U.S. SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ]
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
        March 31, 2007 [     ]
     TRANSITION REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For 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 StreetHeping District,
Shenyang 110003, Peoples Republic of China(Address of Principal Executive Offices)  0086-24-22813888
(Issuers telephone number)  Not Applicable
(Former name, address and fiscal year, if changed since last report)  Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the issuer 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 whether registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule
12b-2 of the Exchange Act). [    ] Large accelerated filer [     ] Accelerated filer [ X ]
Non-accelerated filer Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).   Yes [    ] No [ X ] State the number of shares outstanding of each of the issuers
classes of common equity:  As of March 31, 2007, there were 11,782,036 shares of common
stock outstanding.




FORM 10-QGREAT CHINA INTERNATIONAL
HOLDINGS, INC. TABLE OF CONTENTS PagePART I.
     Item 1.  Financial InformationBalance Sheet as of March 31, 2007 (Unaudited) andDecember 31, 2006
     3Statements of Operations for the Three MonthsEnded March 31, 2007 and 2006 (Unaudited)
     5Statements of Cash Flows for the Three MonthsEnded March 31, 2007 and 2006 (Unaudited)
     6Notes to the Financial Statements
     7Item 2.  Managements Discussion and Analysis of
Financial Condition and Results of Operations
     22Item 3.  Quantitative and Qualitative DisclosuresAbout Market Risk
     28Item 4.  Controls and Procedures
     28PART II.
     Other Information
     28Item 1A.  Risk Factors
     28Item 6.  Exhibits
     29Signatures
     30 2




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                        CONDENSED CONSOLIDATED BALANCE SHEET
                                        MARCH 31, 2007 AND DECEMBER 31, 2006 2007
     
     2006(Unaudited)ASSETSCurrent assets:Cash and equivalents
     $641,778
        
     
     $1,769,744Accounts receivableTrade, net of allowance of $770,798 and $1,443,476, respectively
     2,076,308
        
     
     1,454,164Advances to suppliers
     1,201,015
        
     
     1,089,048Advances to employees
     9,886
        
     
     5,473Deposits
     1,653,861
        
     
     1,636,942Properties held for resale
     10,472,943
        
     
     10,620,550Assets held for sale, net of impairment of $199,542 at March 31, 2007
     9,389,821
        
     
     9,372,189Prepaid expenses
     10,038
        
     
     86,617Total current assets
        
        
     
        25,455,650
        
     
     26,034,727Property and equipment:Land and buildings
     50,505,521
        
     
     49,988,841Motor vehicles
     686,476
        
     
     679,453Office furniture and equipment
     344,927
        
     
     340,61851,536,924
        
     
     51,008,912Less accumulated depreciation
     (7,775,540
        )
     
     (7,114,334
        )43,761,384
        
     
     43,894,578Total assets
     $69,217,034
        
     
     $69,929,305 See accompanying notes to the consolidated financial statements. 3




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                        CONDENSED CONSOLIDATED BALANCE SHEET
                                        MARCH 31, 2007 AND DECEMBER 31, 2006 2007
     
     2006(Unaudited)LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accrued expenses
        
        
     $
        10,034,291
        
     
     $
        10,554,995Deposits held
        
        
     
        760,076
        
     
     767,481Advances from buyers
     2,897,551
        
     
     3,004,011Amounts due to related companies
     537,717
        
     
     695,002Taxes payable
     1,276,210
        
     
     1,083,765Short-term loans
     50,536,176
        
     
     51,308,184Current portion of long-term debt
     395,547
        
     
     428,076Total current liabilities
        
        
     
        66,437,568
        
     
     
        67,841,514Long term debt, net of current portion shown above
        
        
     
        1,808,324
        
     
     
        1,999,465Total liabilities
     68,245,892
        
     
     69,840,979Stockholders equity:Common stock,  $.001 par value 50,000,000 shares authorized,11,782,036 issued and outstandingat March 31, 2007 and December 31, 2006
     11,783
        
     
     11,783Additional paid in capital
     4,542,308
        
     
     4,542,308Retained deficit
     (4,084,704
        )
     
     (4,934,109
        )Accumulated other comprehensive income
     501,755
        
     
     468,344Total stockholders equity
     971,142
        
     
     88,326Total liabilities and stockholders equity
     $69,217,034
        
     
     $69,929,305 See accompanying notes to the consolidated financial statements. 4




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
                                                     (UNAUDITED) 2007
     
     2006RevenuesSales
        
        
     $
        233,015
        
     
     $
        1,357,244Rental and management fee income
     1,358,273
        
     
     1,325,826Total revenues
     1,591,288
        
     
     2,683,070ExpensesCost of properties sold
     213,273
        
     
     1,278,988Building management expenses
     228,782
        
     
     375,378Operating and selling expenses
     18,242
        
     
     39,850Administrative expenses
     378,781
        
     
     769,637Depreciation and amortization
     580,321
        
     
     544,147Total expenses
     1,419,399
        
     
     3,008,000Income (loss) from operations
     171,889
        
     
     (324,930
        )Other income (expense)Other income
     1,949,269
        
     
     15,223Gain on disposal of fixed assets
     --
        
     
     103,043Impairment loss
     (199,542
        )
     
     --Interest and finance costs
     (594,123
        )
     
     (1,331,177
        )Total other income (expense)
     1,155,604
        
     
     (1,212,911
        )Income (loss) before income taxes
     1,327,493
        
     
     (1,537,841
        )Provision for income taxes
     478,088
        
     
     --Net income (loss)
     849,405
        
     
     (1,537,841
        )Other comprehensive income (loss):Foreign currency translation adjustment
     33,411
        
     
     57,792Total comprehensive income (loss)
     $882,816
        
     
     $(1,480,049
        )Basic and diluted net income (loss) per common share
     $0.07
        
     
     $(0.14
        )Weighted average basic and diluted shares outstanding
     11,782,036
        
     
     11,097,466 See accompanying notes to the consolidated financial statements. 5




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
                                                     (UNAUDITED) 2007
     
     2006Cash flows from operating activities:Net income (loss)
     $849,405
        
     
     $(1,537,841
        )Adjustments to reconcile net income (loss) to operating activities -Depreciation and amortization
     580,324
        
     
     544,147Reduction in (provision for) doubtful accounts
     672,678
        
     
     --199,542
        
     
     
        --Non-cash stock compensation expense
     --
        
     
     180,711Changes in assets and liabilites:(Increase) decrease in -Accounts receivable and other receivable
     (1,316,154
        )
     
     (304,234
        )Advances to suppliers
     (111,967
        )
     
     (5,241,075
        )Refunds due from contractors
     --
        
     
     (1,508,751
        )Amounts due from related parties
     --
        
     
     --Prepaid expenses
     76,579
        
     
     1,237,103Accounts payable and other payables
     (520,704
        )
     
     512,850Deposits held
     (7,405
        )
     
     --Advances from buyers
     (106,460
        )
     
     213,433Properties held for resale
     147,607
        
     
     693,216Income and other taxes payable
     192,445
        
     
     (317,678
        )Net cash provided by (used in) operating activities
     655,890
        
     
     (5,528,119
        )Cash flows from investing activities:Construction in progress
     (217,174
        )
     
     198,511Purchases of fixed assets
     (447,130
        )
     
     (434,726
        )Net cash (used in) investing activities
     (664,304
        )
     
