U. S.
Securities and Exchange Commission


Washington,
D. C. 20549





FORM
10-Q







[X]
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended December 31, 2008





[  ]
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from _____ to _____





Commission
File No. 0-52496





CHINA
JIANYE FUEL, INC.


(Name of
Small Business Issuer in its Charter)





Deleware
            20-8296010


(State
      or Other Jurisdiction of incorporation or organization)
            (IRS Employer I.D. No.)








100 Wall Street, 15thFloor, New
York, NY 10005


(Address
of Principal Executive Offices)





Issuer's
Telephone Number: (212) 232-0120








Indicate  by
check mark  whether the  Registrant  (1) has filed
all reports required to be filed by Sections 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. YesX                  No






Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One)
  Large
accelerated filer __     Accelerated filer
____      Non-accelerated filer 
____     Small reporting company  _X_





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)  Yes  ___   No 
X_





APPLICABLE
ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:


February 12, 2009


Common
Voting Stock:  29,976,923





TABLE OF
    CONTENTS
                PagePART I. FINANCIAL
      INFORMATION
 
 Item 1. Financial Statements
                3Consolidated Balance
      Sheets as of December 31, 2008 (Unaudited) and June
      30, 2008 (Audited)
                3Consolidated
      Statements of Operations and comprehensive income for
      the three and six months ended December 31, 2008 and 2007
      (Unaudited)
                4Consolidated
      Statements of Cash Flows for the six months ended December 31, 2008
      and 2007 (Unaudited)
                5Notes to
      Condensed Consolidated Financial Statements
                6-10Item 2. Management's
      Discussion and Analysis of Financial Condition and Results of
      Operation
                11-17Item 3. Quantitative
      and Qualitative Disclosures About Market Risks
                17Item
      4. Evaluation of Controls and Procedures
                17PART
      II. OTHER INFORMATIONItem 1. Legal
      Proceedings
                18Item 1A. Risk Factors
                18Item 2. Unregistered Sales of Equity
      Securities and Use of Proceeds
                18Item 3. Defaults
      Upon Senior Securities
                18Item 4. Submission
      of Matters to a Vote of Security Holders
                18
 Item 5. Other
      Information
                18Item 6. Exhibits
                18
 
 Signatures                                                                                                                                                                                                                                                                                                                                                                                                    19
   2


PART
I.  FINANCIAL INFORMATION
 ITEM
1. FINANCIAL STATEMENTS.
 
 CHINA
JIANYE FUEL, INC
 
 CONSOLIDATED
BALANCE SHEET
 
 ASSETS
 
 
 December 31,
                              
                              
                              June 30,2008
                              
                              
                              2008(Unaudited)ASSETSCURRENT
      ASSETSCash and cash
      equivalents
                              
                              $
                              32,838
                              
                              
                              $
                              129,635Accounts receivable, net of
      allowance for doubtful accounts of
                              
                              
                              5,416,765
                              
                              
                              
                              5,793,568$29,273 and $29,113
      at December 31, 2008 and June 30, 2008, respectivelyInventory
                              
                              
                              714,748
                              
                              
                              
                              662,571Advances to
    suppliers
                              
                              
                              1,012,227
                              
                              
                              
                              1,031,406Prepaid expenses
                              
                              
                              286
                              
                              
                              
                              203,793Other Current
    assets
                              
                              
                              305,220
                              
                              
                              
                              147,481Total Current
    Assets
                              
                              
                              7,482,084
                              
                              
                              
                              7,968,454PROPERTY
      AND EQUIPMENT, NET
                              
                              
                              2,735,282
                              
                              
                              
                              2,833,086OTHER
      ASSETSIntangibles, net
                              
                              
                              50,731
                              
                              
                              
                              55,040Total Assets
                              
                              $
                              10,268,097
                              
                              
                              $
                              10,856,580LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
                              
                              $
                              782,181
                              
                              
                              $
                              1,215,896VAT taxes payable
                              
                              
                              457,891
                              
                              
                              
                              434,580Income taxes
    payable
                              
                              
                              529,679
                              
                              
                              
                              526,791Other current
      liabilities
                              
                              
                              953,637
                              
                              
                              
                              873,471Total Current
      Liabilities
                              
                              
                              2,723,388
                              
                              
                              
                              3,050,738Total Liabilities
                              
                              
                              2,723,388
                              
                              
                              
                              3,050,738STOCKHOLDERS’
      EQUITYCommon Stock, $0.001 par value,
      200,000,000 shares Authorized, 29,976,923
                              
                              
                              29,977
                              
                              
                              
                              29,977shares issued and
      outstandingAdditional paid-in
      capital
                              
                              
                              5,695,058
                              
                              
                              
                              5,695,058Retained Earnings
                              
                              
                              1,034,391
                              
                              
                              
                              1,343,116Accumulated other comprehensive
      income
                              
                              
                              785,283
                              
                              
                              
