UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q T
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period September 30, 2008 ̈
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the transition period from        to  Commission File No.
0-23015 GREAT CHINA
INTERNATIONAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) Nevada
     
     87-0450232(State or Other Jurisdiction of
Incorporation or Organization)
     
     (IRS Employer Identification No.) C Site 25-26F Presidential Building, No. 69 Heping North Street Heping District, Shenyang 110003, Peoples Republic of China (Address of Principal Executive Offices) 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 the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-3 of the Exchange Act). (check one) Large accelerated filer   ̈   Accelerated filer   ̈
          Non-accelerated filer   ̈   Smaller 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 State the number of shares outstanding of each of the issuers classes of common equity:  As of November 12, 2008,
there were 11,759,966 shares of common stock outstanding.




FORM 10-Q GREAT CHINA INTERNATIONAL HOLDINGS, INC. TABLE OF CONTENTS
     
     Page PART I.
     Item 1. Financial Information
     3Balance Sheet as of September 30, 2008 (Unaudited) and
December 31, 2007
     3Statements of Operations for the Three-Month and Nine-Month Periods
Ended September 30, 2008 and 2007 (Unaudited)
     4Statements of Cash Flows for the Nine-Month Periods
Ended September  30, 2008 and 2007 (Unaudited)
     5Notes to the Financial Statements
     6Item 2.  Managements Discussion and Analysis of
Financial Condition and Results of Operations
     21Item 3.  Quantitative and Qualitative Disclosures
About Market Risk
     25Item 4T.  Controls and Procedures
     25PART II.
     Other Information
     25Item 6. Exhibits
     26Signatures
     27  2




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS September 30, 2008
      
     December 31, 2007(Unaudited)ASSETSCurrent assets:Cash and equivalents

     $7,417,041
        

     $10,044,579Accounts receivable, net
        
        
     304,385
        

     325,058Receivable on disposal of subsidiaries
     --
        

     30,701,957Other receivable, net
     128,028
        

     1,070,863Properties held for resale
     6,911,150
        
 
     7,696,437Total current assets
     14,760,604
        
 
     49,838,893Property and equipment, net
     1,070,001
        
 
     1,095,007Properties held for rent
     50,755,355
        
 
     49,537,329Total assets
     $66,585,959
        

     $100,471,229LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Short-term loans
     $21,652,400
        

     $25,231,297Accounts payable and accrued expenses
     4,429,318
        

     8,615,415Other payable
     1,651,865
        

     5,723,489Payable to a former subsidiary
     768,287
        

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

     8,898,502Advances from buyers
     1,904,587
        

     2,034,019Taxes payable
     8,812,204
        

     8,552,316Total current liabilities
     41,002,741
        

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

     5,486,968Total liabilities
     41,002,741
        

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

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

     4,562,855Statutory reserve
     638,128
        

     638,128Other comprehensive income
     2,193,113
        

     1,468,546Retained earnings
     18,174,061
        

     18,753,485Total stockholders' equity
     25,583,218
        

     25,434,773Total liabilities and stockholders' equity
     $66,585,959
        

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




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
                                 FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
                                                     (UNAUDITED) Three month periods ended September 30,
     Nine month periods ended September 30,2008
        
     2007

     2008
        
     2007RevenuesReal estate sales
        
        
     $
        816,571
        

     $
        709,419
        

     $
        3,035,256
        

     $
        2,334,219Rental and management fee income
     1,539,255
        

     1,195,996
        

     4,453,451
        

     4,058,230Total revenues
     2,355,825
        

     1,905,415
        

     7,488,707
        

     6,392,449Cost of revenues
     1,157,439
        

     664,227
        

     3,174,119
        

     3,896,087Gross profit
     1,198,387
        

     1,241,189
        

     4,314,588
        

     2,496,362Operating expensesSelling expenses
     3,893
        

     3,354
        

     85,981
        

     77,074General and administrative expenses
     822,270
        

     5,059,096
        

     2,926,827
        

     7,253,434Agent fee
     --
        

     2,649,007
        

     --
        

     2,649,007Depreciation and amortization
     754,306
        

     635,280
        

     2,214,530
        

     1,750,523Total operation expenses
     1,580,469
        

     8,346,737
        

     5,227,338
        

     11,730,038Loss from operations
     (382,082
        )