     (236,215
        )Cash flows from financing activities:Loan repayments
     (995,678
        )
     
     (2,945,039
        )Advances from (to) directors and affiliated companies
     (157,285
        )
     
     (960,950
        )Net cash (used in) financing activities
     (1,152,963
        )
     
     (3,905,989
        )Effect of exchange differences
     33,411
        
     
     57,792Net (decrease) in cash and cash equivalents
     (1,127,966
        )
     
     (9,612,531
        )Cash and cash equivalents, beginning of period
     1,769,744
        
     
     10,896,807Cash and cash equivalents, end of period
     $641,778
        
     
     $1,284,276Supplemental disclosures of Cash Flow information:Interest paid, net of capitalized amounts
     $410,041
        
     
     $959,807Income taxes paid
     $247,431
        
     
     $-- See accompanying notes to the consolidated financial statements. 6




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                                  MARCH 31, 2007 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.
 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. Prior to its
acquisition of Silverstrand,  the Company was not engaged in active      business
operations. Silverstrand
 was  incorporated  on September  30, 2004 in Hong Kong  Special  Administrative  Region,
 in the      Peoples Republic of China (PRC) with an authorized  capital of
$12,820,513  divided in 100 million ordinary      shares of par value $0.12 per share. During
 October  of  2004,  Silverstrand  acquired  all  of  the  outstanding  capital  of
 Shenyang  Maryland      International  Industry Co.,  Limited  (Shenyang  Maryland) for
 $5,000,000,  payable to its former owners as      follows: 
     Jiang Fang as to $4,350,000;
     Jiang Peng as to $500,000; and,
     Pay $50,000 to each of Dang Jing Shi, Li Guang Hua and Wang Li Rong This
transaction was treated as a recapitalization  of Shenyang Maryland for financial
 reporting purposes and      the excess purchase was treated as dividends to shareholders. On
 November  23, 2004 the  Ministry of Commerce  and  Business  Registration  issued a
business  registration      certificate approving Shenyang Maryland reclassification to a
wholly owned foreign enterprise. Pursuant
to several agreements dated December 8, 2005 and December 28, 2005, the Company,
through its subsidiaries, agreed to acquire in 2006 a 100 percent interest in the
land use rights for the Xita Project. First, pursuant to a sale and purchase
agreement dated December 8, 2005, subsequently amended on December 28, 2005, the
Company agreed to acquire, through Shenyang Maryland, 70 percent of the equity
interest in Shenyang Xinchao Development Co. Limited (Xinchao), a
Sino-Foreign joint venture corporation that owns approximately 66 percent of the
land use rights of the Xita Project, from Shenyang Yunfeng Real Estate
Development Co., Limited (Yunfeng). The Company agreed to acquire the remaining
30 percent equity interest in Xinchao through Silverstrand from Sapphire
Corporation Limited (formerly: I.R.E. Corporation Limited) (Sapphire), an
unrelated Singapore corporation, pursuant an agreement dated December 28, 2005. 7




The
 remaining  approximately  34%  interest  in the land use rights of the Xita  Project is
held by  Shenyang      Yindu Property Co.,  Limited  (Yindu),  also a
 Sino-Foreign  joint  venture.  Pursuant to agreements  dated      December 28, 2005,
 Shenyang  Maryland  agreed to acquire a 70 percent  interest in Yindu from  Yungfeng,
 and      Silverstrand  agreed to  acquire a 30%  interest  in Yindu  from  Sapphire.
 Following  the  closing  of these      transactions,  the Company  holds,  through  its
 subsidiaries,  100  percent  interest in the land use rights      comprising the Xita
Project. Shenyang
 Xin Chao  Property  Company  Limited  (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.  Xin Chao was  formed  to  develop a certain  tract of
     property  located in the Heping  District of Shenyang  featuring a construction
 area of almost 500,000 square      meters with a linear site area of approximately
101,000 square meters. 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,  2006.  Xin Chao was  formed to  develop  a  certain  tract of  property
     located in Xi Ta district of Shenyang, China. Shenyang
Jitian Property Company Limited  (Jitian) was registered on February 22, 2006
in Shenyang  Liaoning      Province,  in the PRC with a registered capital of $616,523
 (Rmb.5,000,000) and a defined period of existence      of 15 years to February 22, 2021.
On March 7, 2006,  the  registered  capital  increased to  $20,000,000  from
     $616,523.  Jitian was formed to develop a certain  tract of property  located in
Chessboard  Mountain  Tourism      Development District of Shenyang, China known as
Galaxy Bay. In
 December,  2006,  Silverstrand  completed  an  agreement  for the  sale of all of the
 outstanding  equity      interest in Shenyang Jitian Property Company, Ltd., (Jitian). Under
the  agreement  Beijing  Capital  Land  Limited  and Reco  Ziyang  Pte  Limited
 purchased  Jitian  from      Silverstrand  in exchange for a total cash payment of
$1,399,970  and  assumption of all bank debt incurred by      Jitian in  connection  with
the  acquisition  of Galaxy  Bay,  which will  result in a release  of  guaranties
     provided by Shenyang Maryland. The
 Company  engages  in the  development  and  sale of  high  quality  private  residential
 properties  and      commercial  buildings for lease 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,  and,
     according to the statistical  information on sales of construction  area as
published by Shenyang  Statistical      Authority, Shenyang Maryland was the ninth
largest private property developer in Shenyang City in 2004. 8




2.     Going
concern The
Company had short-term bank debt of $50,536,176 as of March 31, 2007, which included
$35,032,300 of delinquent bank loans (Note 8). As a result the Company also had a working
capital deficit of $40,981,918 as of March 31, 2007. The Companys ability to continue as a going concern is
dependent on the ability to renegotiate an extension of the bank debt
maturities and to obtain a profitable level of operations. These issues raise
doubts about the Companys ability to continue as a going concern.
Management is in the process of negotiating a settlement of these delinquent
notes and it also in the process of attempting to raise additional capital through
debt and equity offerings. The
financial  statements do not give effect to any  adjustments  which would be necessary
 should the Company      be unable to continue as a going  concern and  therefore be
required to realize its assets and  discharge  its      liabilities  in the normal course
of business at amounts  different  from those  reflected in these  financial
     statements. 3.     Summary
of significant 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: Basis
of presentation- The accompanying condensed consolidated financial statements have
been prepared in compliance with Rule 10-01 of Regulation S-X and U.S. generally
accepted accounting principles, but do not include all of the information and
disclosures required for audited financial statements. These statements should
be read in conjunction with the condensed consolidated financial statements and
notes thereto included in the Companys latest Annual Report on Form 10-K
for the year ended December 31, 2006. In the opinion of management, these
statements include all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation of the results of operations,
financial position and cash flows for the interim periods presented. Operating
results for the three months ended March 31, 2007 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2007. The
factors  discussed in Footnote 2 above raise  substantial doubt about the Company's
ability to continue as      a going concern.  The financial  statements do not include
any adjustments  that might result from the outcome      of this uncertainty. Consolidation
policy 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. 9