                              737,691Total Stockholders’
      Equity
                              
                              
                              7,544,709
                              
                              
                              
                              7,805,842Total Liabilities and
      Stockholders' Equity
                              
                              $
                              10,268,097
                              
                              
                              $
                              10,856,580
   3
 CHINA
JIANYE FUEL, INC
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 AND
COMPREHENSIVE INCOME (LOSS)
 
 (UNAUDITED)
 
 
 For the Three Months Ended
                            
                            
                            For the Six Months EndedDecember 31,
                            
                            
                            December 31,2008
                            
                            
                            2007
                            
                            
                            2008
                            
                            
                            2007SALES
                            
                            $
                            201,588
                            
                            
                            $
                            3,449,434
                            
                            
                            $
                            324,430
                            
                            
                            $
                            3,497,730COST
      OF GOODS SOLD
                            
                            
                            183,961
                            
                            
                            
                            1,316,038
                            
                            
                            
                            294,770
                            
                            
                            
                            1,373,581GROSS
      PROFIT
                            
                            
                            17,627
                            
                            
                            
                            2,133,396
                            
                            
                            
                            29,660
                            
                            
                            
                            2,124,149OPERATING
      EXPENSESSelling, general and
      administrative
                            
                            
                            144,190
                            
                            
                            
                            86,725
                            
                            
                            
                            338,055
                            
                            
                            
                            89,189INCOME
      (LOSS) FROM OPERATIONS
                            
                            
                            (126,563
                            )
                            
                            
                            2,046,671
                            
                            
                            
                            (308,395
                            )
                            
                            
                            2,034,960OTHER
      INCOME (EXPENSES)Other expense
                            
                            
                            (96
                            )
                            
                            
                            -
                            
                            
                            
                            (330
                            )
                            
                            
                            -INCOME
      (LOSS) BEFORE PROVISION FOR INCOME TAX
                            
                            
                            (126,659
                            )
                            
                            
                            2,046,671
                            
                            
                            
                            (308,725
                            )
                            
                            
                            2,034,960PROVISION
      FOR INCOME TAX
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -NET
      INCOME (LOSS)
                            
                            
                            (126,659
                            )
                            
                            
                            2,046,671
                            
                            
                            
                            (308,725
                            )
                            
                            
                            2,034,960OTHER
      COMPREHENSIVE INCOMEForeign currency translation
      adjustment
                            
                            
                            23,407
                            
                            
                            
                            (161,873
                            )
                            
                            
                            47,592
                            
                            
                            
                            (68,177
                            )COMPREHENSIVE
      INCOME (LOSS)
                            
                            $
                            ( 103,252
                            )
                            
                            $
                            1,884,798
                            
                            
                            $
                            ( 261,133
                            )
                            
                            $
                            1,966,783BASIC
      EARNINGS PER SHARE
                            
                            $
                            (0.00
                            )
                            
                            $
                            0.02
                            
                            
                            $
                            (0.01
                            )
                            
                            $
                            0.04DILUTED
      EARNINGS PER SHARE
                            
                            $
                            (0.00
                            )
                            
                            $
                            0.02
                            
                            
                            $
                            (0.01
                            )
                            
                            $
                            0.04WEIGHTED
      AVERAGE SHARES OUTSTANDINGBASIC
                            
                            
                            29,976,923
                            
                            
                            
                            101,963,397
                            
                            
                            
                            29,976,923
                            
                            
                            
                            53,455,948DILUTED
                            
                            
                            29,976,923
                            
                            
                            
                            101,963,397
                            
                            
                            
                            29,976,923
                            
                            
                            
                            53,455,948
   4
 CHINA
JIANYE FUEL, INC
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 (UNAUDITED)
 
 
 
 For
      the Six Months EndedDecember 31,2008
                        
                        
                        2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
                        
                        $
                        ( 308,725
                        )
                        
                        $
                        2,034,960Adjustments
      to reconcile net income (loss) to net cashprovided by (used in) operating
      activities:Bad
      debt expense
                        
                        
                        -
                        
                        
                        
                        20,096Depreciation and amortization
                        
                        
                        154,867
                        
                        
                        
                        64,382Deferred
      production cost
                        
                        
                        -
                        
                        
                        
                        (12,544
                        )Changes in current assets and current liabilities:Accounts
      receivable
                        
                        
                        407,818
                        
                        
                        
                        (4,019,202
                        )Inventory
                        
                        
                        (48,454
                        )
                        
                        
                        (321,494
                        )Inter
      company and related party
                        
                        
                        -
                        
                        
                        
                        107,212Advances
      to suppliers
                        
                        
                        24,788
                        
                        
                        
                        1,840,340Prepaid
      expense
                        
                        
                        204,248
                        
                        
                        
                        -Other
      current assets
                        
                        
                        (156,641
                        )
                        
                        
                        (8,200
                        )Accounts
      payable and accrued expenses
                        
                        
                        (439,560
                        )
                        
