UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K 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.  x 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.




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 I1.
     Business
     41A.
     Risk Factors
     91B.
     Unresolved Staff Comments
     132.
     Properties
     133.
     Legal Proceedings
     154.
     Submission of Matters to a Vote of Security Holders
     15Part II5.
     Market for Registrants Common Equity, Related Stockholder Matters
     16and Issuer Purchases of Equity Securities6.
     Selected Financial Data
     177.
     Managements Discussion and Analysis of Financial Condition and Results of Operations
     177A.
     Quantitative and Qualitative Disclosures About Market Risk
     258.
     Financial Statements and Supplementary Data
     259A(T).
     Controls and Procedures
     269B.
     Other Information
     26Part III10.
     Directors, Executive Officers and Corporate Governance
     2711.
     Executive Compensation
     2812.
     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
     3013.
     Certain Relationships and Related Transactions, and Director Independence
     3114.
     Principal Accountant Fees and Services
     3215.
     Exhibits and Financial Statement Schedules
        32  3




PART I ITEM 1. BUSINESS General Great China
International Holdings, Inc. (the Company, we, or Great China Holdings), through
its various indirect subsidiaries, is engaged in commercial and residential real estate
investment, development, sales and management in the city of Shenyang, Liaoning Province,
in the Peoples Republic of China (PRC). Amounts for 2008 expressed in U.S. dollars are
based on a conversion rate of $1.00 for 6.82 Renminbi (RMB) at December 31, 2008, and
amounts expressed in U.S. dollars for prior periods are based on conversion rates then in
effect. Effective July 5,
2005, the Company completed the acquisition of Silverstrand International Holdings
Limited (Silverstrand), a Hong Kong limited liability company, by issuing 10,102,333
shares of its common voting stock to the former stockholders of Silverstrand in exchange
for all of the capital stock of Silverstrand.  For financial reporting purposes the
acquisition was treated as a recapitalization of Silverstrand.  On September 15, 2005,
the Company changed its name to Great China International Holdings, Inc. from Red Horse
Entertainment Corporation, which was incorporated in the state of Nevada on
December 4, 1987. Silverstrand
was incorporated on September 30, 2004 in Hong Kong Special Administrative Region, PRC,
and is the holding company of Shenyang Maryland International Industry Company Limited
(formerly: Shenyang Malilan Audio Equipment Company, Limited) (Shenyang Maryland).
Shenyang Maryland was originally registered as a limited liability Sino-foreign joint
investment enterprise on December 15, 1989, in Shenyang, Liaoning Province, PRC. In
October 2004, Silverstrand acquired all of the registered equity of Shenyang Maryland,
and this transfer and the reclassification of Shenyang Maryland as a wholly
foreign-owned enterprise (WFOE) was approved in November 2004 by the Liaoning
Provincial Bureau of Foreign Trade and Economic Cooperation. This approval was
subsequently registered, and a business registration certificate (No. 111103721 (1-1))
was issued to Shenyang Maryland as a WFOE in April 2005 by the Shenyang Municipal
Administration of Industry and Commerce. Business Overview The Company is engaged in commercial and residential real estate leasing, management and development activities in the City of
Shenyang, China.  For the year ended December 31, 2008, the proceeds from the sales of properties
constituted 38% of the total revenue from operations, with the remaining revenue consisting
primarily of rental income and management fees. For the year ended December 31, 2007, the proceeds from
the sales of properties constituted 45% of the total revenue. Development activity has typically consisted of locating and acquiring ownership and property rights to
real property, arranging for project financing, managing project planning/ construction, and
implementing sales and leasing of the finished real estate. The Company may obtain/purchase land use
rights from the following sources: (i) purchases from factories which have relocated; (ii) redevelopment
of older areas; and (iii) government public tenders or auctions. Overall management of all projects
developed by the Company is undertaken by special project teams from the Company. The special project
teams oversee and monitor the various stages of the project development process to ensure the timely
completion and construction of high quality properties. Completed
Projects Great China Holdings has five completed real estate projects located in the city of Shenyang in which,
post-completion, it has been selling and/or leasing units: 
     President Building comprises three blocks of commercial buildings, including two commercial towers,
situated in Shenyang City, Heping North Street, which is the financial district of Shenyang.  While the
original intention was to sell the office space, management subsequently decided to retain the majority
of the property for leasing purposes.  The buildings maintain a high occupancy rate with tenants that
are primarily international companies, 20 of which are Fortune 500 companies.  Great China Holdings
head office is situated on the 25th and 26th Floors of President Building.
     Chenglong Garden, situated in Shenyang Huang Gu District, comprises 12 blocks of modern apartments
consisting of 865 residential apartments, a number of retail shops and ancillary facilities including
basement car parking facilities and parks.  As of December 31, 2008, 854 units had been sold, and 11
residential units and approximately 3198 square meters of commercial space remained available for sale
and lease. 4





     Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units, 337 of which
              had been sold as of December 31, 2008.
     Peacock Garden is situated in Shenyang City, Heping North Street, is in the commercial district of
              Shenyang and is comprised of 197 low-density residential apartments, 195 of which had been sold as of
              December 31, 2008.
     The Maryland Building consists of 12,858 square meters of commercial space. Recent Projects Xi Ta Project. In December 2005, we, through our subsidiaries Silverstrand and Shenyang Maryland International,
acquired Shenyang Xinchao Property Company and Shenyang Yindu Property Company, which together held 100%
of the rights granted for a mixed-use development located in the Heping District of Shenyang known as
the Xita Urban Reconstruction Project the Xita Project confirmation letter issued by the Heping District
Government in 2004. The confirmation letter, as subsequently amended, contemplated a 99,000 square meter
project located in the Xi Ta area in the city of Shenyang. Under the confirmation letter we paid a land
transfer fee of RMB 33,228,480.  Shenyang Heping District Investment Promotion Bureau, which is the
agency overseeing development of the Xi Ta area decided to expand the project and, as a consequence of
the expansion, reached an agreement with us to reacquire the land use rights for the Xita Project in
exchange for refunding the land transfer fee of RMB 33,228,480 (approximately $4,437,397), and
reimbursing us for amounts expended on the development in the amount of RMB 12,345,180 (approximately
$1,646,024), resulting in us incurring a net loss on the terminated Xi Ta Project of approximately
$1,504,604. In July 2007, the local government approvals and procedures were completed for transferring
the land use rights back to the local government and we received reimbursement of the land transfer fee
of RMB 33,228,480.  We received the remaining RMB 12,345,180 in August 2007. Chessboard Mountain. 
Our subsidiary, Shenyang Jitian Property Company Limited, was established on February 22, 2006 for a new
project development known as Chessboard Mountain Residential project located in the Chessboard Mountain
International Tourism Development District in Shenyang City.  In February 2006, Shenyang Jitian Property
Company was confirmed as the highest bidder in a public auction for the Chessboard Mountain Residential
project.  The total purchase price for the 420,317 square meters land use rights was approximately $56.7
million, which was obtained through bank financing.  In December 2006, we completed the sale of Shenyang
Jitian Property Company to two unrelated companies in exchange for a total cash payment of $1,399,970
(the amount of our invested capital in Shenyang Jitian Property Company) and assumption of all bank debt
incurred in connection with the acquisition of the Chessboard Mountain Residential project.  In
connection with the sale, Great Chinas subsidiary, Shengyang Maryland International Industry Company
Limited, entered into a Land Consolidation and Development Agreement with respect to the Chessboard
Mountain Residential Project.  Under the development agreement, Shenyang Maryland was engaged to arrange
for necessary permitting, site preparation and installation of development infrastructure.  As the
developer/contractor, the contract provides for Shenyang Maryland to be paid a total of approximately
RMB 104 million ($13.3 million) in staged amounts upon completion of different aspects of the
development work provided for by the agreement.  As of December 31, 2008, Shenyang Maryland had been
paid a total of approximately RMB 78.98 million ($11.58 million) under the development agreement, with
additional payments expected in 2009. Loyal Best. On August 7, 2007, Silverstrand completed the acquisition of all of the issued share capital of Loyal
Best Property Development Limited (Loyal Best), a Hong Kong limited company.  Loyal Best was 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 LB Project).  Silverstrand paid US$4,010,000 to acquire the share capital of Loyal Best and paid
and an additional US$20,500,000 to satisfy all director loan notes issued by Loyal Best, which funds
were used to make Shenyang Loyal Bests land transfer fee payment on the project of US$20,000,000.  In
September 2007, Shenyang Loyal Best closed funding under a bridge loan agreement with Shenyang Huahai
International Investment Co., Ltd. (Shenyang Huahai) whereby Shenyang Huahai loaned RMB 450,000,000, or
approximately US$60 million, to Shenyang Loyal Best for use in connection with development of the LB
Project.  In December 2007, Silverstrand completed the sale of all of the share capital of Loyal Best to
an unrelated third party in exchange for cash consideration of 360 million Chinese yuan (approximately
US$48.7 million) and the assumption by the purchaser of the loan from Shenyang Huahai for development of
the LB Project.  In connection with the sale of Loyal Best, we agreed to pay a finders fee to an
unrelated third party of approximately $8.9 million. 5