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. As of March 31, 2007 and December 31, 2006, the
provision for doubtful debts amounted to $770,798 and $1,443,476
respectively. Related
companies A related company is a company in which a director has a beneficial
interest in and in which the Company has significant influence. 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 Properties held for sale are comprised of properties
held for sale and repossessed properties held for resale and are stated at the
lower of cost or net realizable value. Cost includes acquisition costs of land
use rights, development expenditures, interest costs and any overhead costs
incurred in bringing the developed properties to their present location and condition. Net
 realizable  value  is  determined  by  reference  to  management  estimates  based on
 prevailing  market      conditions.  Management  evaluates the market value of its
properties on an annual basis by comparing  selling      prices  of its  properties  with
 those  of other  equivalent  properties  in the  vicinity  offered  by other
     developers. Management
 reduces the estimated market value by anticipated  selling expenses and associated taxes
to derive      the net realizable value. Assets
held for sale Assets held for sale are comprised of land use rights and
associated costs of development for the Xita project, which had previously been
classified as construction in progress as of December 31, 2006. During 2007
the Company determined that the Company would cease development on this project
and sell the associated assets. Based on the estimated fair value of the assets
held for sale an impairment loss of $199,542 has been recorded during the quarter
ended March 31, 2007. 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 for both financial and income tax reporting purposes over
useful lives as follows: Building and land use rights
     9-30 yearsLeasehold improvements
     20 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixtures
     5 years 10




Depreciation
 expense for the three  months  ended  March 31,  2007 and 2006  totaled  $580,321  and
 $544,147      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      the
years ended December 31, 2006, 2005 and 2004. As
of March 31, 2007 fixed  assets  totaling  $29,087,864  have been  pledged as security to
various  banks in      respect of borrowings totaling $50,536,176 and mortgage loans of
$2,203,871. 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. Income
Recognition Revenue from the sale of properties is recognized when the following
four criteria are met: (1) a sale is consummated (2) the buyers initial and
continuing investments are adequate to demonstrate a commitment to pay for the
property, (3) the sellers receivable is not subject to future subordination and
(4) the seller has transferred to the buyer the usual risks and rewards of
ownership in a transaction that is in substance a sale and does not have a
substantial continuing involvement with the property. Rental
and building  management  income comprises rental and building  management income from
Qiyun New Garden      and President  Building.  Rental income is recognized on an accrual
basis as the rents and management fees are      earned. Interest
income is recognized when earned,  taking into account the average principal amounts
 outstanding and      the interest rates applicable. 11




Cost
of sales The cost of sales includes the carrying amount of the properties being
sold and the business taxes paid by the Company in connection with the sales.
Business taxes included in cost of sales were $139,440 and $274,266 for the
three months ended March 31, 2007 and 2006, respectively. Other
income Other income consists of primarily services performed on behalf of the
purchasers of Jitian. These revenues are recognized when the services have been
performed 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  denominated  in foreign  currencies at the balance  sheet date are
 translated at the      market rate of exchange  ruling at that date.  The  registered
 equity  capital  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. Historically
 the local  currencys  exchange  rate had been  unofficially  tied to the US Dollar
at a rate of      approximately  8.28 Yuan per US  Dollar.  Effective  July 21,  2005,
 the Yuan was  revalued  to an  effective      exchange  rate of  approximately  8.11
Yuan per US Dollar.  Subsequent  to the  revaluation  the Yuan has been      allowed  to
float  within a  specified  range.  As of March 31,  2007 the  exchange  rate was 7.74
Yuan per US      Dollar. Taxation Taxation on overseas profits has been calculated on the estimated assessable
profits for the year at the rates of taxation prevailing in the countries in
which the Company operates. Provision for The Peoples Republic of China
enterprise income tax is calculated at the prevailing rate based on the estimated
assessable profits less available tax relief for losses brought forward. Enterprise
income tax Under the Provisional Regulations of The Peoples Republic of
China Concerning Income Tax on Enterprises promulgated by the State Council and
which came into effect on January 1, 1994, income tax is payable by enterprises
at a rate of 33% of their taxable income. Preferential tax treatment may, however,
be granted pursuant to any law or regulations from time to time promulgated by the
State Council. Enterprise
 income tax  (EIT) is  provided  on the basis of the  statutory  profit for
 financial  reporting      purposes,  adjusted  for income and expense  items,  which are
not  assessable  or  deductible  for income tax      purposes. 12




Value
added tax The Provisional Regulations of The Peoples Republic of China
Concerning Value Added Tax promulgated by the State Council came into effect on
January 1, 1994. Under these regulations and the Implementing Rules of the
Provisional Regulations of the PRC Concerning Value Added Tax, value added tax
is imposed on goods sold in or imported into the PRC and on processing, repair and
replacement services provided within the PRC. Value
added tax payable in The Peoples  Republic of China is charged on an aggregated
 basis at a rate of 13%      or 17%  (depending  on the type of goods  involved) on the
full price  collected for the goods sold or, in the      case of taxable  services
 provided,  at a rate of 17% on the charges for the taxable services  provided,  but
     excluding,  in respect of both goods and  services,  any amount paid in respect of
value added tax included in      the price or charges,  and less any  deductible  value
added tax already  paid by the taxpayer on purchases of      goods and services in the
same financial year. United
States income tax Great China International Holdings, Inc., the U.S. holding
company, does not accrue income taxes on foreign earnings as there is no
intention at the current time to transfer any of these earnings to the holding
company. Should earnings be transferred to the U.S. holding company, they
would be subject to U.S. Corporate income taxes at rates approximating 40%. 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 March 31, 2007 and December 31, 2006,  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 March 31, 2007
and December 31, 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. Stock
based compensation In December 2004, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.
123(R), Share-Based Payment. SFAS 123(R) replaces SFAS No. 123, Accounting for
Stock-Based Compensation, 13




and
supersedes Accounting Principles Board(APB) Opinion No. 25, Accounting for
Stock Issued to Employees. Effective January 1, 2006, the Company adopted
Statement of Financial Accounting Standard No. 123(R), Share-Based Payment, (SFAS
No. 123(R)), using the modified prospective transition method. SFAS No.
123(R) requires equity-classified share-based payments to employees, including
grants of employee stock options, to be valued at fair value on the date of grant and
to be expensed over the applicable vesting period. Under the modified
prospective transition method, share-based awards granted or modified on or
after January 1, 2006, are recognized in compensation expense over the
applicable vesting period. Also, any previously granted awards that are not fully
vested as of January 1, 2006 are recognized as compensation expense over the
remaining vesting period. No retroactive or cumulative effect adjustments were
required upon The Companys adoption of SFAS No. 123(R). Prior
to adopting SFAS No. 123(R),  The Company accounted for its fixed-plan  employee stock
options using the      intrinsic-value  based method  prescribed by Accounting
 Principles Board Opinion No. 25, Accounting for Stock      Issued to Employees,  (APB
No. 25) and related  interpretations.  This method required  compensation expense
     to be recorded on the date of grant only if the current  market  price of the
 underlying  stock  exceeded the      exercise price. Had the Company elected the fair
value  provisions of SFAS No. 123(R),  The Companys 2005 net      earnings  and net
 earnings  per share  would not have  differed  from the  amounts  actually  reported  as
no      share-based payments were made during this period. The
fair value of each option  award is estimated on the date of grant using a Black  Scholes
 option  pricing      model that uses the  assumptions  noted in the table below.
 Because Black  Scholes  option  valuation  models      incorporate ranges of assumptions
for inputs, those ranges are disclosed.  Expected  volatilities are based on      implied
 volatilities  from traded  options on the  Companys  stock,  historical
 volatility of the Companys      stock,  and other  factors.  The  Company  uses
 historical  data to estimate  option  exercise  and  employee      termination  within
the valuation model;  separate groups of employees that have similar  historical
 exercise      behavior are considered  separately for valuation  purposes.  The expected
term of options  granted is derived      from the output of the option  valuation  model
and  represents  the period of time that  options  granted are      expected  to be
 outstanding;  the range given below  results  from  certain  groups of  employees
 exhibiting      different  behavior.  The risk-free rate for periods within the
contractual life of the option is based on the      U.S. Treasury yield curve in effect
at the time of grant. Expected volatility
     25%Weighted-average volatility
     25%Expected dividends
     0%Expected term (in years)
     1 to 5 yearsRisk-free rate
     4.5% 14