                        
                        (66,193
                        )VAT
      taxes payable
                        
                        
                        20,890
                        
                        
                        
                        330,821Due
      to shareholders
                        
                        
                        -
                        
                        
                        
                        37,578Other
      current liabilities
                        
                        
                        75,253
                        
                        
                        
                        -Total Adjustments
                        
                        
                        243,209
                        
                        
                        
                        (2,027,204
                        )Net Cash Provided By (Used In)
      Operating Activities
                        
                        
                        (65,516
                        )
                        
                        
                        7,756CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
                        
                        
                        (31,811
                        )
                        
                        
                        (2,467
                        )Net Cash Used In Investing
      Activities
                        
                        
                        (31,811
                        )
                        
                        
                        (2,467
                        )EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
                        
                        
                        530
                        
                        
                        
                        162NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                        
                        
                        (96,797
                        )
                        
                        
                        5,451CASH
      AND CASH EQUIVALENTS – BEGINNING
                        
                        
                        129,635
                        
                        
                        
                        561CASH
      AND CASH EQUIVALENTS – ENDING
                        
                        $
                        32,838
                        
                        
                        $
                        6,012
 
 5
 CHINA
JIANYE FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007
 (UNAUDITED)
 NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
  China
Jianye Fuel Inc. was incorporated as Standard Commerce, Inc. (“Standard
Commerce”) in December 1994 in Nevada. On November 13, 2007, Standard Commerce
acquired the outstanding capital stock of American Jianye Ethanol Company, Inc.,
a Delaware corporation (“American Jianye”) and changed its name to China Jianye
Fuel Inc. For accounting purposes, the acquisition was treated as a
recapitalization of American Jianye. American Jianye is a holding company that
owns 100% of Zhao Dong Jianye Fuel Co., Ltd. (“Zhao Dong”), a corporation
organized under the laws of the People’s Republic of China. The accompanying
consolidated financial statements include the financial statements of China
Jianye Fuel Inc. and its subsidiaries (the “Company”). The Company’s primary
business is to manufacture and distribute ethanol and methanol as alternative
fuel for automobile use.
  NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  BASIS
OF PRESENTATION
  The
Company’s Consolidated Financial Statements include the accounts of its direct
wholly-owned subsidiaries and its indirect proportionate share of subsidiaries
owned by the wholly-owned subsidiaries. All intercompany balances and
transactions are eliminated in consolidation. The accompanying unaudited
financial statements have been prepared in accordance with GAAP for interim
financial information and with the instructions to Form 10-Q and Regulation S-X
applicable to small business issuers. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
Interim results are not necessarily indicative of results for a full year. In
the opinion of management, all adjustments considered necessary for a fair
presentation of the financial position and the results of operations and cash
flows for the interim periods have been included.
  INTERIM
FINANCIAL STATEMENTS
  These
interim financial statements should be read in conjunction with the audited
financial statements for the year ended June 30, 2008, as not all disclosures
required by generally accepted accounting principles for annual financial
statements are presented. The interim financial statements follow the same
accounting policies and methods of computations as the audited financial
statements for the year ended June 30, 2008.
  NOTE
3 – EARNINGS (LOSS) PER SHARE
  The
Company presents earnings per share on a basic and diluted basis. Basic earnings
per share have been computed by dividing net earnings by the weighted average
number of common shares outstanding. Diluted earnings per share has been
computed by dividing net earnings plus convertible preferred dividends and
interest expense (after-tax) on convertible debt by the weighted average number
of common shares outstanding including the dilutive effect of equity securities.
The weighted average number of common shares calculated for Diluted EPS excludes
the potential common stock that would be exercised under the options and
warrants granted to officers because the inclusion of the potential shares from
these options and warrants would cause an anti-dilutive effect by increasing the
net earnings per share.
  6
 CHINA
JIANYE FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 DECEMBER
31, 2008 AND 2007
 (UNAUDITED)
  NOTE
3 – EARNINGS (LOSS) PER SHARE (CONTINUED)
 
 Three
      Months Ended December 31,2008
                      
                      
                      2007Net
      income (loss)
                      
                      $
                      ( 126,659
                      )
                      
                      $
                      2,046,671Weighted
      average common shares
                      
                      
                      29,976,923
                      
                      
                      
                      101,963,397Effect
      of diluted securities:
                      
                      
                      -
                      
                      
                      
                      -Weighted
      average common shares
                      
                      
                      29,976,923
                      
                      
                      
                      101,963,397Basic
      net income per share
                      
                      $
                      ( 0.00
                      )
                      
                      $
                      0.02Diluted
      net income per share
                      
                      $
                      ( 0.00
                      )
                      
                      $
                      0.02
 
 Six
      Months Ended December 31,2008
                      
                      
                      2007Net
      income (loss)
                      
                      $
                      ( 308,725
                      )
                      
                      $
                      2,034,960Weighted
      average common shares
                      
                      
                      29,976,923
                      
                      
                      
