered  into a  settlement  agreement  with a bank with  respect  to      $8,230,453 of
past due notes. In accordance with the settlement  agreement,  $1,228,163 loan interest
     accrued as of  December  31,  2007 may be waived if the  Company  repays the loan
 principle  per the      installments  schedule.  The  Company  is  required  to pay back
the loan  principal  in a three step      installments in which the entire bank loan will
be paid off on September 20, 2008. The  Company  paid  three
 installments  on time  per the  schedule  of  agreement.  The  outstanding      interest
 for the said loan was  partially  waived by the bank in the amount of  $1,006,722  based
on      the  agreement  and the Company  paid off the rest amount to the bank as of
December  31,  2008.  The      $1,006,722 waived interest expense was recognized as other
income as of December 31, 2008. The  Company  had a default  loan
 amounting  to  $23,166,667  with due  dates in 2003 and 2004.  The      defaulted  loans
 borrowed  from  Industrial  and  Commercial  Bank of China was  assigned to a third
     party.  The Company  entered into an agreement  with the third party on July 30,
2007 to buy back the      loans for  $7,581,333.  As of September 30, 2007,  the total
 consideration  of $7,581,333  was fully      paid.   According  to  the  agreement,
  the  outstanding   interest  payable   associated  with  the      non-performing  loan
 amounting  to $439,014 was also  forgiven as of December  31, 2007.  The assets
     pledged  with the loan were  released  before the year ended  2007.  As of  December
 31,  2007,  the      Company realized gain on settlement of debt amounted to $11,115,201. F-15




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9.
     Long-term debts  secured Nature
          Due on
         Interest perAnnum
         12-31-2008
          12-31-2007Bank loans
     
     
     
        6-12-2009
        
     
        9.477%
        
     $
        
        
     $
        5,486,968 On June 18,  2007 the Company
 obtained a loan from a bank for  $5,486,968  at an  interest  rate of       8.775% and
9.711% before  September 15, 2007 and after September 15, 2007  respectively,  on October
      21,2008 the rate  reconfirmed  as 9.477% and is due on June 12,  2009.  The loan is
secured by fixed       assets and land use rights the  Company  owned.  The  long-term
 debt is due on June 12,  2009.  The       loan is reclassified as short-term loan as of
December 31, 2008. 10.
     Statutory Reserve In accordance  with the Chinese
 Company Law, the Company has  established a policy to reserve 10% of      its annual net
income as statutory  reserve.  When the accrued  statutory  reserve reached the 50% of
     capital,  the  company  could  select not to accrue any more.  The  Company  accrued
$0 and  $638,128      during 2008 and 2007 respectively. 11.
     Gain on Settlement of Debt In January 2008, the Company
 received the final judgment from Liaoning  Province  Peoples  Superior      Court
2007 (No.  97) dated on December  21,  2007  regarding  the law suit  between  Shenyang
 Normal      College,  Shenyang  Maryland (a wholly owned  subsidiary of the Company) and
Jiangsu Province Suzhong      Construction  Group,  Ltd.  The final  judgment  stated
that  Shenyang  Maryland  should pay Shenyang      Normal  College RMB  5,210,454  along
with the interest  calculated  from June 2, 2000 to the payment      date using the
interest  rate of  six-month  loan per Peoples  Bank of China.  The interest
 payable      calculated  was RMB  2,152,262  as of March 31,  2008.  As of  December
 31,  2007,  the  payable  to      Shenyang  Normal College was RMB  14,561,185
 (approximately  $1,997,510).  The gain on settlement of      debt as of December 31,
2008 was calculated as follows: Amount  Debt recorded as of December 31, 2007
     
     
     RMB
        14,561,185Less: Amount per final judgment
        
        
     
        (5,210,454
        )Interest calculated per final judgment
        
        
     
        (2,152,262
        )Gain on settlement of debt as of December 31, 2008
        
     RMB
        7,198,469US$
        1,036, 076 12.
     Loss on Termination Project On July 20, 2007, Xinchao and Yindu
ceased development on Xi Ta project and disposed off the associated assets. Shenyang
Heping District Investment Promotion Bureau of local government, the agency overseeing
development of the Xi Ta area, is expanding the project and, as a consequence of the
expansion, reached an agreement with the Company to re-acquire the land use rights for
the Xita Project in exchange for refunding the land transfer fee of $4,437,397 and
reimbursing the Company for amounts expended on the development in the amount of
$1,646,024. On July 20, 2007, the local government approvals and procedures were
completed for transferring the land use rights back to the local government and the
Company received reimbursement of the land transfer fee and the amount expended on the
development in August 2007. As of December 31, 2007, the Company had loss on termination
project amounted to $1,504,604. F-16