A
summary of option activity under the Plan as of March 31, 2007, and changes during the
three months then      ended is presented below: Options
     Shares
     Weighted-AverageExercisePrice
     Weighted-AverageRemainingContractualTerm
     AggregateIntrinsicValueOutstanding at January 1, 2007
     
     
     
        173,568
        
     $
        5.88
        
     
        6.67
        
     $
        --Granted
     --
        
     $--Exercised
     --
        
     $--Forfeited or expired
     173,568
        
     $5.88
        
     6.67
        
     $--Outstanding at March 31, 2007
     --
        
     $--
        
     
        
     $--Exercisable at December 31, 2006
     --
        
     $--
        
     
        
     $-- A
summary of the status of the Companys nonvested shares as of March 31, 2007, and
changes during the three      months then ended, is presented below: Nonvested Shares
     Shares
     Weighted-AverageGrant DateFair ValueNonvested at January 1, 2007
     
     
     
        10,000
        
     
        $    1.08Granted
     --
        
     $        --Vested
     --
        
     $        --Forfeited
        
        
     
        (10,000)
        
     
        $    1.08Nonvested at March 31, 2007
        
       
     
        --
        
     
        $        -- On
March 3, 2006 the Company issued to its Chief Executive  Officer options to purchase
 572,491 shares of its      common  stock at a purchase  price of $6.00 per share.  The
options  vest in five equal  increments  beginning      with the  date of  issuance  in
 March  2006  and the  following  four  anniversary  dates.  The  options  are
     exercisable  over a term of five years from the date of  vesting.  In March 2007 the
Chief  Executive  Officer      left the Company and agreed to surrender 114,498 of vested
option shares. On
March 15, 2006 the Company  issued to an employee  options to purchase  245,350  shares
of its common stock      at a purchase price of $6.00 per share. The options vest in five
equal  increments  beginning with the date of      issuance in March 2006 and the
following four  anniversary  dates.  The options are exercisable over a term of      five
years from the date of vesting.  In November  2006 the  employee  left the Company and
during 2007 agreed      to surrender 49,070 of vested options shares. 15




On
May 18, 2006 the Company issued to its Chief  Financial  Officer  options to purchase
 10,000 shares of its      common stock at a purchase  price of $11.00 per share.  The
options  vest  immediately  upon  issuance and are      exercisable  over the one year
period from the date of  issuance.  The Chief  Financial  Officer  subsequently      left
the Company and has surrendered all options that were issued. On
October 1, 2006 the Company  issued to an employee  options to purchase  10,000  shares
of its common stock      at a  purchase  price of $7.00 per  share.  The  options  vest
in one year from the date of  issuance  and are      exercisable over the one year period
from the date of issuance.  These options were  subsequently  surrendered      in
February 2007. Recent
accounting pronouncements In February 2006, the FASB issued Statement No.
155, Accounting for Certain Hybrid Financial Instruments (SFAS
No. 155), which amends FASB Statements No. 133 and 140. This Statement
permits fair value remeasurement for any hybrid financial instrument containing
an embedded derivative that would otherwise require bifurcation, and broadens
a Qualified Special Purpose Entitys (QSPE) permitted holdings
to include passive derivative financial instruments that pertain to other
derivative financial instruments. This Statement is effective for all financial
instruments acquired, issued or subject to a remeasurement event occurring after
the beginning of an entitys first fiscal year beginning after September 15,
2006. This Statement has no current applicability to the Companys
financial statements. The Company adopted this Statement on January 1, 2007
and the initial adoption of this Statement did not have a material impact on the
Companys financial position, results of operations, or cash flows. In
March 2006, the FASB issued Statement No. 156, Accounting for Servicing of
Financial Assets  an amendment of FASB Statement No. 140(SFAS
No. 156). This Statement is effective for fiscal years beginning after
September 15, 2006. This Statement requires that all separately recognized servicing
assets and servicing liabilities be initially measured at fair value, if
practicable. This Statement has no current applicability to the Companys
financial statements. The Company adopted this Statement on January 1, 2007
and the initial adoption of this Statement did not have a material impact on the
Companys financial position, results of operations, or cash flows. In
June 2006, the FASB issued Interpretation 48, Accounting for Uncertainty in Income
Taxes(FIN 48), an interpretation of FASB Statement No. 109,
Accounting for Income Taxes.FIN 48 clarifies the accounting and
reporting for income taxes where interpretation of the law is uncertain. FIN
48 prescribes a comprehensive model for the financial statement recognition,
measurement, presentation and disclosure of income tax uncertainties with
respect to positions taken or expected to be taken in income tax returns. FIN
48 is effective for fiscal years beginning after December 15, 2006. This
Statement has no current applicability to the Companys financial
statements. Management adopted this Statement on January 1, 2007 and the
initial adoption of FIN 48 did not have a material impact on the Companys
financial position, results of operations, or cash flows. In
September 2006, the FASB issued Statement No. 157, Fair Value
Measurements(SFAS No. 157). SFAS No. 157 addresses how
companies should  measure fair value when they are 16




required to use a fair value      measure for  recognition or disclosure  purposes under
GAAP.  SFAS No. 157  defines fair value,  establishes a      framework for measuring fair
value and expands  disclosures  about fair value  measurements.  SFAS No. 157  is
     effective for fiscal years beginning after November 15,  2007, with earlier adoption
permitted.  Management is      assessing the impact of the adoption of this Statement. In
September 2006, the FASB issued Statement No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans(SFAS No. 158),
an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires
(a) recognition of the funded status (measured as the difference between the fair
value of the plan assets and the benefit obligation) of a benefit plan as an
asset or liability in the employers statement of financial position, (b)
measurement of the funded status as of the employers fiscal year-end with
limited exceptions, and (c) recognition of changes in the funded status in the year
in which the changes occur through comprehensive income. The requirement to
recognize the funded status of a benefit plan and the disclosure requirements
are effective as of the end of the fiscal year ending after December 15,
2006. The requirement to measure the 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. This Statement has
no current applicability to the Companys financial statements. Management
plans to adopt this Statement on December 31, 2006 and it is anticipated the
adoption of SFAS No. 158 will not have a material impact to the Companys
financial position, results of operations, or cash flows. In
 September   2006,  the  Securities   Exchange   Commission   issued  Staff   Accounting
  Bulletin No. 108      (SAB No. 108).  SAB No. 108  addresses  how the
effects of prior year  uncorrected  misstatements  should be      considered  when
 quantifying  misstatements  in  current  year  financial  statements.  SAB No. 108
 requires      companies  to quantify  misstatements  using a balance  sheet and income
 statement  approach  and to evaluate      whether either  approach  results in
 quantifying an error that is material in light of relevant  quantitative      and
qualitative  factors.  When the effect of initial  adoption is material,  companies will
record the effect      as a cumulative  effect  adjustment to beginning of year retained
 earnings and disclose the nature and amount      of each individual  error being
corrected in the cumulative  adjustment.  SAB No. 108 was effective  beginning
     January 1,  2007 and the  initial  adoption of  SAB No. 108  did not have a material
 impact on the  Companys      financial position, results of operations, or cash
flows. In
 February  2007,  the FASB  issued  Statement  No. 159 The Fair  Value  Option  for
 Financial  Assets and      Financial  Liabilities  (SFAS 159).  This  statement
 permits  companies to choose to measure many  financial      assets and  liabilities  at
fair value.  Unrealized  gains and losses on items for which the fair value option
     has been elected are reported in earnings.  SFAS 159 is effective for fiscal years
 beginning  after  November      15, 2007. The Company is currently assessing the impact
of SFAS 159 on its consolidated financial statements. Reclassifications Certain amounts in the 2006 financial statements have been reclassified to
conform to the 2007 presentation. These reclassifications had on effect on
previously reported results of operations or retained earnings. 17