     (7,105,549
        )

     (912,750
        )

     (9,233,676
        )Other income (expense)Land leveling income (expense)
     --
        

     --
        

     (391,400
        )

     5,960,265Gain on settlement of debt
     --
        

     15,918,226
        

     1,087,805
        

     15,918,226Gain on interest expense waived
     1,002,805
        

     --
        

     1,002,805
        

     --Loss on terminated project
     --
        

     (1,311,323
        )

     --
        

     (1,510,865
        )Other income, net
     555,012
        

     (753,474
        )

     699,092
        

     (229,638
        )Interest and finance costs
     (655,295
        )

     (2,155,487
        )

     (2,064,619
        )

     (3,450,746
        )Total other income (expense)
     902,523
        

     11,697,942
        

     333,327
        

     16,687,242Income (loss) before income taxes
     520,441
        

     4,592,394
        

     (579,424
        )

     7,453,567Provision for income taxes
     164,030
        

     2,532,595
        

     --
        

     3,548,240Income (loss) from operations
     356,411
        

     2,059,799
        

     (579,424
        )

     3,905,327Discontinued operationsGain from entity held for sale
     --
        

     --
        

     --
        

     211,059Net income (loss)
     356,411
        

     2,059,799
        

     (579,424
        )

     4,116,386Other comprehensive income:Foreign currency translation adjustment
     91,224
        

     277,707
        

     724,567
        

     507,427Net comprehensive income (loss)
     447,635
        

     2,337,506
        

     145,144
        

     4,623,813Net income (loss) per share from continued operationsBasic
     $0.03
        

     $0.18
        

     $(0.05
        )

     $0.33Diluted
     $0.03
        

     $0.18
        

     $(0.05
        )

     $0.33Net income per share from discontinued operationsBasic
     $--
        

     $--
        

     $--
        

     $0.02Diluted
     $--
        

     $--
        

     $--
        

     $0.02Net income (loss) per shareBasic
     $0.03
        

     $0.18
        

     $(0.05
        )

     $0.35Diluted
     $0.03
        

     $0.18
        

     $(0.05
        )

     $0.35Weighted average number of shares outstandingBasic
     11,759,966
        

     11,759,966
        

     11,759,966
        

     11,759,966Diluted
     11,760,410
        

     11,759,966
        

     11,759,966
        

     11,759,966  The accompanying notes are an integral part of these unaudited
consolidated financial statements. 4




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
                                                     (UNAUDITED) 2008
     
     2007Cash flows from operating activities:Net income (loss)
     $(579,424
        )
     
     $4,116,386Adjustments to reconcile net income (loss) to operating activities -Depreciation and amortization
     2,214,530
        
     
     1,750,523Gain on interest expense waived
     (1,002,805
        )
     
     --Gain on settlement of debt
     (1,087,448
        )
     
     (15,918,226
        )Provision for doubtful accounts
     92,379
        
     
     3,665,323Loss on termination of project
        
        
     
        --
        
     
     
        1,510,865Non-cash stock compensation expense
     3,301
        
     
     --(Increase) decrease in current assets:Accounts receivable and other receivable
     31,677,751
        
     
     (943,016
        )Advances to suppliers
     --
        
     
     1,039,581Properties held for resale
     1,271,326
        
     
     1,219,604(Increase) decrease in current liabilities:Accounts payable and other payables and accrued expenses
        
        
     
        (24,082,976
        )
     
     688,569Advances from buyers
     (259,448
        )
     
     (728,514
        )Income and other taxes payable
     21,601
        
     
     4,632,604Net cash provided by operating activities from continuing operations
     8,235,786
        
     
     1,033,699Net cash provided by operating activities from discontinued operations
     --
        
     
     17,056,254Net cash provided by operating activities
     8,235,786
        
     
     18,089,952Cash flows from investing activities:Construction in progress
     (34,409)
        
     
     7,861,324Purchase of property & equipment
     (48,292
        )
     
     (6,182,583
        )Net cash provided by/(used in) investing activities
        
        
     
        (82,701
        )
     
     
        1,678,741Cash flows from financing activities:Loan proceeds
     --
        
     
     5,333,333Loan repayments
     (10,886,967
        )
     