Junhui Development
Agreement. In November 2007, our indirect subsidiary, Shenyang Xinchao Property Co.,
Ltd. (Xinchao), entered into a joint development agreement with Beijing Century Junhui
Investment Ltd. (Junhui), an unrelated third party, pursuant to which each of Xinchao
and Junhui agreed to invest RMB 40 million (approximately $US5.4 million) as share
capital in a newly-formed entity whose purpose shall be to jointly develop a commercial
and residential project in Nanjing Street, Heping District, Shenyang, China. Subsequent
to entering into the joint development agreement, Junhui and Xinchao were unsuccessful in
obtaining the property for the project and, in accordance with the terms of the joint
development agreement, the amount of Xinchaos investment was refunded. City of Shenyang Shenyang is a city of
approximately 7.2 million people in Liaoning Province, located in northeastern China
(Manchuria), approximately 435 miles northwest of Beijing. The largest city in northeast China, Shenyang is the economic,
cultural, transportation and trade center of the region, there being eight
industrial cities within a 150-kilometer radius of Shenyang. Shenyangs Taoxian
International Airport is the largest airport in northeast China, and the city also has
developed railway and expressway networks.  Shenyang is comprised of the following
districts: (i) Heping District, better known as Downtown; (ii) Shen He District, just
east of Downtown; (iii) Huang Gu District, situated directly north of Downtown; (iv) Da
Dong District, located northeast of Downtown; (v) Tie Xi District; (vi) Yu Hong District;
(vii) Dong Ling District; (viii) Su Jia Tun District; (ix) Hun ANan New District; and (x)
Shen Bei New District Shenyang is rich in industrial resources. Manufactures
include heavy machinery, tractors, motor vehicles, cables, machine tools (Shenyang has
one of the largest machine-tool plants in China), transformers, textiles, chemicals,
paper products, medicines, and cement. Copper, zinc, and lead are also smelted in the
city. Shenyang is also the seat of Liaoning University, Northeastern University, China
Medical University, Shenyang Conservatory of Music, and numerous other specialized
institutes. From 2001 to 2008, the GDP of Shenyang was continuously increasing at a rate of approximately 10% or greater
each year for five years. In 2008, the GDP in Shenyang increased by 16.3%,
which is 7.3% higher than the national GDP. Shenyang has
experienced rapid renovation in urbanization since the PRC Central Government launched
the Developing the North East Policy in 2003, and priority was given to Shenyang in the
Policy. Shenyang urbanization has led to rapid and steady development in both residential
construction and consumption, indicating the likelihood that the Shenyang real estate
market will continue to develop and expand. Various Shenyang governmental policies aimed
at implementing law and regulations and developing a business law framework have
attracted both domestic and overseas investors to invest in Shenyang. In 2008, consumer
spending in Shenyang reached RMB 150 billion, an increase of 22% over the prior year,
which was the highest growth rate in the past 10 years.  We believe this indicates
Shenyang is a growing urban area with a consumer base that can sustain robust residential
and commercial real estate development.  Though the current global economic slowdown has
had an impact on China and Shenyang, we expect Shenyang to continue to develop at a pace
faster than that of the national average. Shenyang Real Estate Market Prior to 1998, housing
in China was allocated to state employees as a type of staff welfare. In March 1998, the
then Prime Minister, Mr. Zhu Rong Ji, announced the abolishment of state-allocated
housing commencing from mid-1998. During an ensuing phase of transition from
state-provided to privately-owned housing for state employees, eligible state employees
were provided cash subsidies to purchase their own housing. The subsidies also served to
increase the purchasing power of Shenyang residents for residential properties, and hence
have promoted trading of residential properties and the development of the real estate
market in Shenyang. The housing reforms
attracted an influx of capital and broadened the real estate market in Shenyang. Certain
measures were implemented to stimulate trading in residential properties. An example of
such policies allowed expatriates to acquire homes, which has served as an additional
source of demand for residential properties in Shenyang. Another factor that
has affected the real estate market in Shenyang has been the resettlement of displaced
residents who had been affected by the urbanization of dilapidated buildings in the city.
In accordance with an urbanization plan, the Shenyang Municipal Government announced its
intention to complete urban renewal projects in areas where illegal structures had been
previously erected on state land and in old rundown residential areas. These displaced
residents are expected to account for 130,000 family units in need of either leased or
owned new housing. 6




The real estate market
in Shenyang has also been affected by the introduction of investment property buyers who
purchase residential properties as part of their investment portfolio for rental and
capital gain. The number of investment property buyers in the PRC has continued to
increase in recent years. Large property investment enterprises/groups, which have
achieved high returns on investments, became active in such fast growing cities in China
as Beijing, Shanghai, Shenzhen and Wenzhou. The current healthy growth experienced in
the Shenyang real estate market, rapid urbanization and the improvement in its
position/status in the country have increased the property developers confidence in
investing in Shenyang. Property investors have also shown great confidence in the future
development prospects of the real estate market in Shenyang, as evidenced by their
increased property investments, and their continued participation and significance in
Shenyang real estate market should continue to be felt in the future. As property
investment allows high returns (recurring rental and capital appreciation), lower risk
profile, unaffected by inflationary pressure and high marketability, it will become
investors preferred choice of investment. The investment property buyers entry into the
real estate market will also boost property prices and value. These factors coupled with Shenyangs expanding economy resulted in a total investment of RMB 101.1
billion in Shenyang real estate in 2008, an increase of 38.4% over the prior year.   An aggregate of
9.86 million square meters of residential housing was sold in 2008 with a total sales price was RMB 33.9
billion, a 13% decrease from the previous year.  At the end of 2008, the Chinese Government adopted
policies aimed at addressing the global financial crisis. This included lower taxation rates and moves
towards reforming the real estate taxation system in order to stabilize the real estate market. It also
put a loan program into effect that assists residents to purchase or improve housing, the goal of which
is to stabilize and develop the real estate market according to local situations. Governmental regulation Chinese Real Estate Law Over the past five to
ten years, the majority of Chinas urban dwellers have changed their housing situation
from apartments provided by their employer to buying and maintaining their own
apartments. There are some estimates that 80% of urban Chinese now own their own homes.
But China has very few laws regarding the concept of condominiums and few statutes that
define the rights of these millions of homeowners. In 1998, China created
the basic building block of a market economy in real estate - a transferable ownership
interest. This interest, called the granted land use right - is not 100% ownership as
we know it in the West. There are no air rights or underground rights, and the State
retains all the mineral resources and the right to access them. The period of the
interest is limited to a fixed term - varying from 40 to 70 years, depending upon the
character of the right - and the use to which the property must be put is specified as
part of the grant. The granted land use right is transferable, mortgageable, leaseable,
and usually can be subdivided. Further, it theoretically is renewable, but there will be
a fee and since these land ownership rights are new, to date there has been no experience
with renewals. Chinese anti-speculation rules provide that one cannot acquire or hold
property just to ride the market.  The property must be put to productive use within a
set time of acquisition of the land use right (usually two years), or face penalties and
ultimately forfeiture of the right. For the development of
a new commercial real estate project, the developer must first obtain granted land use
rights. Land use rights can be granted through bidding, auction and listing. The
developer then enters into a land use right grant contract with the relevant government
authority. The granted land use right can be transferred, leased, or mortgaged. The
transferor and transferee must enter into a land use right transfer contract and file the
executed contract with the appropriate government bureau, which will then issue a new
land use certificate in the name of the transferee. In May 2002, the Ministry of Land and
Resources issued a regulation regarding the land use right transfer. Whereas in the past,
private parties were able to transfer land use rights by mutual agreement, this practice
was prohibited by the new regulation. Under the new scheme, any procurement of land for
business purposes can only be effected through bidding, auction and listing on an
authorized exchange floor. The long term value of
Chinese land rights are still quite uncertain, and such rights are not the kind of collateral
that would lead a lender, as might happen in the United States, to rely primarily on
the land value and look beyond the individual ability of a borrower to repay the debt.
Chinese banks, for example, rarely make construction loans because in theory they cannot
lend more than the value of the land that is their security at the time of the loan. Real estate developers
in China deal with this problem by signing prelease or prepurchase contracts whereby
the buyer of the finished unit or property pays all of the consideration before the
building is commenced. Effectively the buyers finance the sellers construction. Buyers
borrow the money from the banks under arrangements which later will morph into mortgage
loans when there is something to which the mortgage can attach. Usually the developer
must deposit the purchase proceeds in the bank and the bank monitors the expenditures. 7




Before a presale
method can be legally adopted, the developer of the project must have obtained (i) a land
use right certificate, (ii) a planning permit for construction use of land, (iii) a
planning permit for the construction project, (iv) a certificate of commencement of
construction, and (v) a permit for presale of commercial housing. Mortgages In 1993 the Central
Government allowed state-owned banks to provide mortgage facilities to property buyers.
In accordance with the banking regulations announced in 1998 the maximum loan repayment
period was 20 years, and maximum mortgage loan amount was 70 percent of the purchased
property price. In 1999, banking regulations were amended to extend the maximum loan
repayment period to 30 years and increase the maximum mortgage loan amount to 80 percent
of the purchased property price. As further incentives, state-owned banks were allowed to
increase the mortgage loan facilities by an additional 15 percent (maximum of 92 percent
of the purchased property price). The provision of mortgage facilities to property buyers
is considered to have created increasing demand for properties in the PRC. In accordance with
market practice in the PRC, the Company is required to provide guaranties (during the
development phase) to the banks of mortgages offered to the property buyers until
submission of the buyers real estate ownership certificates and certificates of other
interests in the property unit by the relevant property buyers to the mortgagee bank. In
the experience of the Company, such guaranty periods normally last for up to 6 months. If
a property buyer defaults under the loan and the Company is required, during the guaranty
period, to repay all debt owed by the defaulting property buyer to the mortgagee bank,
the mortgagee bank will assign its rights under the loan and the mortgage to the Company
and, subject to registration, the Company will have full recourse to the property. In
line with industry practice, the Company does not conduct independent credit checks on
the property buyers, but relies instead on the credit checks conducted by the mortgagee
banks. For financial reporting purposes, the sale of a property unit is not recognized
until title has passed and the Company is released from its loan guaranty on the unit. Wholly-Owned Foreign
Enterprises A wholly foreign-owned
enterprise (WFOE) is an entity 100 percent owned by a foreign investor or investors. An
apparent advantage of a WFOE is that it can enjoy exclusive management control of its
business activities and have autonomy in its operation without too much external
interference. The original WFOE
regulations only permitted WFOEs in certain limited sectors and required that the foreign
party either provided advanced technology or that at least 50% of the production could be
exported. These conditions were relaxed over time as more WFOEs were permitted in
increasingly broader sectors of the economy. In accordance with the PRC Wholly
Foreign-owned Enterprise Law as amended in 2001 and the Industrial Catalogue Guiding
Foreign Investments (2004) (the 2004 Catalogue), the export requirement is no longer
required and WFOEs are now much more common, except in certain restricted or prohibited sectors
as provided in the 2004 Catalogue. With respect to Chinas
real estate industry, the market has been gradually opened to WFOEs since Chinas entry
into the World Trade Organization. Pursuant to the 2004 Catalogue, WFOEs are permitted to
engage in the development, construction and management of ordinary residential houses
while they, with limited exceptions, are restricted to participate in the development of
high standard real estate projects. One of the most
important issues covered in the project documentation is the business scope of the WFOE.
Business scope is narrowly defined for all businesses in China and the WFOE can only
conduct business within its approved business scope, which ultimately appears on the
business license. Any amendments to the business scope require further application and
approval. Shenyang Marylands business scope, is defined to include general real estate
development, sales, leasing and property management. 8