4.     Concentrations
of business and credit risk Substantially
 all of the  Companys  bank accounts are in banks located in the PRC and are not
covered by any      type of protection similar to that provided by the FDIC on funds held
in U.S. banks. The
 Company  provides  credit  in the  normal  course  of  business.  The  Company  performs
 ongoing  credit      evaluations  of its customers  and clients and maintains
 allowances  for doubtful  accounts  based on factors      surrounding the credit risk of
specific customers and clients, historical trends, and other information. Substantially
all of the Company's fixed assets and operations are located in the Peoples Republic of
China. Substantially
all of the Company's profits are generated from operations in mainland China. Payments
of dividends may be subject to government restrictions. 5.     Cash
and equivalents At
March 31,  2007 the  Company  held no  restricted  cash  balances.  Pledged  bank
 deposits,  which are now      unrestricted,  bear  interest  at 0.06% per  month and in
 accordance  with the  terms and  conditions  of the      banking  facilities  agreed
with banks to provide  mortgage loan facilities to buyers of properties  developed
     by the Company,  the Company  agreed to place  guarantee fund deposits of not less
than 5% to 10% of the total      outstanding  mortgage  loans  extended to property
 buyers and to  guarantee  the  repayments  of the mortgage      loans.  As of March 31,
2007,  the bank had released  the Company from its loan  guarantees,  and the formerly
     restricted funds have been transferred to an unrestricted bank account at the same
bank. Substantially
 all of the Companys  cash is held in financial  institutions  in the PRC and are
not protected      by FDIC insurance or any other form of guaranteed payment. 18




6.     Properties
held for resale Properties
held for resale at March 31, 2007 and December 31, 2006 by project are as follows: March 31,2007
     
     December 31,2006Qiyun New Village
     
     
     $
        1,814,203
        
             
     $
        1,795,644Peacock Garden
     315,815
        
     
     312,584Chenglong Garden
     7,534,746
        
     
     7,712,615President Building
     416,427
        
     
     412,167Maryland Building
     236,744
        
     
     234,322Others
     155,008
        
     
     153,218Total
     $10,472,943
        
     
     $10,620,550 As
of March 31, 2007 the carrying values of stock of properties of $10,457,943 have been
pledged as security      for the Companys bank loans and mortgage loans. 7.     Amounts
due from/(to) directors and related parties The
amounts due from/(to) directors and related parties at March 31, 2007 and December 31,
2006 are as      follows: Amounts due from/(to) directors
     March 31,2007
     
     December 31,
2006Frank Jiang Fang
     
     
     $
        (257,709
        )
       
     $
        (418,708
        )Gong Wang Fu
     (280,008
        )
     
     (276,294
        )Amounts due from/(to) affiliates, net
     $(537,717
        )
     
     $(695,002
        ) Amounts
due from/(to) related parties are unsecured, bear no interest, and have no fixed
repayment terms. 8.     Short-term
loans March 31,2007
     
     December 31,2006Loans from Banks  delinquent
     
     
     $
        12,583,980
        
       
     $
        13,743,945Loans from Banks - short term
     15,503,876
        
     
     15,345,569Bank loans purchased by asset management company
     22,448,320
        
     
     22,218,670Total current notes payable
     $50,536,176
        
     
     $51,308,184 At
March 31, 2007 and December 31, 2006, all bank loans and those  purchased by the asset
 management  company      were  treated as  short-term  because all bank loans have
matured and  negotiations,  while  ongoing,  are not      settled as to an extension of
the due dates of the bank loans. 19




The
delinquent notes had due dates ranging from May of 2003 to December of 2006. On
June 22, 2006 the Company  entered into a settlement  agreement  with a bank with respect
to  $7,992,326 of      past due notes.  In  accordance  with the terms of this
 settlement  agreement,  $5,434,782  in principal  was      repaid  prior to  December
 31,  2006 and the  balance  of the note is to be  repaid  in two  equal  quarterly
     installments  of  $1,278,772  with the final  payment due on June 30, 2007.  If the
Company makes all payments      on a timely basis,  the bank has agreed to waive
 $1,150,895 in past due interest.  The Company will recognize      the benefit of this
interest waiver once it has complied with all terms of the settlement agreement. There
have been  numerous  instances  of events of defaults  arising  from the  non-payment  of
 interest  and      principal in accordance with the terms of the loan  agreements  with
two of the banks.  No definitive  demands      have been made by the banks to foreclose
on the secured  borrowings.  The Company is still in discussions with      the banks to
approve an  extension  of the terms and tenure of the secured  and  unsecured  loans.
 Management      expects that the bank negotiations will result in an extension to bank
debt maturities. The
Company has not accrued any interest on the loans  acquired by the asset  management
 company  since March      21, 2005 as the asset  management  company has agreed to waive
interest on these acquired loans  subsequent to      that date. Interest
is accruing on all other past due loans at rates  ranging  from  6.0535% to 7.533%,  the
rates called      for in the original loan agreements. Substantially
all of these loans were  collateralized,  however, a significant  portion of the
properties held      as collateral were subsequently sold by the Company. 9.     Long-term
debts  secured March 31,2007
     
     December 31,2006Long term debts:Mortgage loans
     $2,203,871
        
     
     $2,427,541Less: Current portion of long-term debts
     (395,547
        )
     
     (428,076
        )Long-term debts
     $1,808,324
        
     
     $1,999,465 20




Maturities
of long-term  debt  including  mortgage  loans for each of the next five years and
thereafter are as  follows: Amount2007
     
     
     $
        395,5472008
     428,0762009
     428,0762010
     364,4192011
     286,407Thereafter
     301,346$2,203,871 10.    Commitments As
of March 31, 2007 the Company had  $90,867,081  in commitments  for capital  expenditures
 for  contractual      agreements  related to the  development  of the Xita  project.
 The Company  intends to sell its  interests in      this development  project,  which
would release the Company from these  commitments.  Additionally the Company      has
$5,813,953 of commitments for funding the registered capital of its subsidiaries. 21