     (22,005,151
        )Advances to directors and affiliated companies
     --
        
     
     (671,489
        )Net cash in financing activities
     (10,886,967
        )
     
     17,343,307Effect of exchange differences
     106,344
        
     
     748,950Net increase/(decrease) in cash and cash equivalents
     (2,627,538
        )
     
     3,174,336Cash and cash equivalents, beginning of period
     $10,044,579
        
     
     $1,769,744Cash and cash equivalents, end of period
     $7,417,041
        
     
     $4,944,080Supplemental disclosures of cash flow information:Interest paid
     $3,516,313
        
     
     $1,951,286Income taxes
     $97,428
        
     
     $380,888 The accompanying notes are an integral part of these unaudited
consolidated financial statements. 5




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) 1.
Description
of business Nature of organization Great China  International  Holdings,  Inc., (the Company ) was incorporated in the State of Nevada
     on December 4, 1987,  under the name of Quantus  Capital,  Inc.,  and in 1992, it changed its name to
     Red Horse  Entertainment  Corporation.  On September 15, 2005,
     the Company  changed its name to Great China  International  Holdings,  Inc. Beijing  Xinchao
 Property  Company Limited  (Beijing  Xinchao) was registered in Beijing on March 27,
2008.      Beijing  Xinchao was 100% owned by Shenyang  Xinchao with a registered
 capital  amounting to $4,255,440  (RMB      29,800,000) and a defined period of
existence of 10 years. Beijing Xinchao was disposed of in May 2008 for the amount of $4,255,440 and no gain/loss was recognized in
the disposal. The disposal amount was fully received on September 30, 2008. On August 7, 2007,
 the Company  completed  the  acquisition  of all of the issued share capital of Loyal
Best      Property  Development  Limited  (Loyal  Best),  a Hong Kong  limited
 company,  from Gentle  Knight  Limited. Loyal Best was the
sole owner of an entity  called  Shenyang  Loyal Best Hunnan  Property  Development
 Limited      (Shenyang  Loyal  Best),  a wholly owned  foreign  enterprise  that was a
party to a  Confirmation  Letter of      Auction  with  respect  to a parcel of land
 located  at the  center  area of  Hunnan  New Zone in the city of      Shenyang,  China.  Immediately after acquisition,  the Company decided to sell Loyal Best
at a      gain. The  Company,
 through its  wholly-owned  subsidiary  -  Silverstrand,  transferred  100% of the issued
 share      capital of Loyal Best Property  Development Limited to Celebrities
 Real Estate  Development Group Co., Ltd. in      exchange for the payment of
 approximately  $48.70  million(360  million  Chinese yuan).  The  transaction was
     closed on December 15, 2007. As of September 30, 2008,  the Company fully  received the
selling amount of disposal      on Loyal Best. The  Company  engages
in the  development  and sale of high  quality  real  estate  properties  and  developed
     residential and commercial  properties includes Maryland building,  President Buildings, Qiyun new village,
      Peacock Garden, and Chenglong Garden.  The Company
also engages in rental of commercial  buildings in the City      of Shenyang,  China.
Shenyang Maryland, the Companys indirect wholly-owned  subsidiary,  was one of the first
     private property developers and retailers in China. 2.
Summary
of significant accounting policies  The  accompanying
 consolidated  financial  statements  have  been  prepared  in  conformity  with
 accounting      principles  generally  accepted in the United  States of America.  The
 Companys  functional  currency is the      Chinese Renminbi (CNY);  however the
accompanying  consolidated  financial statements have been translated and      presented
in United States Dollars ($) on the basis set forth below. The following is a
summary of significant accounting policies: Unaudited Interim
Financial Information- The accompanying unaudited financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all of the information required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the interim
periods are not necessarily indicative of the results for any future period.
These statements should be read in conjunction with the Company's audited
financial statements and notes thereto for the fiscal year ended December 31,
2007. The results of the nine month period ended September 30, 2008 are not
necessarily indicative of the results to be expected for the full fiscal year
ending December 31, 2008. 6