                      53,455,948Effect
      of diluted securities:
                      
                      
                      -
                      
                      
                      
                      -Weighted
      average common shares
                      
                      
                      29,976,923
                      
                      
                      
                      53,455,948Basic
      net income per share
                      
                      $
                      ( 0.01
                      )
                      
                      $
                      0.04Diluted
      net income per share
                      
                      $
                      ( 0.01
                      )
                      
                      $
                      0.04
 7
 CHINA
JIANYE FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 DECEMBER
31, 2008 AND 2007
 (UNAUDITED)
 NOTE
4 – INVENTORY
 
 Inventory
at December 31, 2008 and June 30, 2008 consists of the following:
  December 31, 2008
                          
                          
                          June 30, 2008Raw
      materials
                          
                          $
                          571,932
                          
                          
                          $
                          594,495Packaging
      supplies
                          
                          
                          34,395
                          
                          
                          
                          32,058Finished
      goods
                          
                          
                          108,421
                          
                          
                          
                          36,018Total
                          
                          $
                          714,748
                          
                          
                          $
                          662,571
 
 NOTE
5 – ADVANCES TO SUPPLIERS
 
 As
a common business practice in China, the Company is required to make advance
payments to certain suppliers for raw material procurement and construction.
Such advances are interest-free and unsecured.
  8
 CHINA
JIANYE FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 DECEMBER
31, 2008 AND 2007
 (UNAUDITED)
 NOTE
6– PROPERTY AND EQUIPMENT
 
 Property
and equipment at December 31, 2008 and June 30, 2008 consists of the
following:
  December 31, 2008
                        
                        
                        June 30, 2008Property
      and equipment
                        
                        $
                        3,442,190
                        
                        
                        $
                        3,386,419Less:
      accumulated depreciation
                        
                        
                        706,908
                        
                        
                        
                        553,333Total
                        
                        $
                        2,735,282
                        
                        
                        $
                        2,833,086
 Depreciation
expense for the three months ended December 31, 2008 and 2007 was $66,412 and
$38,473, and
for the six months ended December 31, 2008 and 2007 was $150,541 and $63,332,
respectively.
 
 NOTE
7– INTANGIBLE ASSETS
 
 Intangible
assets at December 31, 2008 and June 30, 2008 consisted of the
following:
 
 December 31, 2008
                        
                        
                        June 30, 2008Rights
      to use land
                        
                        $
                        73,790
                        
                        
                        $
                        73,387Less:
      accumulated amortization
                        
                        
                        23,059
                        
                        
                        
                        18,347Total
                        
                        $
                        50,731
                        
                        
                        $
                        55,040
 Amortization
expense for the three months ended December 31, 2008 and 2007 amounted to $2,025
and $529, and for the six months ended December 31, 2008 and 2007 amounted to
$4,326 and $1,050,
respectively.
  9
 CHINA
JIANYE FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 DECEMBER
31, 2008 AND 2007
 (UNAUDITED)
 NOTE
8 – OTHER PAYABLE
 
 Other
payable represents a short-term loan from a third party individual for
purchasing raw materials. It is unsecured and non-interest bearing.
 
 NOTE
9 – EMPLOYEE WELFARE PLAN
 
 The
Company has established an employee welfare plan in accordance with Chinese law
and regulations. The Company makes annual contributions of 14% of all employees'
salaries to the employee welfare plan.
 
 NOTE
10 – RISK FACTORS
 
 For
the six months ended December 31, 2008, the Company had four vendors that
provided approximately 76% of the Company’s raw materials. Total purchases from
these vendors amounted to $217,469. For the six months ended December 31, 2007,
the Company had one major vendor that provided approximately 95% of the
Company’s raw materials. Total purchases from this vendor were
$1,806,627.
  For
the six months ended December 31, 2008, one major customer accounted for
approximately 57% of the Company’s net sales. Total sales made to this customer
amounted to $185,583. For the six months ended December 31, 2007, one major
customer accounted for approximately 99% of the net sales. Total sales made to
this customer were $3,425,385.
  NOTE
10 – RISK FACTORS (continued)
 
 The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
 
 NOTE
11 - CONCENTRATIONS OF CREDIT RISK
 
 Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with financial institutions. Management believes
that the financial institutions that hold the Company’s cash and cash
equivalents are financially sound and minimal credit risk exists with respect to
these investments.
 