Sales and Marketing The Company must apply
to the relevant government authorities for pre-sale permits before commencing pre-sales
of its properties under construction. Such permits will only be issued when, amongst
other things, (i) the land premium has been fully paid; (ii) the land use rights
certificates, the construction works planning permit and the construction project
building permit et cetera have been obtained; (iii) the construction works of the
properties have been completed up to the stipulated standard; (iv) the progress and the
expected completion date of the construction work have been ascertained; (v) the
construction plans for the affiliated facilities have been confirmed; (vi) the pre-sale
fund escrow agreement has been signed with a professional real estates funding
supervisory body; (vii) the covenants of use of the properties have been formulated; and,
(viii) an initial property management services contract has been signed with a property
management company. The Companys main
customers are local individual buyers of residential properties. The Company does not have
any dominant buyer as the Company targets the mass residential property market. The
Company advertises in newspapers, magazines and outdoor advertising billboards and
participates in various real estate exhibitions. The Company also sets up on-site
reception centers to display information relating to the relevant project and off-site
promotional centers in areas frequented by targeted customers in circumstances where
on-site reception centers may not be suitable. Competition In recent years, a
number of property developers had entered and commenced property development and other
project investments in Shenyang and other major cities of China lured by the healthy
profit margin that could be had from sales of residential properties. These include
overseas property developers (including sizeable leading property developers from Hong
Kong), local property developers in Shenyang as well as those from other major cities in
China. Competition among the property developers in Shenyang, Shanghai, Beijing,
Guangzhou and other major cities of China has become very intense and this may possibly
lead to an escalation in the cost of acquiring land use rights for development. On the
other hand, in certain other parts of China, there appears to be a surplus of supply of
properties and the related local government in those areas has started administrative
measures to slow down the approval process of the new property development projects. Employees The Company currently has 185 employees, 10 of whom are engaged in property development activities,
14 of whom are engaged in administration activities, and 158 of whom are engaged in property
management activities. Further Information and Reports We are required to
file with the Securities and Exchange Commission annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports of certain events on Form 8-K, and proxy and
information statements disseminated to stockholders in connection with meeting of
stockholders and other stockholder actions.  Copies of these and any other materials we
file with the Commission may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1580  100 F Street, N.E., Washington,
D.C. 20549.  Copies of all or any part of our filings may be obtained from the Public
Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, upon payment
of the prescribed fees.  The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.  The Companys filings with the
Commission are also available through its web site at http://www.sec.gov. ITEM 1A.     RISK FACTORS The following is a
discussion of risks we believe to be significant with respect to our business,
operations, financial condition and other matters pertaining to an investment in our
common stock. It is not possible to anticipate or predict every risk that may, in the
future, prove to have a significant affect on the Company. Additional risks, including
those that are currently not known to us or that we currently deem immaterial, may also
impair our business operations. 9




Risks Related to Our Business We will continue to be
dependent on bank loans to finance our projects and, therefore, our ability to operate
and develop our business is dependent on our ability to deal with loans we now carry and
obtain additional financing as needed. The development of high quality residential and commercial projects requires substantial funds.  We have
relied on bank financing to acquire real estate for development and to fund operations.  At December 31,
2008, we owed an aggregate of approximately $19.4 million in bank loans that mature within the
subsequent 12 months. Bank financing,
private equity and other potential sources of capital may be difficult to locate with the
current global economic conditions and disruption in financing models. If we are able to
locate suitable investment projects, we may not be able to obtain the necessary funds to
support such an endeavor in the current global economic environment.  Failure to obtain
such funds may severely impact our ability to participate in new investment projects. All of our assets and
operations depend on the performance of the Shenyang market for residential and
commercial real estate, so that low demand for or supply of residential or commercial
units in this limited geographic market would likely diminish the price or lease rates
for our real estate projects and have a negative impact on our results of operations. All of Great China
Holdings property projects are situated in Shenyang City, Liaoning Province, PRC, and
consequently, it depends on the continuing economic stability and growth of this area to
support the demand for its residential and commercial real estate.  Should economic
conditions deteriorate, the demand for residential and commercial units could decline.
 On the other hand, continued economic stability or growth in Shenyang could attract
other real estate development companies so that the supply of residential and commercial
real estate would increase to levels well above the demand.  The occurrence of either of
these circumstances would likely result in downward pressure on pricing for units held
for sale or lease, which would adversely affect our results of operations. Our reliance on
independent contractors in providing various services for our operations could affect our
operations adversely if these services become unavailable. Great China Holdings
engages independent third party contractors, through open tenders, to provide various
services including construction, piling and foundation, building and fitting-out work,
interior decoration and installation of elevators and other building systems.  Great
China Holdings practice is to select reputable independent third party contractors with
positive track records and supervise the construction progress. However, there is no
assurance that the services rendered by any of these independent contractors will always
be satisfactory or match the targeted quality level required by Great China Holdings,
which could increase project costs to the extent remediation is required.  Independent
contractors may experience cost over-runs, financial difficulties, or difficulty in
obtaining the labor and materials necessary for the assigned construction work, which
could result completion delays and/ or additional costs of completing projects for Great
China Holdings. Any of these events factors could adversely affect the Companys revenues
and reputation. Our real estate
development business is subject to increasing competition, which may affect sales or lead
to higher costs. In recent years, a
number of property developers had entered and commenced property development and other
project investments in Shenyang and other major cities of China.  These include overseas
property developers (including property developers from Hong Kong), local property
developers in Shenyang as well as those from other major cities in China.  Competition
among the property developers in Shenyang, Shanghai, Beijing, Guangzhou and other major
cities of China has become very intense and this may possibly lead to an escalation in
the cost of acquiring land use rights for development.  Furthermore, as competition
increases it should be expected that the demand for the services of independent
contractors who design and build our projects will increase, which could increase the
cost of those services and/ or make it more difficult for us to schedule those services
when needed thereby delaying the completion of our projects and increase carrying costs.
Finally, as more real estate is developed by other developers, purchasers and lessees
will have more products to choose from, which will likely result in downward pressure on
prices and lease rates for our residential and commercial properties.  These competitive
pressures will likely affect our pricing and operational decisions in the future and our
results of operations. 10




Risks related to
property development may cause project expenses to increase substantially. Property developments
usually require substantial capital outlay during the construction phase and it may take
many months or possibly years before positive cash flows can be generated through
pre-sales or sales of the completed property developments.  The time and the costs
incurred in completing a property development can be increased by many factors including,
but not limited to, shortages of materials, equipment, technical skills and labor,
adverse weather conditions, natural disasters, labor disputes, disputes with contractors
and sub-contractors, accidents, changes in government priorities and policies, changes in
market conditions, delays in obtaining the requisite licenses for the construction site,
permits and approvals from the relevant authorities and other problems and circumstances.
 Any of these factors may lead to delays in the completion of a property development and
result in costs exceeding those originally budgeted as well as losses of revenues. In
addition, any failure to complete a property development according to its original
planned specifications or schedule may give rise to potential liabilities, and returns
may accordingly be lower than originally expected. The practice of
pre-selling projects may expose Great China Holdings to substantial liabilities. The existing common
practices by property developers to pre-sell properties (while still under construction)
in China involves certain risks.  For example, we may fail to complete a property
development that may have been fully or partially pre-sold, which would leave us liable
to purchasers of pre-sold units for losses suffered by them without adequate resources to
pay the liability if funds have been used on the project. In addition, if a pre-sold
property development is not completed on time, the purchasers of pre-sold units may be
entitled to compensation for late delivery.  If the delay extends beyond a certain
period, the purchasers may be entitled to terminate the pre-sale agreement and pursue a
claim for damages that exceeds the amount paid and out ability to recoup the resulting
liability from future sales. Risks Related to Doing
Business in China There are inherent
risks in conducting all of our business in China, which makes it difficult to predict
future prospects and operations with any certainty. All of our assets are
located in the PRC and all of our revenue is sourced from the PRC.  Accordingly, Great
China Holdings result of operations, financial position and prospects are subject to a
significant degree to the economic, political and legal stability and development of the PRC.  The
economy of PRC differs from the economies of most developed countries in many respects,
including level of government involvement, level of development, growth rate, control of
foreign exchange, banking system, and allocation of resources.  The PRC economy has been
transitioning from a planned economy to a more market-oriented economy. Although Great
China Holdings believes these reforms will have a positive effect on its overall and
long-term development, it cannot predict whether or not changes in Chinas political,
economic, and social conditions, laws, regulations, and policies will have any adverse
effect on its current or future business, results of operations and financial condition. Specifically, in the
PRC the concept of property ownership by private individuals is a relatively new
development, so there is a lack of a well-developed market, well-established industry
practices, and well-defined body of law that can serve to provide certainty or
predictability with respect to future prospects or operations.  For example, we rely on
the current system of pre-sale mortgage financing to provide the capital necessary to
design and build our projects.  A change in that system that affects the availability,
timing, or amount of capital obtained would likely have a significant adverse affect on
our ability to successfully develop our projects. Fluctuations in
exchange rates of the Renminbi could adversely affect the value of stock ownership in
Great China Holdings. For over 10 years the
official exchange rate for the conversion of Renminbi to US dollars was unofficially
pegged at US$1 to RMB8.28.  In July 2005, the Peoples Bank of China, the countrys
central bank, began a new policy of calculating the Renminbis value against the US
dollar using a weighted average of the prices given by major banks.  The highest and
lowest offers are excluded from the calculation.  As a result of this change the RBM has
appreciated against the US dollar so that the exchange rate was US$1 to RMB 6.82 at
December 31, 2008. 11




It should be expected that currency exchange fluctuations will occur
in the future as a result of circumstances beyond our control, such as the level of trade
deficit or equalization between the US and the PRC, global economic conditions, global
currency markets, and other factors.  All of our revenue is generated in the PRC in
Renminbi, so that during periods that the US dollar is worth more in relation to the
value of the Renminbi, the total revenue and results of operations of Great China
Holdings reported in US dollars in the financial statements we publish in the US will be
less.  Consequently, fluctuations in exchange rates could adversely affect the US dollar
value of our results of operations and the perceived value of Great China Holdings in the
public market. Uncertainty relating
to the existing law and regulations in the PRC may restrict the level of legal
protections to foreign investors, which could have a chilling effect on obtaining capital
to fund our operations. The PRC currently
operates under a civil law system that relies heavily on written statutes, and decisions
made by the courts are not binding precedents, but for guidance only.  The legal system
in the PRC cannot provide the investors with the same level of protection as in the US.
 Great China Holdings is governed by the law and regulations generally applicable to
local enterprises.  These laws and regulations were recently introduced and remain
experimental in nature and subject to changes and refinements.  Interpretation,
implementation and enforcement of the existing law and regulations can be uncertain and
unpredictable and therefore have restrictions on legal protections on foreign investors. It will be extremely
difficult to acquire jurisdiction and enforce liabilities against our assets based in The
Peoples Republic of China. Because the majority
of our assets are located in The Peoples Republic of China, it would also be very
difficult to access those assets to satisfy an award entered against Great China Holdings
in a U.S. court. Risks Related to Our
Common Stock A single person holds
voting control of Great China Holdings, so an investor will not have a meaningful voice
in the selection of management or on any other matter affecting the future of Great China
Holdings. Frank Jiang holds a majority of the issued and outstanding common stock of
Great China Holdings.  He alone can elect the entire board of directors and approve any
other matter that may be submitted to the stockholders for approval.  Consequently, the
vote represented by common stock held by our other stockholders is not meaningful.
 Holders of our common stock are dependent on the judgment and decisions of Mr. Jiang in
selecting directors and approving other corporate actions, and the abilities of
management employed by the directors to successfully operate and grow our business. Because our common
stock is traded on the OTC Bulletin Board, your ability to sell your shares in the
secondary trading market may be limited. Our common stock
currently is traded on the over-the-counter market on the OTC Bulletin Board.  The OTC
Bulletin Board is an inter-dealer, over-the-counter market that provides significantly
less liquidity than national or regional exchanges.  Securities traded on the OTC
Bulletin Board are usually thinly traded, highly volatile, have fewer market makers and
are not followed by analysts.  Consequently, the liquidity of our common stock is
impaired, not only in the number of shares that are bought and sold, but also through
delays in the timing of transactions, and lack of coverage by security analysts and the
news media.  As a result, prices for shares of our common stock may be lower than might
otherwise prevail if our common stock was quoted or traded on a national securities
exchange. You may have
difficulty selling our shares if they are deemed a penny stock. Since our common stock
is not currently listed on an exchange, and trading in our common stock is subject to the
requirements of certain rules promulgated under the Securities Exchange Act of 1934,
which require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as a penny stock (generally, any non-exchange listed equity
security that has a market price of less than $5.00 per share, subject to certain
exceptions).  Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated therewith
and impose various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally defined as
an investor with a net worth in excess of $1,000,000 or annual income exceeding $200,000
individually or $300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser and have
received the purchasers written consent to the transaction prior to the sale. 12