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) Principles of
Consolidation The accompanying consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant inter-company transactions and balances within the
Company are eliminated in consolidation. Allowance for
Doubtful Accounts- The Company maintains reserves for potential credit losses on
accounts receivable. Management reviews the composition of accounts receivable
and other receivable and analyzes historical bad debts, customer concentrations,
customer credit worthiness, current economic trends and changes in customer  payment
 patterns to evaluate  the adequacy of these  reserves.  As of September 30, 2008 and
     December 31, 2007, the Company reserved $5,613,432 and $5,174,895 respectively. Properties held for
sale The Company capitalizes as properties held for sale, the direct construction
and development costs, property taxes, interest incurred on costs related to
land under development and other related costs (i.e. engineering, surveying,
landscaping, etc.) until the property reaches its intended use. At September 30, 2008
and December 31, 2007, properties held for sale amounted to $6,911,150 and
$7,696,437, respectively. Properties held for rental  Properties include buildings held for rental and land use rights,
which are being depreciated over the estimated useful lives of the related assets.
Depreciation is computed on the straight-line basis over 20-26 years As
of September 30, 2008 and December 31, 2007 properties held for rental consist of the
following: 9-30-2008
     12-31-2007Buildings and land use rights
     62,738,561
     58,825,103Accumulated depreciation
     (11,983,206)
     (9,287,774)50,755,355
     49,537,329 Depreciation
expense for the nine month periods ended September 30, 2008 and 2007, totaled $2,035,936
and $1,712,665, respectively. Property and
equipment Property and equipment is being depreciated over the estimated useful
lives of the related assets. Depreciation is computed on the straight-line basis
over useful lives as follows: Buildings
     8-26 yearsLeasehold improvements
     20 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixtures
     5 years 7




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) As of September 30, 2008
and December 31, 2007 Property, Plant & Equipment consist of the following: 9-30-2008

     12-31-2007Building
     
     
     $
        365,512
        
        
     $
        342,713Automobile
     1,213,881
        
        
     1,115,768Office equipment & Furniture
     433,059
        

     36,168Construction in progress
     35,112
        

     --Others
     15,851
        

     10,9302,063,415
        

     1,855,579Accumulated depreciation
     (993,414
        )

     (760,572
        )Property and equipment, net
     $1,070,001
        

     $1,095,007 Depreciation expense
for the nine month periods ended September 30, 2008 and 2007, totaled $178,594 and
     $37,858 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 nine month periods ended September 30, 2008, 2007 and 2006. As of September 30, 2008
fixed assets  totaling  $27,616,605  have been pledged as  security to various banks in
     respect of borrowings totaling $21,652,400. Construction-in-progress Properties currently under development are accounted for as
construction-in-progress. Construction-in-progress is recorded at acquisition
cost, including land rights cost, development expenditure, professional fees
and the interest expenses capitalized during the course of construction for the purpose of financing
the project.  Upon completion and readiness for use of the project,      the cost of
construction-in-progress is to be transferred to properties held for sale. Construction-In-Progress
 is valued at the lower of cost or market.  Management  evaluates the market value of
     its  properties  on a  quarterly  basis by  comparing  selling  prices of its
 properties  with those of other      equivalent  properties in the vicinity  offered by
other developers  reduced by anticipated  selling costs and      associated taxes. In the
case of construction in progress,  management takes into  consideration the estimated
     cost to complete the project when making the lower of cost or market calculation. As of September 30, 2008
and December 31, 2007, the Company had $35,112 and $0 construction-in-progress balance respectively. 8