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13.
     Stock Options On January  31,  2008,  the  Company
 issued a  non-incentive  stock  option for 10,000  shares to a       non-employee
 director  with an exercise  price of $0.65 that will expire on January 31,  2010.  The
      options  vested  and  became  exercisable  over a term  of two  years.
 Compensation  expense  as of       December 31, 2008 related to the outstanding stock
options was $3,301. Risk-free interest rate
     
     
     
        2.00%Expected life of the options
        
        
     
        2 yearExpected volatility
        
        
     
        121.79%Expected dividend yield
        
        
     
        0% On January  31,  2007,  the  Company
 issued a  non-incentive  stock  option for 10,000  shares to a       non-employee
 director  with an exercise  price of $4.65 which will expire on January 31, 2009.  The
      options  vested  and  became  exercisable  over a term  of two  years.
 Compensation  expense  as of       December 31, 2007 related to the outstanding stock
options was $20,524. Risk-free interest rate
     
     
     
        2.00%Expected life of the options
        
        
     
        2 yearExpected volatility
        
        
     
        83.76%Expected dividend yield
        
        
     
        0% Options outstanding at December 31,
2008 and related weighted average price and intrinsic value is          as follows: ExercisePrices
      TotalOptionsOutstanding
          WeightedAverageRemainingLife(Years)
          TotalWeightedAverageExercise Price
          OptionsExercisable
          WeightedAverageExercise Price
         AggregateIntrinsicValue$
        4.65
        
     
        10,000
        
     
        0.04
        
     $
        2.33
        
     
        9,583
        
     $
        2.33
        
     
        --$
        0.65
        
     
        10,000
        
     
        0.54
        
     $
        0.33
        
     
        4,583
        
     $
        0.33
        
     $
        1,000  F-17




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of option  activity as of
December 31, 2008,  and changes  during the periods then ended is      presented below: Options
          SharesOutstanding at January 1, 2007
     
     
     
        173,568Granted
     10,000Exercised
     --173,56
        8Forfeited or expiredOutstanding on December 31, 2007
     10,000Granted
     10,000Exercised
     --Forfeited or expired
     --Outstanding on December 31, 2008
     20,000Exercisable on December 31, 2008
     14,167  14.
     Disposal of subsidiaries and discontinuance of subsidiaries Shenyang  Xinchao Property  Company
Limited  (Shengyang  Xinchao) was registered on August 16, 2005      in
 Shenyang,  Liaoning  Province,  in  the  PRC  with  a  registered  capital  of
 $12,330,456  (RMB      100,000,000)  and a defined  period of  existence  of 11 years to
August  15,  2016.  Shenyang  Yindu      Property  Company  Limited  (Yindu)
 was  registered  on  August  16,  2005 in  Shenyang,  Liaoning      Province,  in the
PRC with a registered  capital of $6,615,228 (RMB  50,000,000) and a defined period
     of  existence  of 11 years to August 15,  2016.  Xinchao  and Yindu were  formed to
develop a certain      tract of property  located in the Heping District of Shenyang,
 and will feature a construction  area      of almost 500,000 square meters with a linear
site area of approximately  101,000 square meters.  The      local  government  of Heping
 District  of  Shenyang  received  back the land use  rights of the Xita      project
 because of new  developing  plan of the district.  Heping  District  refunded the land
usage      right paid by  Xinchao  and  reimbursed  the  development  cost  incurred  by
 Xinchao.  The Board of      Director  approved to to discontinue  Shenyang  Xinchao and
Yindu on October 30, 2008. As of December      15,2008  Shenyang  Xinchao  and  Yindu
 were  discontinued.   As of December 15,2008 the operations of Shenyang Xinchao and Yindu were discontinued, although the
Companies were legally still in existence. The assets and liabilities are to be subsequently transferred
to Shenyang Maryland International Industry Co., Limited. Beijing  Xinchao  was  registered  in
Beijing  on March 27,  2008,  which was 100% owned by  Shenyang      Xinchao with a
registered  capital  amounting to $4,255,440 (RMB  29,800,000) and a defined period of
     existence of 10 years. Sooner after Beijing  Xinchao
 registered,  the Company  changed their business  development  plan in      Beijing City
and disposed  Beijing  Xinchao in May 2008 in the amount of $4,255,440  (RMB29,800,000).
     No gain/loss of the disposal was realized.  Beijing  Xinchao had no operation
 before  disposal.  The      disposal amount was fully received as of December 31, 2008. 15.
     Income Tax  The Company is registered in the
State of Nevada and has operations in primarily three tax jurisdictions  the Peoples
Republic of China, Hong Kong and the United States. For operation in the US, the Company
has incurred net accumulated operating losses for income tax purposes.  The Company
believes that it is more likely than not that these net accumulated operating losses will
not be utilized in the future. Therefore, the Company has provided full valuation
allowance for the deferred F-18