Item 2. 
 Managements Discussion and Analysis of Financial Condition and Results of
Operations (1)    Caution
Regarding Forward-Looking Information The
 following  discussion  and  analysis  should  be read in  conjunction  with our
 consolidated  financial       statements  prepared  in  accordance  with  accounting
 principles  generally  accepted  in the  USA.  Unless       otherwise  indicated,
 references in this discussion to we,our and us are
to Great China  International       Holdings, Inc., and its subsidiaries. (2)    Executive
Summary Great
China International  Holdings,  Inc., 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  indirect  wholly  owned   subsidiaries;   Shenyang   Maryland
      International  Industry  Company Limited,  Shenyang Jitian Property Company
Limited,  Shenyang Yindu Property       Company Limited,  Shenyang Xinchao Property
Company Limited and Silverstrand  International  Holdings Company       Limited. Prior
to June 30, 2006, Shenyang Maryland  International  Industry Company Limited  (Maryland)
has been the       principal operating company and until 2005 owned five real estate
projects. 
     President Building comprises three blocks of 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 intends to retain this as their flag ship
and a number of units were leased. The Companys 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, a number of retail shops and ancillary
facilities including basement car parking facilities and parks.
     Qiyun New Village is situated along the Nanyun Riverside and consists of
347 residential units, among which 327 units have been sold, and 2,186
square meters of commercial units.
     Peacock Garden is situated in Heping North Street, the commercial
district of Shenyang. Construction was completed in November 2000 and
Peacock Garden comprises 197 low-density residential apartments of whic
193 have been sold.
     The Maryland Building consists of 12,858 square meters of commercial
 space among which 11,310 have been sold and other remaining 1,548 square
 meters are held for leasing purposes. 22




Our
subsidiary,  Shenyang Jitian Property Company  Limited,  was established on February 22,
2006 for a new project development in Shenyang  called the Chessboard  Mountain
 Residential  project known as Galaxy Bay. On February 27, 2006,  Shenyang Jitian
 Property  Company was confirmed as the highest bidder in a public auction for a
residential development  project located in the Chessboard  Mountain  International
 Tourism  Development  District in Shenyang City. The total purchase  price for the
420,317 square meters of land use rights was  approximately  $56.7 million. On May 12,
2006,  bank  financing was obtained  through a related  third party.  On May 16, 2006,
 Shenyang  Jitian Property  Company  obtained  planning  approval  from the  relevant
 local  authority  for the project with a total construction  area of  approximately
 891,840  square  meters  (9.6  million  square  feet),  and on May 28,  2006,
construction approval from the relevant local authority was obtained. Effective
 July 3, 2006,  Shenyang  Jitian  Property  Company  entered into a loan agreement with
the Shenyang City Commercial  Bank  whereby  the Bank  agreed to  provide a loan of up to
RMB  550,000,000,  or  approximately  $68.7 million,  to Shenyang  Jitian  Property
 Company for the purpose of acquiring the land use right for the Chessboard Mountain
Project.  The loan agreement has a term of three years, and any amounts advanced
 thereunder bear interest at a rate of 6.633% per annum and must be repaid by the end of
the term of the loan agreement. On
November 20, 2006,  Silverstrand  International  Holdings  entered into an agreement  for
the sale of all of the outstanding  equity interest in Shenyang Jitian Property Company,
 and this transaction  closed effective  December 8, 2006. Under the agreement,
 Silverstrand  sold 50% of the equity interest in Shenyang Jitian Property Company to
each of  Beijing  Capital  Land  Limited  and Reco  Ziyang  Pte  Limited in  exchange
 for a total cash  payment of US$1,399,970  (the amount of  Silverstrands  invested
capital in Shenyang Jitian Property  Company) and assumption of all bank debt incurred in
connection  with the  acquisition of Galaxy Bay. In connection with and effective upon
the completion of the sale of Shenyang Jitian Property Company,  our subsidiary,
 Shengyang Maryland  International Industry Company Limited,  entered into a Land
 Consolidation and Development  Agreement with respect to the Galaxy Bay Project. Under
this 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  $13.3  million  in  staged  amounts  upon completion  of
different  aspects of the  development  work  provided for by the  Development
 Agreement.  Shenyang Maryland  is  obligated  to pay any  necessary  sub-contractors  on
the  Galaxy  Bay  Project  for  their  work and materials.  The agreement is a
fixed-price contract,  which means that Shenyang Maryland has agreed to complete its
development  work at fixed prices,  and any cost overruns  incurred in connection with
the development work covered by the Development  Agreement would therefore  impact Great
Chinas profit with respect to such  development  work. It is estimated that the
Galaxy Bay Project will take approximately one year to complete. Pursuant
to agreements  entered into in December  2005,  we acquired two  companies  that own
rights to develop and acquire a property  interest  (land use right) for a large  parcel
of property  in Shenyang  City known as the Xita Project. The two companies are
successors in interest to a bid confirmation  letter,  originally issued by the City of
Shenyang to Shenyang Yunfeng Real Estate  Development  Co., Ltd., and  subsequently
 amended and supplemented in September 2005. We expect the Xita Project shall be a major
 development  project for 2007 and subsequent years. It is  an  urban  reconstruction
 development  project  with  multi-functional  sections,  which  is  consistent  with
government  development  planning.  The project is located
in the Xi Ta area in the city of 23




Shenyang  and is mostly populated  by ethnic  Koreans.
 It will  feature a  construction  area of almost  500,000  square  meters,  with an
occupying area of approximately 83,071 square meters. Pursuant
to a sale and purchase  agreement  dated December 8, 2005,  subsequently  amended on
December 28, 2005, we agreed to acquire through our indirect subsidiary,  Shenyang
Maryland International,  70% of the equity interest in Shenyang Xinchao  Development
 Company, a Sino-Foreign joint venture corporation that owns approximately 66% of the
rights granted under the Xita Project  confirmation  letter,  from Shenyang Yunfeng Real
Estate  Development Co. We agreed to acquire the remaining 30% equity  interest in
Shenyang  Xinchao  Development  Company  through our direct subsidiary,   Silverstrand
 International  Holdings,  from  I.R.E.  Corporation  Limited,  an  unrelated  Singapore
corporation.  The remaining  approximately  34% interest in the rights granted under the
Xita Project  confirmation letter is held by Shenyang  Yindu Property  Company,  also a
 Sino-Foreign  joint  venture.  Pursuant to agreements dated  December 28,  2005,
 Shenyang  Maryland  International  agreed to acquire a 70%  interest in Shenyang  Yindu
Property  Company from  Shenyang  Yunfeng Real Estate  Development  Co., and
 Silverstrand  International  Holdings agreed to acquire a 30% interest in Shenyang Yindu
Property  Company from I.R.E.  Corporation.  These  transactions closed at the end of
December 2005, so that we now hold through our  subsidiaries  100 percent interest in the
land comprising the Xita Project. The
purchase price for the interests  acquired from I.R.E.  Corporation is the assumption of
the obligations  under joint  venture  arrangements,  which is a total of $5.5 million
for both joint  ventures.  The  purchase  price for Shenyang Yunfeng Real Estate
Development Co.s interest in Shenyang Xinchao  Development  Company, is
approximately $8.6 million,  which was paid by a cash payment of $5 million by Shenyang
Maryland  International in December 2005, and by the  assumption  of the  obligation  of
Shenyang  Yunfeng  Real Estate  Development  Co. to make  additional contributions  to
the joint venture in the amount of $3.6 million (which Shenyang  Maryland  International
 made to Shenyang Xinchao Development Company in December 2005). The
terms of the Xita  Project  confirmation  letter  provide  that,  in order  for the
 rights  granted  under the confirmation  letter to fully vest, the owners of the project
rights must pay a total of approximately  $88 million for the Xita property.  To date, of
this amount, a total of  approximately  $4.0 million has been paid. In December 2005,  we
obtained  bank  financing in the  principal  amount of $14.8  million to make our initial
cash payment in connection with the Shenyang Xinchao Development  Company  acquisition
and the additional capital  contributions in connection  with this  acquisition.  In
2006,  the loan  accrued  interest at a rate of 7.254% per annum,  with all principal
 and  interest due December  31,  2006.  We obtained  from the bank an extension of the
maturity  date to November 7, 2007, but in exchange the interest rate increased to 8.19%
per annum.  We sought the  participation  of one or more  partners in a joint  venture to
provide the  financing  necessary to advance the project,  but did not identified any
joint venture  partners or established  terms for a joint venture  arrangement.  In 2007
the Company ceased development on the Xita Project and began negotiations to sell its
assets and rights in the Xita Project. (3)   Results
of Operations Comparison of operations for the three months ended March
31, 2007 with the three months ended March 31, 2006: The
Company earned net income of $849,405 for the three months ended March 31, 2007
compared to a net loss of $(1,537,841) for 2006, representing an increase of
$2,387,246. Components of sales and expenses resulting in this increase in net
income are discussed below. 24