 NOTE
12 - SUBSEQUENT EVENTS
  None.
  10
  ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
OPERATIONS  Forward
Looking Statements
  This
Quarterly Report on Form 10-Q contains “forward-looking” statements, as such
term is defined in the Private Securities Litigation Reform Act of
1995.  These forward-looking statements consist of information
relating to the Company that is based on the beliefs of the Company’s management
as well as assumptions made by and information currently available to the
Company’s management. When used in this report, the words “anticipate,”
“believe,” “estimate,” “expect” and “intend” and words or phrases of similar
import, as they relate to the Company or Company management, are intended to
identify forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitations, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein and in other
filings made by the Company with the Securities and Exchange Commission. Based
upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.
  Results
of Operations
  Zhao
Dong Jianye Fuel commenced operations in 2004. Its activities, however,
have been essentially developmental. Its research and development efforts
have led to the development of a series of fuel products and the award of
several patents. With funds provided by its Chairman, Jianye Wang, it has
developed a state-of-the-art refinery for the production of methanol-based
fuels. And it has organized a staff of engineers, managers and sales
professionals that will be able to support its full-scale entry into the fuel
market.
  Until
the year ended June 30, 2008, the Company’s revenue-producing activities had
been incidental to the Company’s research and development activities. Prior
to September 30, 2007, Zhao Dong Jianye Fuel sold modest amounts of fuel to a
variety of customers, primarily to (a) develop the channels through which it
will market when it commences full scale production and (b) introduce new
products to those markets for testing and publicity.  However, in the
most recent fiscal year, which ended on June 30, 2008, Zhao Dong Jianye Fuel
generated $6,917,508 in revenue, primarily during the first half of fiscal year
2008. During the quarter ended December 31, 2007, Zhao Dong Jianye Fuel recorded
revenue of $3,449,434, primarily from  a sale and delivery of fuel
additives to Zhanjiang Runtong Trading Corp. In the quarter ended March 31,
2008, the Company realized the first significant revenue from the sale of fuel,
as 4,200 tons of methanol-based fuel was sold to CIPC Heilongjiang HuBei, a fuel
distributor, for $3,249,795.  These two sales represented
approximately 97% of our revenues for the year ended June 30, 2008. Since
then, however, our revenues have returned to prior levels.  In
the  quarter  ended June 30, 2008, for example, our sales
totaled only $212,335, primarily consisting of incidental sales of sample
batches.
  11
  During
the three and six month periods ended December 31, 2008, our sales continue to
be incidental to research and development.  These sales again
represent our distribution of sample batches to potential customers, and reflect
the current volatile market, and do not represent the type of marketing that
will accompany full production.  This situation has occurred despite
the fact that during the summer of 2008 we entered into supply contracts with
two contractors, Zhuhai Zhonghuan Oil Ltd and Hanzhong Xilan Liquefied
Petroleum, which we expected to be the basis for significant revenue
growth.  The primary reason for our lack of sales has been the
dramatic decrease in world oil prices.  The low cost of
oil  has limited the demand for alcohol based fuel. Prices for crude
oil have fallen recently due to the global recession, which reduces demand for
oil.  We are unable to predict when this trend will reverse
itself.  Until oil prices increase, demand for our alcohol-based
products is likely to be limited.
  A
second reason for our poor  operating results for the quarter and six
months ended December 31, 2008 was the fact that  the Chinese
Administrative Government is planning to initiate  a fuel tax reform
in the near future.     Advance information indicates
that the tax on oil and gas may be reduced by up to 80%.  At the same
time, the Government’s tax policy for alcohol based fuel, including our
ethanol-based fuel and other ancillary fuel additives, has not been
announced.  This uncertainty regarding the comparative pricing of
petroleum-based fuel and alcohol-based fuel has increased our difficulty in
developing a market for our alcohol-based products.
   Our
gross profit margin during both the quarter and the six months ended December
31, 2008 was approximately 9%. This figure is not meaningful, however,
since we have not commenced full scale production. When the market price of the
raw materials for methanol-based fuels (i.e. methanol and petroleum
distillate) is substantially lower than the market price for gasoline, and we
start our full production and sales of our major fuel products, we expect our
gross profit margin to be significantly higher than that which is customary for
refiners of petroleum-based fuels. At current market prices, we believe
that we will be able to produce methanol-based fuel for $27 to $40 per ton less
than the prevailing cost of refining gasoline with comparable octane
levels. The price advantage can only be achieved, however, when we produce
our fuels in quantities that make efficient use of our refinery and ship it in
quantities that enable us to obtain wholesale shipping charges. Those
conditions will be achieved only after we obtain large volume customers and we
obtain the funds necessary to bring our operations up to the full production
level.
  Our
selling, general and administrative expenses increased significantly from the
first six months  of fiscal year 2008 ($89,189) to the first six
months  of fiscal year 2009 ($338,055). The main reasons for the
increase were (a) increased expenses of operating our facility, as we prepare
for full production, and (b) the professional and other costs attendant to
functioning as a U.S. public company, a situation initiated in November
2007. As we commence full-scale production, our operating expenses will
continue to increase, primarily due to (a) increased staff required for
production and marketing, (b) increased selling expense required to develop and
expanded market for our products, and (c) increased depreciation
expense. Currently, we only depreciate the portion of our facility that has
been put into active use.  The denominator for our depreciation
calculation will increase when our entire facility is engaged in
production.
  Due
to our lack of significant revenues, the Company’s revenue less expenses
produced a net loss of $126,659 in the quarter ended December 31, 2008, compared
to our net income of $2,046,671 in the three months ended on December 31,