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) Revenue Recognition Real estate sales Real estate sales are
reported in  accordance  with the  provisions of SFAS No. 66,  Accounting  for Sales of
     Real  Estate.  Profit from the sales of  development  properties,  less 5% business
tax, is recognized by the      full accrual method when the sale is consummated.  A sale
is not considered  consummated until (1) the parties      are bound by the terms of a
contract,  (2) all consideration has been exchanged,  (3) any permanent  financing
     for which the seller is  responsible  has been  arranged,  (4) all  conditions
 precedent  to closing have been      performed,  (5) the seller does not have
substantial  continuing  involvement  with the property,  and (6) the      usual risks
and rewards of ownership have been  transferred to the buyer.  Sales  transactions not
meeting all      the  conditions of the full accrual  method are accounted for using the
deposit  method of  accounting.  Under      the deposit method,  all costs are
capitalized as incurred,  and payments received from the buyer are recorded      as a
deposit  liability.  Real estate rental income,  less 5% business tax, is recognized on
the straight-line      basis over the terms of the tenancy agreements. For land sales,  the
Company  recognizes the revenue when title of the land  development  right is transferred
     and collectability is assured. For the reimbursement
on infrastructure  costs, the Company recognizes the income (loss),  which is at the fair
     market  value  agreed  between the Company and the PRC  government,  when they enter
into a binding  agreement      with the government agreeing on the reimbursement. Real Estate
Capitalization and Cost Allocation Real
estate held for development or sale consists of residential and commercial units under
construction and units completed. Real estate held for
 development  or sale is stated at cost or estimated net realizable  value,  whichever is
     lower. Costs include land and land improvements,  direct  construction costs and
development costs,  including      predevelopment  costs,  interest on  indebtedness,
 real estate taxes,  insurance,  construction  overhead and      indirect  project costs.
 Selling and  advertising  costs are expensed as incurred.  Total  estimated costs of
     multi-unit developments are allocated to individual units based upon specific
identification methods. If the real estate is
 determined  to be  impaired,  it will be written  down to its fair market  value.  Real
     estate held for  development  or sale costs  include the cost of land use rights,
 land  development  and home      construction  costs,  engineering  costs,  insurance
costs,  wages, real estate taxes, and interest related to      development  and construction.  All costs are  accumulated by specific  projects and allocated to
residential      and commercial  units within the respective  projects.  The Company
leases the land for the  residential  unit      sites under land use rights with  various
 terms from the  government  of the PRC. The Company  evaluates  the      carrying  value
for  impairment  based on the  undiscounted  future cash flows of the assets.
 Write-downs  of      inventory deemed impaired would be recorded as adjustments to the
cost basis. No depreciation is
provided for construction in progress. Capitalization of
Interest In  accordance  with
SFAS 34,  interest  incurred  during  construction  is  capitalized  to  construction  in
     progress.  All other  interest is expensed as incurred.  During the nine month
 periods ended September 30, 2008,      the Company did not have any construction therefore
no interest was capitalized. 9




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) Other income Other income consists
of land leveling  income,  which was a one-time  service  performed pursuant to the request by
     our  customer  and gain on  settlement of debt.  These  revenues are  recognized
 when the services have been      performed and the settled amount has been paid in
accordance with the terms of the agreement. Foreign currencies-
The Companys principal country of operations is in The Peoples Republic of China. The
financial position and results of operations of the Company are determined
using the local currency (Renminbi or Yuan) as the functional currency. The
results of operations denominated in foreign currency are translated at the average
rate of exchange during the reporting period. Assets and
 liabilities of the Company have been  translated at year- end exchange  rates,  while
revenues and      expenses  have been  translated at average  exchange  rates in effect
 during the year.  Resulting  cumulative      translation  adjustments have been recorded
as other  comprehensive  income (loss) as a separate  component of      stockholders'
equity. Equity  denominated
 in the functional  currency is translated at the historical  rate of exchange at the
time      of  capital  contribution.  All  translation  adjustments  resulting  from the
 translation  of the  financial      statements  into the reporting  currency (US Dollars)
are dealt with as an exchange  fluctuation  reserve in      shareholders equity. Use of estimates The
preparation of financial statements in accordance with generally accepted accounting
principles require management to make estimates and assumptions that affect
reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ from
those estimates. Concentrations of
business and credit risk  Financial instruments that potentially subject the Company
to concentrations of credit risk are cash, accounts receivable and other
receivables arising from its normal business activities. The Company places
its cash in what it believes to be credit-worthy financial institutions. The
Company has a diversified customer base, most of which are in China. The Company controls
credit risk related to accounts  receivable  through credit approvals,  credit limits and
     monitoring  procedures.  The Company  routinely  assesses the financial  strength of
its customers  and, based      upon factors surrounding the credit risk,  establishes an
allowance,  if required,  for uncollectible accounts      and, as a consequence,
 believes that its accounts  receivable  credit risk exposure  beyond such allowance is
     limited. Recent accounting
pronouncements In September 2006, FASB issued SFAS 157 Fair Value Measurements.
This Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This Statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this Statement
does not require any new fair value measurements. However, for some entities, the
application of this Statement will change current practice. This Statement is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. The management
is currently evaluating the effect of this pronouncement on financial statements. In  September  2006, FASB issued SFAS 158  Employers  Accounting  for  Defined  Benefit  Pension and Other
     Postretirement  Plans  an  amendment of FASB  Statements No. 87, 88, 106, and 132(R) This
Statement  improves      financial  reporting  by  requiring  an employer to  recognize
 the over funded or under  funded  status of a defined  benefit  postretirement
 plan  (other than a  multiemployer  plan) as an asset or  liability  in its
     statement of financial  position
 and to  recognize  changes in that funded  status in the year in which the      changes
occur through  comprehensive  income of a business entity or changes in unrestricted  net
assets of a      not-for-profit  organization.  This Statement also improves  financial
 reporting by requiring an employer to      measure the funded  status of a 10