Sales
revenues decreased by $1,124,229 or 83% quarter-on-quarter to $233,015 for the
three months ended March 31, 2007 compared to 2006 of $1,357,244. Rental and
management fee income increased by $32,447 or 2% to $1,358,273 during the
quarter ended March 31, 2007 from $1,325,826 for the comparable period in 2006.
These changes are mainly attributable to: 
     Significant decrease in sales of Chenglong Garden by $992,575 or 81%;
     Decreases in gross floor area sold by 1,833 square meters quarter-on-quarter to 159 square meters for the quarter ended March 31,
        2007 compared to 1,992 square meters in 2006;
     The number of units sold decreased by 7 units or 88% quarter-on-quarter
         to 1 units for the quarter ended March 31, 2007 compared to 8 units in 2006;
     Increases management fee income by $30,845 or 8%; and
     No new development projects were introduced during 2006 or 2007. Cost
of properties  sold  decreased by $1,065,715 or 83% during the quarter ended March 31,
2007, as compared       to the  corresponding  period in 2006.  This was primarily
 attributable to a 92% decrease in the gross floor       area sold as described above. Building
 management  expenses  decreased by $146,596 or 39% primarily  due to lower  utility
costs  achieved       under a new air conditioning maintenance and service contract. Operating
 and selling  expenses  decreased by $21,608 or 54% to $18,242 for the quarter ended
March 31, 2007       as  compared to $39,850 for the quarter  ended March 31,  2006.  The
 decrease is mainly due to a decrease in       property sales activity. General
and  administrative  expenses  decreased by $390,856 or 51% to $378,781 during the three
months ended       March 31, 2007  compared to $769,637 for the three  months  ended
March 31,  2006.  The decrease is due to an       increase in legal and professional fees
of $271,087 offset by recovery of doubtful accounts of $685,825. Depreciation
 expense  increased by $36,174 or 7% to $580,321 for the quarter ended March 31, 2007,
 compared       to $544,147 for the corresponding period in 2006. Other
income  increased to $1,949,269  in 2007 from $15,223 in 2006 due primarily to revenues
 earned under a       development contract with the new owners of the Jitian Project of
$1,935,533. Interest
and  financing  costs  decreased by $737,054 to $594,123  for the quarter  ended March
31, 2007,  as       compared to $1,331,177  for the quarter ended March 31, 2006.  The
decrease was primarily due to loan closing       costs of $183,555 incurred during 2006. (4)   Liquidity
and Capital Resources Net
cash flows  provided by (used in)  operating  activities  for the three months ended
March 31, 2007,  and       2006 were $655,890 and  $(5,528,119),  respectively.  The
increase in funds  provided 25




by
was primarily due to       increase in other  revenue  offset by an increase in accounts
 receivable  during the quarter ended March 31,       2007 as compared to  significant
 advances to  contractors  that were made during the quarter ended March 31,       2006. Net
cash flows  used in  investing  activities  for the three  months  ended  March 31,
 2007,  was  $664,304       compared to $236,215 for the three months ended March 31,
2006. The investing  activity  change was primarily       construction in progress with
the Xita construction project. Net
cash flows used in financing  activities for the quarter ended March 31, 2007,  was
 $1,152,963  compared       to net cash used in financing  activities  of $3,905,989  for
the quarter  ended March 31, 2006  representing       substantial repayments of
borrowings in 2006 compared to 2007. Current
 liabilities  exceeded  current  assets by  $40,981,918  as of March 31,  2007.  The
working  capital       deficit was incurred primarily due to $50,536,176 of short-term bank loans, which
included $35,032,300 of bank loans currently in default. Due
to  frequent  changes in  government  fiscal and bank  lending  policies  in the past 15
years as well as       other  administrative  controls  from time to time in China,  it
is not uncommon  for many  companies to find       themselves  holding  overdue  loans
 borrowed  from the banks,  although  the initial  intention  between the       borrowers
 and lenders was for terms with longer  maturity  period.  Under the  circumstances,
 most  lending       banks  had and have  usually  worked  sympathetically  and  closely
 with  borrowers  for loan  extension  or       restructuring  for a  shorter  period
 within  the  administrative  guidelines  of the  government.  As State       policies
are issued  outside the control of the banks in China and form part of the macro and
 micro-economic       measures,  many bankers and their  customers are often stuck in the
 situation,  thus they are generally more       tolerant and supportive to overdue loans
than their  counterparts in Western  economies;  they will work hard       to deal with
the  situation  provided the  borrowers  are  responsible  and have good  relationship
 with the       lenders. As
of March 31, 2007,  the  Companys  subsidiary,  Shenyang  Maryland  International
 Industry  Co.  Limited  (Maryland),  has ongoing  discussions with
lending banks to renegotiate various matured bank loans totaling  $35,032,300 with
the following relevant banks: 1.  
The Bank of China: As of March 31, 2007, bank loans from the Bank of China totaled
 $7,751,938.  The loans       were  originally  extended  for the  development  of the
 President  Building  in  2000.  While  the bank had       originally  agreed orally on a
10-year  long-term loan period for the project,  in 2002, owing to a change in
      lending  policy,  the Bank  changed  the terms of the loans  into  short-term
 development  loans.  Since the       maturity of the various loans by December 31, 2004,
 Maryland commenced ongoing  negotiation with the Bank of       China for an extension of
the loans.  Due to the initial verbal  agreement and a credible  relationship  over
      the years,  the Bank has agreed to  renegotiate  a  settlement  term.  As of July
13,  2006,  the Company has       received a written notice from the Bank of China
explaining the situation. 2.  
The  Agricultural  Bank of China:  As of March 31, 2007,  bank loans from the
 Agricultural  Bank of China       totaled  $2,248,062.  The loans were originally
 extended for the development of Chenglong Garden.  Since the       loans matured on
December 21, 2005,  Maryland has commenced  ongoing  negotiation with the Agricultural
 Bank       of China for a short-term loan extension for another one-year term. 26