The
broker-dealer also must disclose the commissions payable to the broker-dealer, current
bid and offer quotations for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed
control over the market. Such information must be provided to the customer orally or in
writing before or with the written confirmation of trade sent to the customer. Monthly
statements must be sent disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks.  The additional
burdens imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in our common stock, which could severely limit the market
liquidity of the common stock and the ability of holders of the common stock to sell
their shares. ITEM 1B.     UNRESOLVED STAFF COMMENTS None. ITEM 2.     PROPERTIES General As of December 31,
2008, the Company, through Shenyang Maryland, had five real estate projects located in
the city of Shenyang in which it either was selling and/or leasing. 
     President Building comprises three blocks of commercial buildings, including two commercial towers,
           situated in Shenyang City, Heping North Street, which is the financial district of Shenyang.  While
           the original intention was to sell a majority of the office buildings, management subsequently decided
           to retain most of the properties for leasing purposes.  The buildings maintain a high occupancy rate
           with tenants that are primarily international companies, 20 of which are Fortune 500 companies.  Great
           China Holdings head office is situated on the 25th and 26th Floors of President Building.
     Chenglong Garden, situated in Shenyang Huanggu District, comprises 12 blocks of modern apartments
           consisting of 865 residential apartments, a number of retail shops and ancillary facilities including
           basement car parking facilities and parks.  As of December 31, 2000, 854 units had been sold, and 11
           residential units and approximately 3198 square meters of commercial space remained available for sale and lease.
     Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units, 337 of
           which had been sold as of December 31, 2008.
     Peacock Garden is situated in Shenyang City, Heping North Street, is in the commercial district of
           Shenyang and is comprised of 197 low-density residential apartments, 195 of which had been sold as of
           December 31, 2008. 
     The Maryland Building consists of 12,858 square meters, of which 11,310 have been sold and other
           remaining 1,548 square meters are held for leasing purposes.  PresidentBuilding
     PeacockGarden
     ChenglongGarden
     MarylandBuilding
     QiyunNew VillageConstruction date
        .................................................
      June 1999
     April 1999
     June 2000
     June 1997
     April 1996Construction completion date
        ..............................
        Dec 2002
     Nov 2000
     Oct 2002
     Nov 1998
     Nov 1997Permission for pre-sale/sales
        ..............................
        Feb 2001
     April 1999
     June 2001
     Dec 1997
     July 1997Date of first sales
        .................................................
             May 1999
     May 1999
     Sept 2001
     Nov 1997
     May 1997 13




The following table
set forth information about the Companys various projects: Sales Revenue Mix 2007
     2008%
     $
     %
     $Properties sales:Qiyun New Village
        ......................................................................................
   5.0
        
 
     487,694
        
 
     7.6
        
 
     739,619Peacock Garden
      ............................................................................................
      
0.4
        
 
     37,382
        
 
     1.1
        
 
     105,069Chenglong Garden Phases I & II
        ..................................................................
             
        39.8
        
 
     
        3,853,917
        
 
     
        29.2
        
 
     
        2,834,35645.2
        
 
     
        4,378,993
        
 
     
        37.9
        
 
     
        3,697,044Rental income
        
        
        38.6
        
 
     
        3,733,241
        
 
     
        43.3
        
 
     
        4,194,139Building management income:President Building Management Center
        ......................................................
         
        16.2
        
 
     1,564,394
        
 
     18.8
        
 
     1,817,037100.0
        
 
     
        9,675,627
        
 
     
        100.0
        
 
     
        9,690,220 The President Building The Companys
President Building, which was completed in 2002, consists of three blocks of commercial
towers, each built according to international construction standards, situated in
Shenyang City, Heping North Street in the financial district of Shenyang. The project
occupies an area of 8,126 square meters on a total construction area of 77,000 square
meters, and represents an investment by the Company of RMB 582 million (approximately
US$71.8 million). While the Companys original intention was to sell a majority of the
office buildings, management subsequently decided to retain most of the properties for
leasing purposes.  The buildings maintain a high occupancy rate with tenants who are
mostly international companies, 20 of which are Fortune 500 companies. The Companys head
office is situated on the 25th and 26th Floors of President Building. When the President Building was built, it was one of the few commercial buildings in Shenyang which was
positioned as premium commercial building. Over the years, a number of commercial buildings were built
to fulfill an increasing demand. The President Building maintains its competitiveness mainly with its
strong location at the financial center of Shenyang. Tenants satisfaction is closely monitored
and maintained through surveys and regular networking meetings. Though
minor renovations are ongoing in the Building, we anticipate no major renovations in the near future. The aggregate
occupancy rate for the two towers at the end of 2007 and 2008 was 98% and 98.4%,
respectively, ranked among the highest in Shenyang.  The tenants as a whole are engaged
in a variety of businesses, including real estate, foreign trade, investment, insurance,
e-commerce, media, advertisement, and heath care. In June 2007, Shenyang Maryland closed funding under a loan agreement with Shenyang City Commercial Bank
(Holdings) Co., Ltd. (Zhongshan Branch) (the Bank) whereby the Bank agreed to loan RMB 40,000,000, or
approximately US$5,486,968, to Shenyang Maryland for use in connection with renovation of the President
Building, repurchase of assets from the Industrial and Commercial Bank of China and other purposes.  The
principal amount of the loan bore interest at 8.775% before September 15, 2007 and 9.711%
, with the rate reconfirmed on October 21, 2008 at 9.477%.  The principal amount of the
loan, none of which has been repaid, along with any accrued interest, is due on June 12, 2009.  The loan
agreement provides that Shenyang Maryland must notify the Bank of certain material changes in its
business that may occur during the term of the loan agreement, provides for penalties in the event of
various events of default, and also provides that the amount of the Loan is secured by a pledge of
property owned by Shenyang Maryland, including part of the President Building, as security for payment
of the loan. 14




The total area of the President Building owned by the Company is 61,175.61 square meters,
and the mortgaged area is 33,423.95 square meters. The realty tax for the President Building is
12% of the total rental income, and the total realty tax for the year 2008 is RMB 3,219,646
(approximately US$ 463,412). The mortgage details for the President Building are as follows: Lender(bank)

     Amount of loanRMB:000s)

     Guaranty(President Building)

     MortgagedAreaBlock A, 1st-4th floor (axle 1-7)
     
     6349.20Block A, 8th-9th floor
     
     2195.72Block A, 11th-14th floor
     
     4380.76Commercial Bank of China Zhongshan Branch
     
     148,000
     
     Block A, 17th-26th floor
     
     10925.20Block B, 3rd-4th floor, (axle 7-11)
     
     1891.06Block C, 13th-19th floor
     
     7682.01Total mortgaged area
     
     
     
     
     
     33,423.95 Chenglong Garden Chenglong Garden,
 Shenyang Huanggu District, comprises 12 blocks of modern apartments
consisting of 865 residential apartments, a number of retail shops and ancillary
facilities including basement car parking facilities and parks. The project is situated
near Beiling Park, schools and Hymall and Megamart. Approximately 96% of the area
comprising Chenglong Garden had been sold as of December 31, 2008. Qiyun New Village Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units. Qiyun
New Village was introduced to the real estate market in 1999. The Company introduced a Five-year Trial
Accommodation Scheme (the Scheme) to attract potential buyers.  Under the Scheme, property buyers are
required to pay a refundable deposit totaling $6,039 (RMB50,000), and pay a 30% deposit based
on the sales price of the property over 5 years in monthly installments throughout the trial period.
(The initial $6,039 payment is included in the 30% deposit; however, this amount is refundable, whereas
the balance of the payments is not.)  The remaining 70% of the consideration is due and payable
immediately after the trial period when the property buyers must exercise their option whether or not to
complete the purchase. If the buyer chooses not to buy the property, only the $6,039 initial deposit
will be refunded to the buyer, and the remainder of the deposit amount is retained and recognized as
rental income in the year in which such payments arose.  Ten units were still under the Scheme as
of December 31, 2008; of these, eight participants of the Scheme agreed to purchase the unit, and
sales revenues for their units were recognized during the year ended December 31, 2008. The Maryland Building The Maryland Building
is 12,858 square meters in size of which 11,310 square meters have been sold and other
remaining 1,548 square meters are held for leasing purposes. ITEM 3.     LEGAL
PROCEEDINGS The Company is the
subject of certain legal matters that it considers incidental to its business activities.
It is the opinion of management that the ultimate disposition of these matters will not
have a material impact on the financial position, liquidity or results of operations of
the Company. ITEM 4.     SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was
submitted to a shareholder vote during the quarter ended December 31, 2008. 15




PART II ITEM 5.
     MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY             SECURITIES Market Information The common stock of
Great China Holdings trades in the over-the-counter market under the symbol GCIH.  The
following table sets forth for the respective periods indicated the prices of the common
stock in the over-the-counter market, as reported and summarized on the OTC Bulletin
Board. Such prices are based on inter-dealer bid and ask prices, without markup,
markdown, commissions, or adjustments and may not represent actual transactions. Calendar Quarter Ended
     
     High Bid ($)
     
     Low Bid ($)March 31, 2007....................................................................................................
     
     5.40
     
     3.90June 30, 2007.......................................................................................................
     
     4.00
     
     2.20September 30, 2007.............................................................................................
     
     3.80
     
     2.75December 31, 2007.............................................................................................
     
     2.50
     
     0.76March 31, 2008...................................................................................................
     