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) plan as of
the date of its year-end  statement of  financial  position,  with      limited
 exceptions.  An employer with publicly traded equity  securities is required to
initially  recognize      the funded status of a defined benefit  postretirement plan and
to provide the required disclosures as of the      end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity  securities      is
 required to  recognize  the funded  status of a defined  benefit  postretirement  plan
and to provide the      required  disclosures  as of the end of the fiscal  year ending
 after June 15,  2007.  However,  an employer      without publicly traded equity
 securities is required to disclose the following  information in the notes to
     financial  statements for a fiscal year ending after  December 15, 2006, but before
June 16, 2007,  unless it      has applied the recognition provisions of this Statement
in preparing those financial statements: a.   A brief
description of the provisions of this Statement b.   The date
that adoption is required c.   The date
the employer plans to adopt the recognition provisions of this Statement, if earlier. The  requirement  to
measure  plan assets and benefit  obligations  as of the date of the  employers  fiscal
     year-end  statement of financial  position is effective for fiscal years ending
after  December 15, 2008. The      management is currently evaluating the effect of this
pronouncement on financial statements. In December  2007,
 the FASB  issued  SFAS No. 160,  Non-controlling  Interests  in  Consolidated  Financial
     Statements.  This  Statement  amends  ARB 51 to  establish  accounting  and
 reporting  standards  for  the      non-controlling  (minority)  interest  in a
 subsidiary  and  for the  deconsolidation  of a  subsidiary.  It      clarifies  that a
 noncontrolling  interest in a  subsidiary  is an ownership  interest in the
 consolidated      entity  that  should be  reported  as equity  in the  consolidated
 financial  statements.  SFAS No.  160 is      effective for the Companys fiscal year
beginning  October 1, 2009.  Management is currently  evaluating the      effect of this
pronouncement on financial statements. In March 2008, the
FASB issued FASB Statement No. 161, Disclosures about Derivative  Instruments and Hedging
     Activities.  The new standard is intended to improve  financial  reporting about
derivative  instruments and      hedging activities by requiring enhanced  disclosures to
enable investors to better understand their effects      on an entitys  financial
 position,  financial  performance,  and cash flows. It is effective for financial
     statements  issued for fiscal years and interim  periods  beginning  after  November
 15,  2008,  with early      application  encouraged.  The new  standard  also  improves
 transparency  about the location and amounts of      derivative  instruments in an entitys
financial statements;  how derivative  instruments and related hedged      items are
accounted for under Statement 133; and how derivative  instruments and related hedged
items affect      its financial  position,  financial  performance,  and cash flows.
 Management is currently  evaluating  the      effect of this pronouncement on financial
statements. In December 2007, the
FASB issued SFAS No. 141(R),  Business  Combinations.  This Statement  replaces SFAS
     No. 141, Business  Combinations.  This Statement retains the fundamental
 requirements in Statement 141 that      the  acquisition  method of  accounting  (which
 Statement  141 called the purchase  method) be used for all      business  combinations
 and for an acquirer to be identified for each business  combination.  This Statement
     also  establishes  principles  and  requirements  for how the acquirer:  a)
 recognizes  and measures in its      financial  statements the identifiable  assets
acquired,  the liabilities  assumed,  and any  noncontrolling      interest in the
acquiree;  b) recognizes and measures the goodwill acquired in the business combination
or a      gain from a  bargain  purchase  and c)  determines  what  information  to
 disclose  to enable  users of the      financial  statements to evaluate the nature and
 financial  effects of the business  combination.  SFAS No.      141(R) will apply
 prospectively  to business  combinations  for which the  acquisition  date is on or
after      Companys fiscal year beginning  October 1, 2009. While the Company has not
yet evaluated this statement for      the impact,  if any, that SFAS No. 141(R) will have
on its consolidated  financial  statements,  the Company      will be required to expense
costs related to any 11