2007.   Likewise our net loss of $308,725 during the six months
ended December 31, 2008 contrasted poorly with the $2,034,960 in net income that
we realized during the six months ended December 31, 2007.
  12
  Our
business operates primarily in Chinese RMB (“RMB”), but we report our results in
our SEC filings in U.S. Dollars.  The conversion of our accounts from
RMB to Dollars results in translation adjustments.  While our net
income is added to the retained earnings on our balance sheet; the translation
adjustments are added to a line item on our balance sheet labeled “accumulated
other comprehensive income,” since it is more reflective of changes in the
relative values of U.S. and Chinese currencies than of the success of our
business.  During the six months ended on December 31, 2008, the
effect of converting our financial results to Dollars was to add $47,592 to our
accumulated other comprehensive income.
  Liquidity
and Capital Resources
  Our
operations to date have been funded primarily by capital contributions and
short-term loans from our Chairman, Jianye Wang, which have been adequate to
bring us to the point where we are prepared to commence full scale
production.
  Our
working capital at December 31, 2008 totaled $4,758,696. Included in our working
capital, however, was $5,416,765 in accounts receivable, almost all of which are
owed by the two customers who were the source of 97% of our 2008
revenue. We are not certain when those receivables will be paid. Also
included in working capital was an advance payment to the raw material suppliers
in the amount of $1,012,227. The recipient of this advance payment will be
our primary source of petroleum distillate, and we made this payment in accord
with Chinese custom, to enable the refinery to expand its production capacity in
anticipation of doing a large amount of business with us. We have,
therefore, only a small amount of liquid assets.
  Despite
the net loss of $308,725 that we incurred during the six months ended December
31, 2008, our operations in that period reduced our cash position by only
$65,516. This disparity occurred primarily because the amount that we
applied to reduce our accounts payable and accrued expenses, $439,560, was
approximately equal to the amount that we collected on our accounts receivable,
$407,818.  This offset enabled us to preserve the goodwill of our
vendors.  During the same period we realized $204,248 in value from
prepaid expenses, which partially offset our net loss, allowing us to preserve
our cash.
  In
order to commence full scale operations, we will need approximately $4,000,000
to purchase raw materials and fund our initial receivables.  On our
December 31, 2008 balance sheet, we have property and equipment with a book
value of $2,735,282 on which there is no lien. We expect that some amount
of the funds that we require can be obtained by pledging those assets to secure
a loan. The remainder, however, will be obtained from the sale of
equity. To date we have no commitment from any source for either debt or
equity financing.
 13
 Off-Balance Sheet Arrangements
  We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition or results
of operations.
  Risk Factors That May Affect Future
Results
  You
should carefully consider the risks described below before buying our common
stock.  If any of the risks described below actually occurs, that
event could cause the trading price of our common stock to decline, and you
could lose all or part of your investment.
  Because we have not yet commenced our full scale production operations,
unexpected factors may hamper our efforts to implement our business
plan.
  Our business plan contemplates that we will become a fully-integrated refiner
and marketer of methanol-based fuel oil.  To date, however, we have
produced and marketed our fuels only in limited quantities.  If the
necessary funding can be obtained, we will commence operations on a much larger
scale.  The complexity of this undertaking means that we are likely to
face many challenges, some of which are not yet foreseeable.  Problems
may occur with our raw material acquisition, with the roll-out of efficient
manufacturing processes, and with our ability to deliver fuel
efficiently.  If we are not able to minimize the costs and delays that
result, our business plan may fall short of its goals, and we will be unable to
achieve profitability.
  The capital investments that we plan may result in dilution of the equity of our
present shareholders.
  Our business plan contemplates that we
will invest approximately $4 million in the start-up of our full-scale
operations.  We intend to raise a large portion of the necessary funds
by selling equity in our company.  At present we have no commitment
from any source for those funds.  We cannot determine, therefore, the
terms on which we will be able to raise the necessary funds.  It is
possible that we will be required to dilute the value of our current
shareholders’ equity in order to obtain the funds.  If, however, we
are unable to raise the necessary funds, our growth will be limited, as will our
ability to compete effectively.
  The market for methanol-based fuel is
not developed in China.
  One of the greater challenges that we
will face in the implementation of our business plan will be the development of
widespread acceptance of methanol as automobile fuel.  Because our
products perform as an alternative to conventional gasoline-based fuel, we will
be challenged by the inertial effect of the association of gasoline with
automobiles.  Until we commence widespread marketing activities, we
will not know the extent to which we will be able to persuade distributors and,
ultimately, consumers, to trust our fuels in their automobiles.  If we
are unable to effect a change in the public concept of automobile fuel, our
business plan may fail.
  14
 Zhao
Dong Jianye Fuel’s profitability will be dependent on market prices for
methanol, ethanol and gasoline.
  Zhao Dong
Jianye Fuel’s profitability and financial condition will be significantly
affected by the selling price for methanol-based fuel.  That price, in
turn, will depend on the market prices for competitive products, specifically
gasoline and ethanol.  Uncontrolled market forces ultimately drive the
price and supply of each of these fuels.  Factors that affect these
market prices include the level of consumer product demand, governmental
regulations and taxes, the level of foreign imports of oil and natural gas, and
the overall economic environment. Significant declines in world wide prices for
oil could have a material adverse effect on our success in introducing
methanol-based fuels.
  Zhao Dong Jianye Fuel creates products
that may have harmful effects on the environment if not stored and handled
properly prior to use, which could result in significant liability and
compliance expense.
 