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS tax assets  arising from the losses
at these  locations as of December  31,  2008.  Accordingly,  the      Company has no net
deferred tax assets. The provision  for income taxes from
 continuing  operations on income  consists of the following for      the years ended
December 31, 2008 and 2007: 12-31-2008
     12-31-2007US current income tax expense (benefit)
     $              
                      --
     $              
                       --Federal
     --
     --State
     --
     --HK current income tax expense
     --
     --PRC current income tax expense
     $              
           401,038
     $              
           1,514,810Total provision for income tax
     $              
           401,038
     $              
           1,514,810 The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate
to the income taxes reflected in the Statement of Operations: 12-31-2008
     12-31-2007Tax expense (credit) at statutory rate - federal
     34%
     34%State tax expense net of federal tax
     6%
     6%Changes in valuation allowance
     (40%)
     (40%)Foreign income tax - HK
     15%
     0%Foreign income tax - PRC
     25%
     30%Tax expense at actual rate
     25%
     30% United States of America As of  December  31,  2008,  the
 Company in the  United  States had  approximately  $120,325  in net      operating  loss
carry  forwards  available to offset  future  taxable  income.  Federal net operating
     losses can  generally be carried  forward 20 years.  The  deferred  tax assets for
the United  States      entities at December 31, 2008  consists  mainly of net operating
 loss carry  forwards and were fully      reserved  as the  management  believes  it is
more  likely  than not that  these  assets  will not be      realized in the future. The  following  table  sets  forth
the  significant  components  of the net  deferred  tax assets for      operation in the
US as of December 31, 2008 and December 31, 2007. 12-31-2008
     12-31-2007Net operation loss (gain) carry forward
     $           (470,800)
     $        (278,840)Total deferred tax assets
     188,320
     121,111Less: valuation allowance
     (188,320)
     (121,111)Net deferred tax assets
     $           
      --
     $           
      --  Hong Kong As of December 31, 2008, the Company
in the Hong Kong had approximately $124,276 in net operating loss carry forwards
available to offset future taxable income. There is no time limit for the losses to carry
forward. The deferred tax assets for the Hong Kong entities at December 31, 2008 consists
mainly of net operating loss carry forwards and were fully reserved as the management
believes it is more likely than not that these assets will not be realized in the future. F-19




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The  following  table  sets  forth
the  significant  components  of the net  deferred  tax assets for      operation in the
US as of December 31, 2008 and December 31, 2007. 12-31-2008
     12-31-2007Net operation loss (gain) carry forward
     $           24,121,447
     $        23,722,801Total deferred tax assets
     --
     --Less: valuation allowance
     --
     --Net deferred tax assets
     $           
      --
     $           
      --  Peoples Republic of China (PRC) Pursuant to the PRC Income Tax Laws,
the Company's subsidiary is generally subject to Enterprise      Income Taxes ("EIT") at
a statutory rate of 33%, which comprises 30% national income tax and 3%      local income
tax. The subsidiary is qualified as a new technology enterprises and under PRC Income
     Tax Laws, it subject to a preferential tax rate of 18%. Beginning  January 1, 2008, the new
Enterprise  Income Tax ("EIT") law will replace the existing laws      for Domestic
 Enterprises  ("DES") and Foreign Invested  Enterprises  ("FIEs").  The new standard EIT
     rate of 25% will replace the 33% rate  currently  applicable to both DES and FIEs.
 The two years tax      exemption,  three  years  50%  tax  reduction  tax  holiday  for
 production-oriented  FIEs  will  be      eliminated.  The Companys  applicable
 EIT rate under new EIT law is 25% which was approved by local      Tax department. As of December 31, 2008 and December
31, 2007,  the Companys PRC  subsidiary  had net operating loss      carry forwards
which can be carried  forward 5 years to offset future  taxable  income.  The deferred
     tax assets for  Shenyang  Maryland,  Xinchao and Yindu on December  31,  2008
 consist  mainly of net      operating loss carry  forwards and they were fully reserved
as the management  believes they are more      likely than not that these assets will not
be realized in the future. The following table sets forth the
significant components of the net deferred tax assets for      operation in PRC as of
December 31, 2008 and December 31, 2007. 12-31-2008
     12-31-2007Net operation loss carry forward
     $           2,919,384
     $        2,357,908Total deferred tax assets
     858,978
     707,372Less: valuation allowance
     (858,978)
     (707,372)Net deferred tax assets
     $           
      --
     $           
      -- Aggregate net deferred tax assets The following table sets forth the
significant components of the aggregate net deferred tax assets      of the Company as of
December 31, 2008 and December 31, 2007: 12-31-2008
     12-31-2007Aggregate:Total deferred tax assets
     $           1,047,298
     $           828,483Less: valuation allowance
     (1,047,298)
     (828,483)Net deferred tax assets
     $           
      --
     $           
      -- 16.
     Other comprehensive income Balances of related after-tax
components comprising accumulated other comprehensive income (loss),      included in
stockholders equity, at December 31, 2008 and December 31, 2007 are as follows: F-20