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) acquisitions
 after  September 30, 2009. The management is      currently evaluating the effect of
this pronouncement on financial statements. In May 0f 2008, FSAB issued SFASB No.162, The Hierarchy of
Generally Accepted Accounting Principles.  The pronouncement mandates the GAAP hierarchy
reside in the accounting literature as opposed to the audit literature.  This has the
practical impact of elevating FASB Statements of Financial Accounting Concepts in the
GAAP hierarchy.  This pronouncement will become effective 60 days following SEC approval.
 The company does not believe this pronouncement will impact its financial statements. In May of 2008, FASB issued SFASB No. 163, Accounting for
Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.  The
scope of the statement is limited to financial guarantee insurance (and reinsurance)
contracts.  The pronouncement is effective for fiscal years beginning after December 31,
2008.  The company does not believe this pronouncement will impact its financial
statements. Reclassifications Certain
amounts in the 2007 financial statements have been reclassified to conform to
the 2008 presentation. These reclassifications had on effect on previously
reported results of operations or retained earnings. 3.
Receivable
on disposal of subsidiaries  The amount of
 receivable  on disposal of  subsidiary  as of September 30, 2008 and December 31, 2007 are
$0 and      $30,701,957,  respectively.  The receivable balance was non interest bearing,
unsecured and due on demand. The      Company  received the entire  balance on disposal
of subsidiary  amounting  to $30,701,957 in the nine-month period ended      September 30, 2008. 4.
Properties
held for resale  Properties held for
resale at September 30, 2008 and December 31, 2007 by project are as follows: 9-30-2008
        
     12-31-2007Qiyun New Village
     
     
     $
        1,359,920
        

     $
        1,595,366Peacock Garden
     246,628
        

     231,244Chenglong Garden
     4,644,028
        

     5,250,960President Building
     218,426
        

     204,801Maryland Building
     268,080
        

     251,358Others
     174,068
        

     162,708Total
     $6,911,150
        

     $7,696,437 The Company
 introduced a Five-year Trial  Accommodation  Scheme (the Scheme) to attract
 potential buyers      when initial sales at the project did not meet expectations.
 Under the Scheme,  property buyers were required      to pay a 10%  refundable  deposit
 based on the sale price of the property or $6,039  (RMB50,000)  and another      20%,
based on the sale price of the property which is  non-refundable,  over 5 years by
monthly  installments,      totaling 30%  throughout  the trial period.  The remaining
70% of the  consideration  is due and payable      immediately  after the trial
period when the property  buyers exercise their option whether or not to complete
     the  purchase.  If the buyer  chooses  not to buy the  property,  the 10%
 refundable  deposit or $6,039  (RMB      50,000) is refunded to the buyers (less
any unpaid  rental due) and monthly  installments  received  over      the 5-year  trial
period will have been  recognized  as rental  income in the year in which they arose. 12




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) As
of      September 30, 2008 and December 31, 2007,  $880,678 and $733,774  worth of
 properties  held for sale in Qiyun New      Village were occupied by individuals  who
agreed to buy the properties  without having fully paid the purchase      consideration.
 $245,467  and  $196,103  was  included in advance  from buyers for this Scheme as of
September 30      2008 and December 31, 2007. 5.
Accounts
payable and accrued expenses  Accounts payable and
accrued expenses consisted of following as of September 30, 2008 and December 31, 2007: 9-30-2008

     12-31-2007Accounts payable
     
     
     $
        4,306,315
        

     $
        6,090,281Payroll and welfare payable
     100,503
        

     71,090Interest and other accrued expenses
     22,500
        

     2,454,044Total
     $4,429,318
        

     $8,615,415 6.
Tax
payables  Tax payables consist
of the following as of September 30, 2008 and December 31, 2007: 9-30-2008
        