     1.20
     
     0.51June 30, 2008......................................................................................................
     
     1.50
     
     1.02September 30, 2008............................................................................................
     
     1.07
     
     0.70December 31, 2008.............................................................................................
     
     0.75
     
     0.27 Dividends We did not make any
distributions to shareholders in 2008 or 2007.  Our present intention is to retain any
earnings for use in our business activities, so it is not expected that any dividends on
the common stock will be declared and paid in the foreseeable future. Security Holders At March 15, 2009,
there were approximately 157 holders of record of our common stock. Equity Compensation Plans (c)Number of securities(a)
     
     remaining available forNumber of securities to be
     (b)
     future issuances underissued upon exercise of
     Weighted average exercise
     equity compensation plansoutstanding options,
     price of options, warrants
     (excluding securitiesPlan Category
     warrants and rights
     and rights
     reflected in column (a))Equity compensation plans
     None
     N/A
     Noneapproved by stockholdersEquity compensation plans not
     20,000
     $ 2.65
     N/Aapproved by stockholders 16




Repurchases of common stock There were no
repurchases of equity securities by Great China Holdings in the fourth quarter of
2008. ITEM 6.     SELECTED
FINANCIAL DATA The following tables
set forth selected financial data for each of the years in the five-year period ended
December 31, 2008.  The consolidated statement of operations data and balance sheet data
are derived from the audited Consolidated Financial Statements of Great China
Holdings and its predecessors.  The following selected financial data should be read
in conjunction with Managements Discussion and Analysis of Financial Condition and
Results of Operations and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this report. Consolidated Statement of Operations Data (in thousands): Year Ended December 31, 2008
     2007
     2006
     2005
     2004Revenues
     
     
$
        9,690
        
     $
        9,676
        
     $
        12,738
        
     $
        26,524
        
     $
        29,671Net income (loss) from continuing operations
$1,411
        
$4,500
        
     $(3,715
        )
     $80
        
     $(597
        )Net income (loss) per share, basic and diluted
$0.09
        
$2.07
        
     $(0.33
        )
     $0.01
        
     $(0.06
        ) Consolidated Balance Sheet Data (in thousands): December 31, 2008
     2007
     2006
     2005
     2004Total assets
     
     
$66,406
        
     $100,471
        
     $69,929
        
     $79,420
        
     $79,844Long-term obligations
$-0-
        
     $5,487
        
     $1,999
        
     $3,266
        
     $18,369Cash dividends per common share
     $-0-
        
     $-0-
        
     $-0-
        
     $-0-
        
     $-0- ITEM 7.      MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following
discussion should be read in conjunction with our consolidated financial statements
presented at the end of this report.  Unless otherwise indicated, references in this
discussion to we, ourand us are to the Great China
International Holdings, Inc and its subsidiaries. History and Development of Great China International
Holdings Great China
International is a comprehensive real estate company with principal activities in real
estate investment, development, sales and management.  We conduct all our operation in
the Peoples Republic of China through our direct and Business Overview Great China Holdings is engaged in commercial
and residential real estate leasing, management and
development activities in the City of Shenyang, China. For the year ended
December 31, 2008, the proceeds from the sales of properties constituted 38% of the total
revenue from operations, with the remaining revenue consisting primarily of rental income. For the year
ended December 31, 2007, the proceeds from the sales of properties constituted 45% of the
total revenue. Development activity
typically consists of locating and acquiring ownership and property rights to real
property, arranging for project financing, managing project planning and construction,
and implementing sales and leasing of the finished realty. We may obtain/purchase land
use rights from the following sources: (i) purchases from factories which have relocated;
(ii) redevelopment of older areas; and (iii) government public tenders or auctions.
Overall management of all projects developed by us is undertaken by special project teams
from our company. The special project teams oversee and monitor the various stages of the
project development process to ensure the timely completion and construction of high
quality properties. 17




Completed Projects Great China Holdings
has five completed real estate projects located in the city of Shenyang in which it has
been selling and/or leasing units: 
     President Building comprises three blocks of commercial buildings, including two commercial towers,
              situated in Shenyang City, Heping North Street, which is the financial district of Shenyang.  While
              the original intention was to sell a majority of the office buildings, management subsequently
              decided to retain most of the properties for leasing purposes.  The buildings maintain a high
              occupancy rate with tenants that are primarily international companies, 20 of which are Fortune 500
              companies.  Great China Holdings head office is situated on the 25th and 26th Floors of President
              Building.
     Chenglong Garden, situated in Shenyang Huanggu District, comprises 12 blocks of modern apartments
              consisting of 865 residential apartments, a number of retail shops and ancillary facilities
              including basement car parking facilities and parks.  As of December 31, 2008, 854 units had been sold, and 11 residential units and
approximately 3198 square meters of commercial space remained available for sale and lease.
     Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units, 337
              of which had been sold as of December 31, 2008.
     Peacock Garden is situated in Shenyang City, Heping North Street, is in the commercial district of
              Shenyang and is comprised of 197 low-density residential apartments, 195 of which had been sold as
              of December 31, 2008.
     The Maryland Building consists of 12,858 square meters of commercial space. Recent Projects Xi Ta Project. In
December 2005, we, through our subsidiaries Silverstrand and Shenyang Maryland
International, acquired Shenyang Xinchao Property Company and Shenyang Yindu Property
Company, which together held 100% of the rights granted for a mixed-use development
located in the Heping District of Shenyang known as the Xita Urban Reconstruction Project
the Xita Project confirmation letter issued by the Heping District Government in 2004.
The confirmation letter, as subsequently amended, contemplated a 99,000 square meter
project located in the Xi Ta area in the city of Shenyang. Under the confirmation letter
we paid a land transfer fee of RMB 33,228,480. Shenyang Heping District Investment
Promotion Bureau, which is the agency overseeing development of the Xi Ta area decided to
expand the project and, as a consequence of the expansion, reached an agreement with us
to reacquire the land use rights for the Xita Project in exchange for refunding the land
transfer fee of RMB 33,228,480 (approximately $4,437,397), and reimbursing us for amounts
expended on the development in the amount of RMB 12,345,180 (approximately $1,646,024).
In July 2007, the local government approvals and procedures were completed for
transferring the land use rights back to the local government and we received reimbursement of the land transfer fee of
RMB 33,228,480.  We received the remaining RMB 12,345,180 in August 2007.  We incurred a
net loss on the terminated Xi Ta Project of $1,504,604.  We decided to discontinue Shenyang Xinchao and Yindu in October 2008.  As of December 15, 2008 Shenyang
Xinchao and Yindu were discontinued, and the assets and liabilities of the two companies were
subsequently transferred to our subsidiary, Shenyang Maryland International Industry Co., Limited. Chessboard Mountain.
Our subsidiary, Shenyang Jitian Property Company Limited, was established on February
22, 2006 for a new project development known as Chessboard Mountain Residential project
located in the Chessboard Mountain International Tourism Development District in Shenyang
City. In February 2006, Shenyang Jitian Property Company was confirmed as the highest
bidder in a public auction for the Chessboard Mountain Residential project. The total
purchase price for the 420,317 square meters land use rights was approximately $56.7
million, which was obtained through bank financing. In December 2006, we completed the
sale of Shenyang Jitian Property Company to two unrelated companies in exchange for a
total cash payment of $1,399,970 (the amount of our invested capital in Shenyang Jitian
Property Company) and assumption of all bank debt incurred in connection 18




with the
acquisition of the Chessboard Mountain Residential project. In connection with the sale,
Great Chinas subsidiary, Shengyang Maryland International Industry Company Limited,
entered into a Land Consolidation and Development Agreement with respect to the
Chessboard Mountain Residential Project. Under the development agreement, Shenyang
Maryland was engaged to arrange for necessary permitting, site preparation and
installation of development infrastructure. As the developer/contractor, the contract
provides for Shenyang Maryland to be paid a total of approximately RMB 104 million ($13.3
million) in staged amounts upon completion of different aspects of the development work
provided for by the agreement. As of December 31, 2008, Shenyang Maryland had been paid
a total of approximately RMB78.98 million ($11.58 million) under the development agreement. Loyal Best. On August
7, 2007, Silverstrand completed the acquisition of all of the issued share capital of
Loyal Best Property Development Limited (Loyal Best), a Hong Kong limited company.
Loyal Best was 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 LB Project).
Silverstrand paid US$4,010,000 to acquire the share capital of Loyal Best and paid and an
additional US$20,500,000 to satisfy all director loan notes issued by Loyal Best, which
funds were used to make Shenyang Loyal Bests land transfer fee payment on the project of
US$20,000,000. In September 2007, Shenyang Loyal Best closed funding under a bridge loan
agreement with Shenyang Huahai International Investment Co., Ltd. (Shenyang Huahai)
whereby Shenyang Huahai loaned RMB 450,000,000, or approximately US$60 million, to
Shenyang Loyal Best for use in connection with development of the LB Project. In
December 2007, Silverstrand completed the sale of all of the share capital of Loyal Best
to an unrelated third party in exchange for cash consideration of 360 million Chinese
yuan (approximately US$48.7 million) and the assumption by the purchaser of the loan from
Shenyang Huahai for development of the LB Project. Silverstrand had received
the entire cash sales price by the end of March 2008.  In connection with the sale
of Loyal Best, we agreed to pay a finders fee to an unrelated third party of approximately $8.9 million. Junhui Development
Agreement. In November 2007, our indirect subsidiary, Shenyang Xinchao Property Co.,
Ltd. (Xinchao), entered into a joint development agreement with Beijing Century Junhui
Investment Ltd. (Junhui), an unrelated third party, pursuant to which each of Xinchao
and Junhui agreed to invest RMB 40 million (approximately $US5.4 million) as share
capital in a newly-formed entity whose purpose shall be to jointly develop a commercial
and residential project in Nanjing Street, Heping District, Shenyang, China. Subsequent
to entering into the joint development agreement, Junhui and Xinchao were unsuccessful in
obtaining the property for the project and, in accordance with the terms of the joint
development agreement, the amount of Xinchaos investment was refunded. Results of Operations The Company generated
net income of $1,074,531 for the year ended December 31, 2008 compared to a net income of
$24,325,722 for the year ended December 31, 2007, representing a decrease of $23,251,191,
or 95.58%.  Of the 2007 income, $19,825,479 was attributed to income (gain) from
discontinued operations.  We incurred a loss from operations for the year ended December
31, 2008 of $1,499,661, as compared to a loss of $1,840,772 for the year ended December
31, 2007, a decrease of $341,111. Sales revenues
increased by $14,593 or 0.15% to $9,690,220 for the year ended December 31, 2008 compared
to $9,675,627 for the year ended December 31, 2007.  Real estate sales decreased by
$699,949 or 15.98%, for the year ended December 31, 2008, while rental and management fee
income increased by $714,541 or 13.49%, for the year ended December 31, 2008 as compared
to 2007. Cost of properties
sold decreased by $1,626,386 or 27.19% for the year ended December 31, 2008 as compared
to $5,980,853 for the year ended December 31, 2007, attributable primarily to a
corresponding decrease in real estate sales. Selling expenses
decreased by $321,731, or 77.68%, to $92,448 for the year ended December 31, 2008, as
compared to $414,179 for the year ended December 31, 2007. This decrease is primarily
attributable to a significant advertising expense incurred in 2007 which was not incurred
in the year ended December 31, 2008. 19