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Balance as of December 31, 2006
     $       468,344Change for 2007
     1,000,202Balance as of December 31, 2007
     1,468,546Change in 2008
     819,352Balance as of December 31, 2008
     $    2,287,898  17.
     Segment Information Statement of Financial  Accounting
 Standards No. 131 ("SFAS 131"),  "Disclosure About Segments of an      Enterprise  and
Related  Information"  requires use of the  "management  approach"  model for segment
     reporting.  The  management  approach  model  is based on the way a  company's
 management  organizes      segments  within the company for making  operating  decisions
and assessing  performance.  Reportable      segments are based on products and services,
 geography,  legal structure,  management structure,  or      any other manner in which
management disaggregates a company. During the years ended December 31,
2008 and December 31, 2007, the Company is organized into two main business segments: (1)
Property for sale, (2) Rental income and Income of management fee of commercial
buildings. The following table presents a summary of operating information and certain
year-end balance sheet information for the years ended December 31, 2008 and December 31,
2007: F-21


GREAT CHINA INTERNATIONAL
HOLDINGS, INC. AND SUBSIDIARIES          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12-31-2008
     
     12-31-2007Revenues from unafiliated customers:Selling of properties
        
             $
        3,679,044
        

$
        4,378,992Rental income & Management fee
        
     6,011,176
        
     
     5,296,635Consolidated
        
     $9,690,220
        
     
     $9,675,627Operating income (loss):Selling of properties
        
             $
        (85,684
        )

$
        (708,291
        )Rental income & Management fee
        
     
        (44,090
        )
     
     
        (494,988
        )Corporation (1)
        
     
        (1,369,887
        )
     
     
        (637,493
        )Consolidated
        
     $(1,499,661
        )
     
     $(1,840,772
        )Net income (loss) before taxes:Selling of properties
        
             $
        (2,070,360
        )

$
        2,637,332Rental income & Management fee
        
     
        (44,330
        )
     
     
        494,988Corporation (1)
        
     
        3,927,009
        
     
        
     2,882,733Consolidated
        
     $1,812,319
        
     
     $6,015,053Identifiable assets:Selling of properties
        
             $
        6,685,110
        

$
        5,350,282Rental & Management fee
        
     
        51,278,231
        
     
     
        49,953,769Corporation (1)
        
     
        8,442,423
        
     
     
        45,167,178Consolidated
        
     $66,405,764
        
     
     $100,471,229Depreciation and amortization:Selling of properties
        
             $
        --
        

$
        --Rental & Management fee
        
     
        2,980,072
        
     
     
        2,325,938Corporation (1)
        
     
        4,544
        
     
     
        17,703Consolidated
        
     $2,984,615
        
     
     $2,343,641Capital expenditures:Selling of properties
        
             $
        --
        

$
        79,187Rental & Management fee
        
     
        75,949
        
     
     
        5,765,432Corporation (1)
        
     
        (128,640
        )
     
     
        4,878,509Consolidated
        
     $(52,691
        )
     
     $10,723,128 (1)
Unallocated loss from Operating income (loss) and Net income (loss) before taxes are
primarily related to general         corporate expenses. F-22