 The
distribution of methanol-based fuel involves the controlled use of materials
that are hazardous to the environment. Zhao Dong Jianye Fuel cannot eliminate
the risk of accidental contamination or discharge and any resulting problems
that occur. Government regulations govern the use, manufacture, storage,
handling and disposal of these materials. Zhao Dong Jianye Fuel may be named a
defendant in any suit that arises from the improper handling, storage or
disposal of these products. Zhao Dong Jianye Fuel could also be subject to civil
damages in the event of an improper or unauthorized release of, or exposure of
individuals to, hazardous materials. Compliance with environmental laws and
regulations may be expensive, and current or future environmental regulations
may impair Zhao Dong Jianye Fuel’ research, development and production
efforts.
 
 An
increase in raw material prices could increase Zhao Dong Jianye Fuel’s costs and
decrease its profits.
  Changes
in the cost of raw materials could significantly affect Zhao Dong Jianye Fuel’s
business. Although the cost of methanol has traditionally been relatively
stable, increased use of methanol for fuel would create increased demand and
could introduce volatility into the market for methanol.  Our other
two primary raw materials, gasoline distillate and ethanol, already trade in
volatile markets.  The market price for gasoline distillate is a
function of the market price of oil, which has been highly volatile in recent
years.  The market price of ethanol depends primarily on the
availability of feedstocks, which again has become volatile in recent years due
to the heightened demand caused by the widespread acceptance of ethanol as a
fuel supplement.   Increased prices in any of these markets could
decrease Zhao Dong Jianye Fuel’s profitability.  Zhao Dong Jianye Fuel
does not expect to enter into hedging contracts with respect to raw material
prices, but will rely on its Chairman’s network of industry relationships to
obtain the best available prices.
  Reliance
on third party suppliers for raw materials may affect Zhao Dong Jianye Fuel’s
production and profitability.
  To date,
Zhao Dong Jianye Fuel has no binding commitments for the supply of raw
materials, although it has established a favourable relationship with its
primary distillate supplier by making a large advance payment.  Even
as it develops supply arrangements, Zhao Dong Jianye Fuel’s suppliers could
terminate the contracts and sell to other buyers, or enter into the
methanol-based fuel production business in direct competition with Zhao Dong
Jianye Fuel.  If Zhao Dong Jianye Fuel’s suppliers do not perform
their obligations as agreed, Zhao Dong Jianye Fuel will not be able to maintain
its refinery operations at an efficient level, and may itself default in
satisfying deliver orders, all of which would adversely affect Zhao Dong Jianye
Fuel’ profitability.
  15
 Increased government regulation of our
production and/or marketing operations could diminish our profits.
  The fuel production and supply business
is highly regulated.  Government authorities are concerned with effect
of fuel distribution on the national and local economy.  To achieve
optimal availability of fuel, governments regulate many key elements of both
production and distribution of fuel.  Increased government regulation
may affect our business in ways that cannot be predicted at this time,
potentially involving price regulation, distribution regulation, and regulation
of manufacturing processes.  Any such regulation or a combination
could have an adverse effect on our profitability.
  In addition, the day-to-day operations
of our business will require frequent interaction with representatives of the
Chinese government institutions.  The national, provincial and local
governments in the People’s Republic of China are highly
bureaucratized.  The effort to obtain the registrations, licenses and
permits necessary to carry out our business activities can be
daunting.  Significant delays can result from the need to obtain
governmental approval of our activities.  These delays can have an
adverse effect on the profitability of our operations.  In addition,
compliance with regulatory requirements applicable to fuel manufacturing and
distribution may increase the cost of our operations, which would adversely
affect our profitability.
  Our business and growth will suffer if
we are unable to hire and retain key personnel that are in high
demand.
  Our future success depends on our
ability to attract and retain highly skilled engineers, chemists, industrial
technicians, production supervisors, and marketing personnel.  In
general, qualified individuals are in high demand in China, and there are
insufficient experienced personnel to fill the demand.  In a
specialized scientific field, such as ours, the demand for qualified individuals
is even greater.  If we are unable to successfully attract or retain
the personnel we need to succeed, we will be unable to implement our business
plan.
  We may have difficulty establishing
adequate management and financial controls in China.
  The People’s Republic of China has only
recently begun to adopt the management and financial reporting concepts and
practices that investors in the United States are familiar with.  We
may have difficulty in hiring and retaining employees in China who have the
experience necessary to implement the kind of management and financial controls
that are expected of a United States public company.  If we cannot
establish such controls, we may experience difficulty in collecting financial
data and preparing financial statements, books of account and corporate records
and instituting business practices that meet U.S. standards.
  Capital outflow policies in China
may hamper our ability to pay dividends to shareholders in the United
States.
  The People’s Republic of China has
adopted currency and capital transfer regulations. These regulations require
that we comply with complex regulations for the movement of capital. Although
Chinese governmental policies were introduced in 1996 to allow the
convertibility of RMB into foreign currency for current account items,
conversion of RMB into foreign exchange for capital items, such as foreign
direct investment, loans or securities, requires the approval of the State
Administration of Foreign Exchange. We may be unable to obtain all of the
required conversion approvals for our operations, and Chinese regulatory
authorities may impose greater restrictions on the convertibility of the RMB in
the future. Because most of our future revenues will be in RMB, any inability to
obtain the requisite approvals or any future restrictions on currency exchanges
will limit our ability to pay dividends to our shareholders.
  16
 Currency fluctuations may adversely
affect our operating results.
  Zhao Dong Jianye Fuel generates
revenues and incurs expenses and liabilities in RMB, the currency of the
People’s Republic of China.  However, as a subsidiary of China Jianye
Fuel, it will report its financial results in the United States in U.S.
Dollars.  As a result, our financial results will be subject to the
effects of exchange rate fluctuations between these currencies.  From
time to time, the government of China may take action to stimulate the Chinese
economy that will have the effect of reducing the value of RMB.  In
addition, international currency markets may cause significant adjustments to
occur in the value of the RMB.  Any such events that result in a
devaluation of the RMB versus the U.S. Dollar will have an adverse effect on our
reported results.  We have not entered into agreements or purchased
instruments to hedge our exchange rate risks.
  We have limited business insurance
coverage.
  The insurance industry in China is
still at an early stage of development. Insurance companies in China offer
limited business insurance products, and do not, to our knowledge, offer
business liability insurance. As a result, we do not have any business liability
insurance coverage for our operations. Moreover, while business disruption
insurance is available, we have determined that the risks of disruption and cost
of the insurance are such that we do not require it at this time. Any business
disruption, litigation or natural disaster might result in substantial costs and
diversion of resources.
  China Jianye Fuel is not likely to hold
annual shareholder meetings in the next few years.
  Management does not expect to hold
annual meetings of shareholders in the next few years, due to the expense
involved.  The current members of the Board of Directors were
appointed to that position by the previous directors.  If other
directors are added to the Board in the future, it is likely that the current
directors will appoint them.  As a result, the shareholders of China
Jianye Fuel will have no effective means of exercising control over the
operations of China Jianye Fuel.
  ITEM
3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS
 