General and
administrative expenses increased by $980,705, or 35.3%, to $3,758,351 for the year
ended December 31, 2008, as compared to $2,777,646 for the year ended December 31, 2007,
attributable primarily to an increase in agent fee expenses during the year ended December
31, 2008. Depreciation expense
increased by $640,894, or 27.35%, to $2,984,615 for the year ended December 31, 2008
compared to $2,343,721 for 2007, reflecting a growth in fixed assets held by the Company
for business expansion. Land leveling income
increased by $1,168,333, or 60.57%, to $3,097,374 for the year ended December 31, 2008,
as compared to $1,929,041 for the year ended December 31, 2007, due primarily to a
decrease of land leveling cost in 2008, and a corresponding higher profit margin. Gain on settlement of
debts decreased by $10,079,125 or 90.68% compared to $11,115,201 in 2007, due primarily
to the Companys gain of $11,115,201 from disposal of debts of Great Wall Capital
Management Company in 2007, whereas the Company recognized a gain in 2008 of only
$1,036,076 from disposal of debts of  Shenyang Normal College. Loss on terminated
project increased by 100% in 2008 compared to 2007, as there was no such  loss occurred
in 2008. Other income increased
by $1,442,850, or approximately 225%, to $800,273 for the year ended December 31, 2008,
compared to ($642,577) for the year ended December 31, 2007, which change is primarily
attributable to a change in the Companys treatment of business and property taxes, which
were accounted for in 2007 as an other expense, whereas in 2008 were treated as a cost of
sales. Loss from entities held
for discontinuance increased by $3,723,553 or 91.71% for the year ended December 31, 2008,
due to the Companys discontinuance of two subsidiaries, Shenyang Xinchao and Shenyang
Yindu, on December 15,2008. Liquidity and Capital Resources Net cash flows
provided by operating activities for the years ended December 31, 2008 and 2007 were
$11,209,753 and $50,420,001, respectively.  The substantial amount in 2007 was
attributable to a significant increase in net income, due primarily to a gain on
disposition of a subsidiary and a gain upon settlement of debt, an a correspondingly
large increase in other payables and accrued expenses. Net cash flows provided by investing activities for the year
ended December 31, 2008 was $(2,015), compared to $28,288,291 used in investing activities for the year ended
December 31, 2007.  Very few transactions occurred relating to Investing Activities in 2008 and therefore there was
a large disparity between the previous year.  The amount reflected in 2007 was primarily related to discontinued
operations. Net cash flows used in
financing activities for the year ended December 31, 2008 was $13,261,157, attributable
to repayment of debt, compared to $15,107,074 net cash used by financing activities for
the year ended December 31, 2007. As of December 31,
2008, current liabilities exceeded current assets by $23,731,147, as compared to
$19,710,594 as of December 31, 2007. The working capital deficit as of December 31, 2008
was incurred primarily due a reclassification, as short term loans, loans in the
aggregate principal amount of $19,317,925.  Cash and equivalents were $8,214,381 at
December 31, 2008, compared to $10,044,579 at December 31, 2007, an decrease of
$1,830,198, or 18.22%. 20




Outlook For 2009 The current global
economic environment has certainly had an impact on China and Shenyang.  Management has
therefore decided to act in a prudent and cautious manner.  While we will continue to
actively seek new opportunities that will create value for investors, it is unlikely that
we will engage in any significant new transactions in the first half of 2009. Contractual Obligations The following table is
a summary of Great China Internationals contractual obligations as of December 31, 2008: Total

     Less thanone year

     1-3 Years

     ThereafterShort-Term Debt
     
     
     $
        19,317,925
        

     $
        19,317,925
        

     $
        --
        

     $
        --Long-Term Debt
     --
        

     --
        

     --
        

     --Amounts due to related parties
     --
        
     --
        
     --
        
     --Construction commitments
        
        
     
        --
        
     --
        
     --
        
     --Total Contractual Cash Obligations
     $19,317,925
        
     $19,317,925
        
     $--
        
     $-- Critical Accounting Policies The financial
statements are prepared in accordance with accounting principles generally accepted in
the United States of America and the following is a summary of significant accounting
policies: Principles of Consolidation All
significant inter-company transactions and balances within the Company are eliminated
in consolidation. Cash and equivalents The Company
considers all highly liquid debt instruments purchased with maturity period of three
months or less to be cash equivalents. The carrying amounts reported in the
accompanying consolidated balance sheet for cash and cash equivalents approximate
their fair value. Substantially all of the Companys cash is held in the PRC and is
not protected by FDIC or any other form of insurance. Accounts receivable- Provision is
made against accounts receivable to the extent which they are considered to be
doubtful. Accounts receivable in the balance sheet is stated net of such provision. 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 2007, the Company reserved $5,664,081 and
5,174,895, respectively. Advances from buyers Advances from
buyers represents prepayments from buyers on properties on which sales revenues have
not yet been recognized for financial reporting purposes. 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. At December 31, 2008,
properties held for sale amounted to $6,228,607. 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.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. 21




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 the years ended December 31, 2008, and 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. 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.  Construction in progress  includes costs associated in development and
construction of the Xita project 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. 22




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 year ended  December  31, 2007,  the
Company did not have any construction therefore no interest was capitalized. 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. 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, 2007 and 2006, 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  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 23




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 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. 24




In May 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 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. ITEM 7A.     QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Exchange Risk While our reporting
currency is the U.S. dollar, all of our consolidated revenues and consolidated costs and
expenses are denominated in RMB. All of our assets are denominated in RMB. As a result,
we are exposed to foreign exchange risk as our revenues and results of operations may be
affected by fluctuations in the exchange rate between U.S. dollars and RMB. If the RMB
depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets
as expressed in our U.S. dollar financial statements will decline.  The value of the
Renminbi against the U.S. dollar and other currencies is affected by, among other things,
changes in Chinas political and economic conditions. Since July 2005, the Renminbi has
not been pegged to the U.S. dollar. Although the Peoples Bank of China regularly
intervenes in the foreign exchange market to prevent significant short-term fluctuations
in the exchange rate, the Renminbi may appreciate or depreciate significantly in value
against the U.S. dollar in the medium to long term. Moreover, it is possible that in the
future, PRC authorities may lift restrictions on fluctuations in the Renminbi exchange
rate and lessen intervention in the foreign exchange market. Interest Rate Risk We are primarily
exposed to interest rate risk arising from short loans.  As the Company must renegotiate
those loans on and annual basis, changes in PRC banking or monetary policy may aversly
affect the Company. Credit Risk We have not
experienced significant credit risk, as most of our customers are long-term customers
with excellent payment records. We review our accounts receivable on a regular basis to
determine if the allowance for doubtful accounts is adequate at each quarter-end. We only
extend 30 to 90 day trade credit to our largest customers, which tend to be
well-established and large businesses, and we have rarely seen accounts receivable go
uncollected beyond 90 days or experienced minimal write-off of accounts receivable in the
past. Inflation Risk Inflationary factors
such as increases in the cost of raw material may adversely affect our investment
projects. Although we do not believe that inflation has had a material impact on our
financial position or results of operations to date, a high rate of inflation in the
future may have an adverse effect on our ability to maintain current levels of gross
margin and selling, general and administrative expenses as a percentage of net revenues
if the selling prices of our products do not increase with these increased costs. 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 36. 25




ITEM 9A(T).     CONTROLS
AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure
controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are
designed to ensure that information that would be required to be disclosed in Exchange
Act reports is recorded, processed, summarized and reported within the time period
specified in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including to the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As required by Rule 13a-15 under the Exchange Act, under the supervision and
with the participation of our management, including our Chief Executive Officer and our
Chief Financial Officer, we evaluated the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2008. Based on that evaluation,
our management concluded that our disclosure controls and procedures were effective as of
December 31, 2008. Managements Annual Report on Internal Control Over
Financial Reporting Our management is
responsible for establishing and maintaining adequate internal control over financial
reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is designed to
provide reasonable assurance regarding the (i) effectiveness and efficiency of
operations, (ii) reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles, and (iii) compliance with applicable laws and regulations. Our internal
controls framework is based on the criteria set forth in the Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Due to inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.  Projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may deteriorate. In 2007, the Company utilized outside consultants to assist us in performing a top-down risk assessment,
documenting in detail the existing controls and creating certain new controls  to assist us in
performing a top-down risk assessment, documenting in detail the existing controls and creating certain
new controls. This action was not an indication of any significant deficiencies or material weaknesses
of internal controls, but part of the Companys ongoing strategy regarding improvement of operational
efficiency and effectiveness.  During 2008, management continued to utilize the documentation and
framework of our controls to test and assess effectiveness. As a result of this review, management
believes that our internal controls over financial reporting are effective. Attestation Report This annual report
does not include an attestation report of the Companys registered public accounting firm
regarding internal control over financial reporting.  Managements report was not subject
to attestation by the Companys registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report. Changes in Internal
Controls There have been no
changes in the Companys internal control over financial reporting during the three-month period
ended December 31, 2008 that have materially affected, or are reasonably likely to
materially affect, the Companys internal controls over financial reporting. ITEM 9B.      OTHER
INFORMATION None. 26