3.  
The  Industrial and  Commercial  Bank of China (ICBC):  As of March 31, 2007, the bank
loans from the ICBC       totaled  $25,032,300 and were originally  extended for the
development of the Chenglong Garden in 2001. Since       the loans had matured at the end
of 2003,  Maryland has commenced  ongoing  negotiations  for an extension of       the
 loans.  As part of the  listing  procedures  on the Stock  Exchange  of Hong  Kong,
 reorganization  and       restructuring,  certain  of the loans  totaling  $22,448,320
 were sold to the Great  Wall  Asset  Management       Limited.  On January 5, 2006,
 Great Wall Asset Management  Limited issued a notification  letter to Maryland
      that certain loans  totaling  $22,448,320  has been assigned from the ICBC.  The
Great Wall Asset  Management       Limited  and  Maryland  are  conducting  ongoing
 negotiation  on the terms and  repayment  schedules  of the       assigned loans. The
terms and repayment  schedules  requires approval from various government  bureaus,  and,
      accordingly,  Maryland  believed the  negotiation  could be closed by the end of
2006, but  negotiations  are       still ongoing.  On June 22, 2006,  Maryland has also
negotiated a settlement  repayment schedule with ICBC on       the remaining  loans
totaling  $7,992,326.  Under the negotiated  terms of the repayment  schedule,  Maryland
      will be  required  to make  quarterly  installment  repayments  commencing  from
June 30, 2006 until June 30,       2007. As of March 31, 2007,  Maryland has paid
 $5,434,782 to ICBC in  installments on the repayment plan and       has two  remaining
 payments of  $1,278,772  that are due on March 31, 2007 and June 30, 2007.  When
Maryland       shall have fully  repaid the last  installment  on or before  June 30,
 2007,  accrued  accumulated  interest       totaling $1,150,895 will be waived by ICBC. (5)   Contractual
Obligations The
following table is a summary of the Companys contractual obligations as of March
31, 2007: Total
     
     Less thanone year
     
     1-3 Years
     
     ThereafterShort-Term Debt
     
     
     $
        50,536,176
        
     
     $
        50,536,176
        
     
     $
        --
        
             
     $
        --Long-Term Debt
        
        
     2,203,871
        
     
     395,547
        
     
     856,152
        
     
     952,172Amounts due to related parties
     537,717
        
     
     537,717
        
     
     --
        
     
     --Purchase commitments
     2,325,581
        
     
     2,325,581
        
     
     --
        
     
     --Construction commitments
     87,016,837
        
     
     87,016,837
        
     
     --
        
     
     --Total Contractual Cash Obligations
     $142,620,182
        
     
     $140,811,858
        
     
     $856,152
        
     
     $952,172 The
construction commitments represent amounts due for the development of the Xita Project.
 The Company          is currently negotiating the sale of its interest in the project
including the associated commitments. 27




Item 3.
 Quantitative and Qualitative Disclosure About Market Risk As
an  underpinning  industry in China,  real estate has  developed  into a crucial  pulling
force to the all-round growth of national  economy with its long-term  continuous  speedy
growth and positive  momentum of both production
and marketing  thrive which have attracted  extensive  attention  both in the domestic and from overseas.  A lot of
problems and risks arose with the real estate prosperity due to its over speedy development: The
 national  land is fully  controlled  by the  government,  and its price keeps  rising in
 accordance  with the supply-demand  relationship,  which  resulted in the  over-fast
 increase of the  investment in real estate and the capital pressure. Meanwhile, the
adjustment of lending rate increased the risk and pressure of capital operation. The
 contradictions  of real estate market  structure in some regions  emerged,  among which
the  contradiction  of commodity houses supply structure is conspicuous.  On one hand,
some large-area residences,  high rises and premium projects emerged in endlessly,  but
they are unsuitable for sale; on the other hand,  normal-sized commodity houses and
economic  and  functional  houses  targeting  the low and medium  wages  earners in the
urban area are in short supply.  The housing price still rises faster in some cities,
 the  construction of living houses  safeguard system lags behind in other cities,  which
 resulted in the  disharmony  between  supply and demand.  So the order of real estate
market is to be further standardized. There
still exist the phenomena of false  advertisements,  contract fraud and illegal  actions
in agent service and logistic  administration,  which  are to be  kept  within  limits
 in  effect.  It  should  not  only  rely  on the self-restriction  of real estate
 enterprises to address all these  problems.  The credit  standing  system of real estate
market is to be perfected.  The operation,  supervision  and control systems of real
estate market are to be further improved. Item  4.
 Controls and Procedures As
of March 31,  2007 an  evaluation  was  performed  under the  supervision  and with the
 participation  of Great China's management,  including the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and  operation  of Great
 China's  disclosure  controls  and  procedures.  Based on that  evaluation,  Great
China's  management,  including the Chief  Executive  Officer and Chief  Financial
 Officer,  concluded  that Great China's  disclosure  controls  and  procedures  were
 effective.  There have been no  significant  changes in Great China's internal controls
or in other factors that could  significantly  affect internal controls subsequent to the
date of the evaluation. PART II. OTHER INFORMATION Item  1A.
 Risk Factors Any
statements in this discussion that are not historical facts are  forward-looking
 statements that involve risks and uncertainties;  actual results may differ from the
 forward-looking  statements.  Sentences or phrases that use such words as believes,
anticipates,  plans,  may,  hopes,  can, will,  expects, is
designed to,with the intent,  potential and others
 indicate  forward-looking  statements,  but their absence does not mean that a statement
is not forward-looking.  Forward-looking statements are based on current expectations,
 estimates, 28




and
 projections  as of the date of this  report,  and they are  subject to a number of
risks,  uncertainties,  and assumptions  that could cause actual  results to differ
 materially  from those  described  in the  forward-looking statements.  Such
 forward-looking  statements  should,  therefore,  be  considered  in light of various
 important factors,  including  those set  forth in this  report  and in our  annual
 report  on Form 10-K for the year  ended December 31, 2006,  under the caption ITEM
1A. RISK FACTORS. In  particular,  the matters  discussed  above under PART I, ITEM
2.  MANAGEMENTS  DISCUSSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS should be viewed as  creating  substantial  uncertainty  about the  Company
and its  prospects  for the future.  Any one or a combination of factors could materially
affect our operations and financial condition. Item  6.
 Exhibits. Exhibits:
 Copies of the following documents are included or furnished as exhibits to this report
pursuant to Item 601 of Regulation S-K. ExhibitNo.
     SEC Ref.No.
     Title of Document31.1
     31
     The certification of chief executive officer required by
        Rule 13a-14(a) or Rule 15d-14(a)31.1
     31
     The certification of chief financial officer required by
        Rule 13a-14(a) or Rule 15d-14(a)32.1
     32
     The certifications required by Rule 13a-14(b) or
        Rule 15d-14(b) and 18 U.S.C. Section 1350 29




SIGNATURES In
accordance with 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: May 14, 2007
        
     By:
     
     /s/ Frank JiangFrank Jiang, Chief Executive Officer(Principal Financial Officer)   Date: May 14, 2007
     
     By:
     
     /s/ Danny Sui Keung ChauDanny Sui Keung Chau, Chief Financial Officer(Principal Financial and Accounting Officer) 30