 Not applicable.
  ITEM 4. CONTROLS AND
PROCEDURES
  (a)  Evaluation of
disclosure controls and procedures.
  The term
“disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to
the controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,
processed, summarized and reported within required time periods. The Company’s
management, with the participation of the Chief Executive Officer and the Chief
Financial Officer, has evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by this report (the
“Evaluation Date”). Based on that evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer have concluded that, as of the Evaluation
Date, such controls and procedures were effective.
 
 (b)  Changes in internal
controls.
  The term
“internal control over financial reporting” (defined in SEC Rule 13a-15(f))
refers to the process of a company that is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. The Company’s management, with the participation
of the Chief Executive Officer and Chief Financial Officer, has evaluated any
changes in the Company’s internal control over financial reporting that occurred
during the fiscal quarter covered by this quarterly report, and they have
concluded that there was no change to the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
   
 PART II   -
  OTHER INFORMATION
 ITEM 1.
LEGAL PROCEEDINGS
  The company is not party to any material legal proceeding.
  ITEM
2. CHANGES IN SECURITIES
  None.
  ITEM
3. DEFAULTS UPON SENIOR SECURITIES
  None.
  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
  ITEM
5. OTHER INFORMATION
  None.
 ITEM 6.
EXHIBITS
  31
              Rule
      13a-14(a) Certification
  31
              Rule
      13a-14(b) Certification
 
 
 
 
 SIGNATURES
 
 Pursuant
to the  requirements  of the Securities  Exchange Act of 1934,
the Registrant  has duly  caused  this  Report  to be
 signed  on its  behalf by the undersigned thereunto duly
authorized.
 
  CHINA JIANYE FUEL, INC.
 
 Date:
February 17, 2009
 By: /s/
Jianye Wang
 Jianye
Wang, Director
 Chief
Executive Officer and Chief Financial Officer
 
 
  
   19