PART III ITEM 10.     DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and officers Set forth in the table
below are the names, ages and positions of our current directors and executive officers.
 None of our directors or executive officers has any family relationship to any other
director or executive officer. Name
     Age
     Position
     SinceJiang Peng
     45
     Chairman of the Board of Directors
     2008Sun Dongqing
     38
     Director and Chief Financial Officer
     2008Duan Jing Shi
     57
     Director
     2005Raymond Reed Baker
     32
     Director
     2008 Wang Jian Guo was a director as of December 31, 2008, but resigned as a director for personal reasons on
March 1, 2009. All executive officers are elected by the board and hold office until their successors
are duly elected and qualified.  Each director is elected by the stockholders and serves until
resignation or election of a successor by the stockholders. Biographies The following is
information on the business experience of each of the new officers. Jiang Peng was
appointed as a director and as Chairman of the Board in May 2008.  Prior to this
appointment, he had served in the previous five years as Chairman as General Manager of
Shenyang Maryland, a subsidiary of Great China Holidngs, where he played a key role in
the development of several of our large real estate projects, including Chenglong Garden,
Qiyun New Village and the President Building.  Jiang Peng is the brother of our largest
shareholder, Frank Jiang, and was formerly a Director of the Company from July 2005 to
July 2006. Sun Dongqing has
served as a Director and as Chief Financial Officer since May 2008.  She graduated from
Northeast University in 1991 with a major in Accounting and began her career in 1992 with
the Companys affiliate, Maryland International Industry Co., Ltd. During the period
2003-2004, she was Chief Accountant of Shenyang Maryland International Industry Co.,
Ltd., real estate development branch, responsible for cost accounting, control, tax
inspection and coordination with Shenyang Marylands subsidiaries. From 2005 until her
appointment as our Chief Financial Officer, she was Financial Manager of Shenyang
Maryland International Industry Co., Ltd. and President Building Management Centre, in
charge of the affairs involving, among other things, domestic industry and commerce,
taxation, and foreign exchange. Duan Jing Shi has
served as a Director of Silverstrand International and its subsidiary, Shenyang Maryland
International Industry, since January 2002, and has the responsibility for real estate
property development.  Prior to his appointment as Director, he served as President of
Shenyang Normal University. Raymond Reed Baker is
a Non-Managing Director and joined GCIH in 2008.  He also serves as a Managing Director
for The One World Investment Group and has lived in China since 2004.  He began his
career with PricewaterhouseCoopers LLP, serving in the Transition Services practice, where he
specialized in financial due diligence and internal control.  Mr. Baker is a Certified Public Accountant in
the state of Pennsylvania, has a B.S. in Accounting from The Pennsylvania State
University and a Masters of Business Administration from Hong Kong University. Audit Committee;
Financial Expert The Board of directors has not established an audit committee, so the entire Board of Directors performs
the functions associated with an audit committee, including, evaluating financial reporting matters,
monitoring internal controls, compliance with internal financial polices, and engaging the registered
independent accounting 27




firm to audit the financial statements of Great China Holdings.  None of our
directors are independent under the definition set forth in Rule 4200(a)(15) of the NASDAQ Marketplace
Rules.  The Board of Directors has determined that Sun Dongqing is an audit committee financial expert
within the meaning of Item 407(d)(5) of Regulation S-K. Director Nominations The Board of Directors
has not made any changes to the procedures by which security holders may recommend nominees
to our Board of Directors. Code of Ethics Great China Holdings has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief
Financial Officer, a copy of which will be provided to any person, free of charge, upon request.  A
request for a copy of the Code of Ethics should be in writing and sent to Ms. Lang Lang, Great China
International Holdings, Inc., C Site 25-26F President Building, No. 69 Heping North Street, Heping
District, Shenyang 110003, The Peoples Republic of China. Compliance with Section
16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors,
and persons who beneficially own more than 10% of Great China Holdings common stock, to file initial
reports of ownership and reports of changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% beneficial owners are required by Securities and
Exchange Commission regulations to furnish Great China Holdings with copies of all Section 16(a) forms
they file. Based solely on Great China Holdings review of copies of such reports and representations
from Great China Holdings executive officers and directors, and greater than ten-percent beneficial
owners, Great China Holdings believes that its executive officers and directors complied with all
Section 16(a) filing requirements during the fiscal year ended December 31, 2008. ITEM 11.      EXECUTIVE
COMPENSATION Compensation Discussion
and Analysis Our Board of Directors makes all evaluations and decisions regarding executive and board compensation.
To date Great China Holdings has not established any policies, goals, or other processes for setting
compensation for its executive officers and directors because of pre-existing employment and
compensation arrangements that Great China Holdings has not chosen to revisit or modify.  Historically
Great China Holdings has negotiated employment arrangements with executive officers on an individual
basis.  We do not have an employment agreement with our Chairman, his compensation being determined and
approved by our Board of Directors from time to time.  We have not established any long-term benefit or
stock plans for our officers, directors or employees.  In the past, options to purchase common stock of
the Company have been granted to executive officers on an individually negotiated basis.  If the Board
of Directors considers later in 2009 the development of a more comprehensive approach to compensation,
it may consider adopting long-term benefit and stock plans for executive officers. Summary Compensation
Table Name and Principal Position
     Year
     Salary($)
     OptionAwards($)
     All OtherCompensation($)
     Total($)Jiang Peng (1)
     2008
     87,823
     --
     --
     87,823Chairman of the BoardFrank Jiang (1)
     2008
     122,166
     --
     --
     122,166President and CEO
     2007
     111,111
     --
     --
     111,1112006
     12,000
     --
     --
     12,000Sun Dongqing, CFO(2)
     2008
     9,481
     --
     --
     9,481 28




Name and Principal Position
     Year
     Salary($)
     OptionAwards($)
     All OtherCompensation($)
     Total($)Wang Li Rong, CFO(2)
     2008
     12,386
     --
     --
     12,3862007
     16,049
     --
     --
     16,0492006
     --
     --
     --
     -- (1)     The dollar
values shown reflect the compensation cost of the awards, before reflecting forfeitures,
over the requisite service period, as described in SFAS 123R.  The assumptions we used in
valuing these awards are described in Note 13 to our Consolidated Financial Statements
included in this Form 10-K. (2)     Wang Li Rong resigned as a director and as our Chief Financial Officer in May 2008.  At the same time,
Sun Dongqing was appointed as a director and as our Chief Financial Officer. Discussion of Summary
Compensation Table For his service as
Chairman of the Board, Mr. Jiang is paid a monthly salary of 50,000 RMB (approximately
US$7,200). We have entered into a
standard form employment agreement with Sun Dongqing, which provides for an initial term
of two years and pursuant to which the Company agreed to pay her a base salary of 5,000
RMB (approximately US$720) per month. Grants of Plan Based
Awards There were no grants
of plan-based awards to our named executive officers during the year ended December 31,
2008. Outstanding Equity
Awards There are no
outstanding equity awards held by our named executive officers at December 31, 2008. Option Exercises and
Stock Vested None of the named
executive officers exercised any options in 2008. Pension Benefits Great China
International does not maintain any plan providing for the payment of benefits at,
following, or in connection with retirement. Nonqualified Defined
Contribution and Other Nonqualified Deferred Compensation Great China
International does not maintain any nonqualified defined contribution or other
nonqualified deferred compensation plans. Potential Payments upon
Change in Control Great China
International does not have any severance or other payment arrangements that are
triggered by a change in control. Director Compensation
Table Mr. Wang Jianguo as a
non-employee director received a monthly director fee of $833.  He was a director
throughout 2008, but resigned his position as director on March 1, 2009 for personal
reasons.  Raymond Reed Baker became a director in March 2008.  In the course of his
service as a director, Mr. Baker assists Great China Holdings with financing and
budgeting issues, along with matters that arise in the course of Great China Holdings business
operations.  We agreed to pay to Mr. Baker a monthly fee of RMB 10,000 (approximately US
$1,408). 29




The Board of Directors
has authorized that each non-employee director serving on January 31 of each year,
beginning in 2007, receive an option to purchase 10,000 shares of Great China
International common stock exercisable over a term of two years with an exercise price
equal to 90% of the average of the closing bid prices for Great China International
common stock over the 10 trading days prior to the date the options are issued. The following table
summarizes the compensation paid to our directors who are not executive officers for the
year ended December 31, 2008. Name
     Fees Earned orPaid in Cash ($)
     OptionAwards($) (1)
     All OtherCompensation($)
     Total($)Duan Jing Shi (2)
     14,405
     --
     --
     14,405Chen Jin Rong (3)
     1,767
     --
     --
     1,767Wang Jian Guo
     9,640
     20,524
     --
     30,164Raymond Reed Baker (4)
     13,680
     --
     --
     13,680  (1)
     Pursuant to the terms of his employment agreement, the Company granted 10,000 two-year options on
January 31, 2007 to Wang Jianguo at an exercise price of $4.65 per share on January 31, 2007 and 10,000
two-year options on January 31, 2008 at an exercise price of  $0.65 per share. The dollar value shown
reflects the compensation cost of the awards, before reflecting forfeitures, over the requisite service
period, as described in SFAS 123R.  The assumptions we used in valuing these awards are described in
Note 13 to our Consolidated Financial Statements included in this Form 10-K.  Wang Jianguo was serving
as a director as of December 31, 2008, but resigned his position as a director on March 1, 2009.  None
of the options granted in January 2007 were exercised and they expired on January 31, 2009.  At the time
of Wang Jianguos resignation, his remaining options were cancelled.(2)
     Duan Jing Shi does not receive monthly director fees.  He is employed full-time in administrative
          capacities by subsidiaries of Great China International, and the amount shown in the table is the
          salary paid to him during 2007.(3)
     Chen Jinrong resigned as a director on April 2, 2008 due to personal reasons, resulting in cancellation
          of her options.(4)
     Raymond Reed Baker receives a monthly fee of RMB 10,000 (approximately US$1,408). ITEM 12.      SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth as of March 31, 2009, the number and percentage of the outstanding shares
of common stock which, according to the information supplied to Great China International, were
beneficially owned by (i) each person who is currently a director, (ii) each executive officer,
(iii) all current directors and executive officers as a group, and (iv) each person who, to our
knowledge, is the beneficial owner of more than 5% of the outstanding common stock.  The address of each
person listed is C Site 25-26F President Building, No. 69 Heping North Street, Heping District, Shenyang
110003, Peoples Republic of China. Name and Address
     Number ofShares
     Percent ofClassFrank JiangC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     8,245,447(1)
     70.1  30




Name and Address
     Number ofShares
     Percent ofClassJiang PengC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     1,085,745(2)
     9.23Duan Jing ShiC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     91,024
     0.77Sun DongqingC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     -0-
     -0-Raymond Reed BakerC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     -0-
     -0-All executive officers and directors as a group (4 persons)
     9,422,216
     80.1  (1)   Includes 67,000
shares held indirectly by Mr. Jiangs wife. (2)  Includes 30,000 shares held indirectly by Jiang Pengs wife. ITEM 13.      CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Director Independence None of our Directors are independent under the definition set forth in Rule 4200(a)(15) of the NASDAQ
Marketplace Rules. Great China
International has not adopted any policy regarding review of transactions with related
persons beyond what is provided for in the Nevada Revised Statutes pertaining to
corporations.  The statutes provide that no contract or transaction between Great China
International and one or more of its directors or officers, or between Great China
International and any other corporation, firm, association, or other organization in
which one or more of its directors or officers are directors or officers or are
financially interested, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of the Board
of Directors or committee that authorizes or approves the contract or transaction, or
because their votes are counted for such purpose, provided that: 
     the material facts as to his, her, or their relationship or interest and as to the contract or
            transaction are disclosed or are known to the Board of Directors or the committee and noted in the
            minutes, and the Board of Directors or committee, in good faith, authorizes the contract or
            transaction in good faith by the affirmative vote of a majority of disinterested directors, even
            though the disinterested directors are less than a quorum;
     the material facts as to his, her, or their relationship or interest and as to the contract or
            transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract
            or transaction is specifically approved or ratified in good faith by the majority of shares entitled
            to vote, counting the votes of the common or interested directors or officers; or
     the contract or transaction is fair as to Great China International as of the time it is authorized or
            approved. 31




ITEM 14.      PRINCIPAL
ACCOUNTANT FEES AND SERVICES Great China
Holdings paid or accrued the following fees in each of the prior two fiscal years to
its principal accountant: Year endedDecember 31,2008
        
     Year endedDecember 3120071. Audit fees
     
     
     US$
        54,365
        

     US$
        113,5602. Audit-related fees
     6,538
        

     19,7333. Tax fees
     --
        

     6,5604. All other fees
        
        
     
        
        

     
        --Totals.......................................................................................................
        ...
        ...
     US$
        60,903
        

     US$
        139,853 Great China
Holdings has no formal audit committee. However, as defined in Sarbanes-Oxley Act of
2002, the entire Board of Directors is Great China Holdingss de facto audit
committee. In discharging its
oversight responsibility as to the audit process, the Board obtained from the independent
auditors a formal written statement describing all relationships between the auditors and
Great China Holdings that might bear on the auditors independence as required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees.  The Board discussed with the auditors any relationships that may impact
their objectivity and independence, including fees for non-audit services, and satisfied
itself as to the auditors independence.  The Board also discussed with management, the
internal auditors, if any, and Great China Holdingss independent auditors the
quality and adequacy of Great China Holdingss internal controls. The Board reviewed
with the independent auditors their management letter on internal controls, if one was
issued by Great China Holdingss auditors. The Board discussed
and reviewed with the independent auditors all matters required to be discussed by
auditing standards generally accepted in the United States of America, including those
described in Statement on Auditing Standards No. 61, as amended, Communication with
Audit Committees. The Board reviewed the
audited consolidated financial statements of Great China Holdings as of and for the
years ended December 31, 2008, 2007 and 2006, with management and the independent
auditors.  Management has the sole ultimate responsibility for the preparation of Great
China Holdingss financial statements and the independent auditors have the
responsibility for their examination of those statements. Based on the
above-mentioned review and discussions with the independent auditors and management, the
Board of Directors approved Great China Holdingss audited financial statements and
recommended that they be included in its Annual Report on Form 10-K for the year ended
December 31, 2008, for filing with the Securities and Exchange Commission. 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 Document3.1

     Articles of Incorporation (1)3.2

     Articles of Amendment effective September 15, 2005 (2)3.3

     Bylaws (1) 32




Exhibit No.

     Title of Document10.1
             
     Form of Executive Employment Agreement with Shenyang Maryland International Industrial Co. Ltd. (2)10.2
     
     Development Agreement dated April 26, 2004 between The Peoples Government of Heping District, Shenyang,
China and Shenyang Maryland International Industrial Co., Ltd. (2)10.3
     
     Form of Regulation S Subscription Agreement  February 2006 (2)10.4
     
     Form of Registration Rights Agreement  February 2006 (2)10.5
     
     Loan Agreement dated July 3, 2006 between Shenyang City Commercial Bank and Shenyang Jitian Property
Co., Ltd.(5)10.6
     
     Loan Guarantee Agreement dated July 3, 2006 between Shenyang City Commercial Bank, Shenyang Maryland
International Industry Co., Ltd., and Shenyang Jitian Property Co. (5)10.7
     
     Pledge (Mortgage) Agreement dated July 3, 2006 between Shenyang City Commercial Bank and Shenyang Jitian
Property Co., Ltd. (5)10.8
     
     Sales and Purchase Contract dated December 28, 2005 between Silverstrand International Holdings Limited and
             I.R.E. Corporation Limited (Ref. No: HT-2005-12004) (2)10.9
     
     Creditors Right Transfer Agreement dated effective May 18, 2006 between Hainan Hexing Industry Co.,
Ltd. and Shenyang Jitian Property Co., Ltd. (5)10.10
     
     Loan Guarantee Agreement dated for reference June 28, 2006 among Shenyang City Commercial Bank, Shenyang
Maryland International Industry Co., Ltd., and Shenyang Jitian Property Co., Ltd. (6)10.11
     
     Pledge (Mortgage) Agreement dated for reference June 28, 2006 among Shenyang City Commercial Bank,
Shenyang Maryland International Industry Co., Ltd., and Shenyang Jitian Property Co., Ltd. (6)10.12
     
     Form of Employment Agreement between Great China International Holdings, Inc. and
Danny Sui Keung Chau (7)10.13
     
     Equity Transfer Agreement dated November 20, 2006 between Silverstrand International Holdings Company
Limited and each of Beijing Capital Land Limited and Reco Ziyang Pte Limited(8)10.14
     
     Land Consolidation and Development Agreement between Shenyang Jitian Property Company Limited and
Shengyang Maryland International Industry Company Limited (8)10.15
     
     Letter of Intent dated May 31, 2007 among Silverstrand International Holdings Limited, Gentle Knight
Limited and Loyal Best Property Development Limited (10)10.16
     
     Loan Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and
Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.17
     
     Loan Pledge Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and
Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.18
     
     Compensation Agreement dated June 24, 2007 between Shenyang Heping District Investment Promotion Bureau
and Shenyang Maryland International Industry Co., Ltd. (12)10.19
     
     Loan Agreement dated September 28, 2007 with Shenyang Huahai International Investment Co., Ltd. (13) 33




Exhibit No.
        
     Title of Document10.20
     
     Letter of Intent dated October 30, 2007 between Silverstrand International Holdings Limited and
Celebrities Realestate Development Group Co., Ltd. (14)10.21
     
     Letter of Guarantee given November 3, 2007 by Shenyang Maryland International Industry Co., Ltd. to
Celebrities Realestate Development Group Co., Ltd. (14)10.22
     
     Investment Medium Contract dated 25 October 2007 between Silverstrand International Holdings Limited and
Hong Kong Top Might Investments Co., Ltd. (14)10.23
     
     Definitive Agreement dated November 20, 2007 by an among Silverstrand International Holdings Limited,
Zhang Yu and Shenyang Maryland International Industry Co., Ltd. (15)10.24
     
     Letter of Guarantee given November 20, 2007 by Celebrities Realestate Development Group Co., Ltd. to
Silverstrand International Holdings Limited (15)10.25
     
     Joint Development Agreement executed on November 20, 2007 and dated for reference November 16, 2007
between Shenyang Xinchao Property Co., Ltd. and Beijing Century Junhui Investment Ltd. (15)10.26
     
     Employment Agreement executed on May 22, 2008 between Great China International Holdings, Inc. and
Dongqing Sun (16)10.26
        
     Land Consolidation and Development Agreement between Shenyang Jitian Property Company Limited and Shengyang
             Maryland International Industry Company Limited (8)10.27
        
     Letter of Intent dated May 31, 2007 among Silverstrand International Holdings Limited, Gentle Knight Limited and
             Loyal Best Property Development Limited (10)10.28
        
     Loan Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and Shenyang City
             Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.29
        
     Loan Pledge Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and
             Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.30
        
     Compensation Agreement dated June 24, 2007 between Shenyang Heping District Investment Promotion Bureau and
             Shenyang Maryland International Industry Co., Ltd. (12)10.31
        
     Loan Agreement dated September 28, 2007 with Shenyang Huahai International Investment Co., Ltd. (13)10.32
        
     Letter of Intent dated October 30, 2007 between Silverstrand International Holdings Limited and Celebrities
             Realestate Development Group Co., Ltd. (14)10.33
        
     Letter of Guarantee given November 3, 2007 by Shenyang Maryland International Industry Co., Ltd. to Celebrities
             Realestate Development Group Co., Ltd. (14)10.34
        
     Investment Medium Contract dated 25 October 2007 between Silverstrand International Holdings Limited and Hong
             Kong Top Might Investments Co., Ltd. (14)10.35
        
     Definitive Agreement dated November 20, 2007 by an among Silverstrand International Holdings Limited, Zhang Yu
             and Shenyang Maryland International Industry Co., Ltd. (15)10.36
        
     Letter of Guarantee given November 20, 2007 by Celebrities Realestate Development Group Co., Ltd. to
             Silverstrand International Holdings Limited (15)10.37
        
     Joint Development Agreement executed on November 20, 2007 and dated for reference November 16, 2007 between
             Shenyang Xinchao Property Co., Ltd. and Beijing Century Junhui Investment Ltd. (15) 34




Exhibit No.
        
     Title of Document14.1
        
     Code of Ethics (2)21.1
        
     List of Subsidiaries (2)31.1
        
     Certification of Chief Executive Officer31.2
        
     Certification of Chief Financial Officer32.1
        
     Certifications of Chief Executive Officer and Chief Financial Officer _____________________________________________ (1)
     These exhibits are incorporated herein by this reference to our registration statement on Form 10-SB,
      filed with the Securities and Exchange Commission on August 21, 1997.(2)
     These exhibits are incorporated herein by this reference to our Annual Report on Form 10-KSB for the year
      ended December 31, 2005, filed with the Securities and Exchange Commission on April 17, 2006.(3)
     These exhibits are incorporated herein by this reference to our Annual Report on Form 10-KSB for the year
      ended December 31, 2004, filed with the Securities and Exchange Commission on March 25, 2005.(4)
     These exhibits are incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on March 6, 2006.(5)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on July 11, 2006.(6)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on July 26, 2006.(7)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on October 10, 2006.(8)
     These exhibits are incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on December 11, 2006.(9)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K/A filed
      with the Securities and Exchange Commission on March 28, 2006.(10)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on June 6, 2007. (11)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on June 25, 2007.(12)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on July 25, 2007.(13)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on October 1, 2007.(14)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on November 9, 2007.(15)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on November 27, 2007.(15)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on May 29, 2008. 35




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: March 31, 2009
        
     By:
     
     /s/ Jiang PengJiang Peng, Chairman of the Board(Principal Executive Officer)   Date: March 31, 2009
     
     By:
     
     /s/ Sun DongqingSun Donqing, Chief Financial Officer(Principal Financial and Accounting Officer) In accordance with the
Exchange Act, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. Date: March 31, 2009
     
     By:
     
     /s/ Jiang PengJiang Peng, Director    Date: March 31, 2009
     
     By:
     
     /s/ Duan Jing ShiDuan Jing Shi, Director    Date: March 31, 2009
     
     By:
     
     /s/ Sun DongqingSun Dongqing, Director    Date: March 31, 2009
     
     By:
     
     /s/ Raymond Reed BakerRaymond Reed Baker, Director 36




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
     (642,577
        )

     (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