     12-31-2007(Audited)Income tax payable
     
     
     $
        5,905,120
        
        
     $
        5,944,954Business tax
     590,099
        

     519,634Land appreciate payable
     2,199,939
        

     2,069,781Other levies
     117,046
        

     17,947Total
     $8,812,204
        

     $8,552,316  7.
Bank loans, Short-term and long-term
loans  Short-term loans as of September 30, 2008 and December 31, 2007
are comprised as follow: Nature
     Due on
     Interest perAnnum
     9-30-2008
        
     12-31-2007Bank loan  in default
     
     
     
     12-31-2004
     
     
        7.56%
        
     $
        --
        
        
     $
        9,931,413Bank loan
        
        
     
        10-23-2008
        
     
        10.206%
        
     
        15,800,400
        

     
        14,814,815Various dates tillMortgage loans
        
        
     
        6-12-2023
        
     
        4.2%
        
     --
        

     485,069Bank loans
        
        
     
        6-12-2009
        
     
        9.711%
        
     5,852,000
        

     --Total
        
        
     
        
        
     
        
        
     $
        21,652,400
        

     $25,231,297  The Company acted as
an agent and borrowed mortgage loans amounting to $485,069 as of December 31, 2007 under
     its employees names using properties held by the Company. All balances of mortgage
loans were cleared as of      March 31, 2008 and the pledged assets were released. As
of September 30, 2008 and December 31, 2007, 13




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) the
     carrying values of stock of properties of $0 and $484,764 have been pledged for the
Companys mortgage      loans. As
of September 30, 2008 and 2007, the Company incurred interest expense amounting to
$2,083,416 and $3,450,746, respectively. On June 22, 2006 the
Company entered into a settlement agreement with a bank with respect to $8,230,453
     of past due notes.  In accordance with the settlement      agreement, up to
$1,228,163 loan interest accrued as of December 31, 2007 may be waived if the Company repays the
loan principle per the installments
schedule. The Company is required to pay back the loan principal in three installments in which the
entire bank loan will be paid off on September 20, 2008. The
Company paid three  installments on time per the agreement.  The outstanding interest for
the said loan was partially waived by the bank in the amount of $1,002,805 based on the
agreement and the Company paid off the rest to the bank as of September 30, 2008. The
$1,002,805 waived  interest expense was recognized as other income as of September 30, 2008. The
Company had a default loan amounting to $23,166,667 with due dates in 2003 and 2004. The
defaulted loans      borrowed from Industrial and Commercial Bank of China was assigned
to a third party. The Company entered      into an agreement with the third party on July
30, 2007 to buy back the loans for $7,581,333.  As of      September 30, 2007, the total
consideration of $7,581,333 was fully paid.  According to the agreement, the
     outstanding interest payable associated with the non-performing loan amounting to
$439,014 was also forgiven  as of December 31, 2007. The assets pledged with the loan
were released before the year ended 2007. As of      September 30, 2007, the Company
realized gain on settlement of debt amounted to $15,918,226. 8.
Long-term
debts  secured  Nature
     Due on
     Interest perAnnum
     9-30-2008
        
     12-31-2007Bank loans
     
     
     
     6-12-2009
     
     
        9.711%
        
     $
        --
        
        
     $
        5,486,968Total
        
        
     
        
        
     
        
        
     $
        --
        

     $5,486,968  On
June 18, 2007 the Company obtained a loan from a bank for $5,486,968 at an interest rate
of 8.775% before September 15, 2007 and 9.711% after September 15, 2007, and is due on
June 12, 2009. The loan is secured by fixed assets and land use rights the Company owns.
The long-term debt is due on June 12, 2009.  The loan is reclassified as short-term loan
as of September 30, 2008. 9.
Statutory
Reserve  In  accordance  with
the Chinese  Company  Law,  the Company  has  established  a policy to reserve 10% of its
     annual net income as statutory  reserve.  The Company  reserved  $0 and
$638,128 as of September 30, 2008 and      December 31, 2007 respectively. 10.
Gain on Settlement of Debt  In
January 2008, the Company received the final judgment from Liaoning Province Peoples
Superior Court 2007 (No. 97) dated on December 21, 2007 regarding the law suit between
Shenyang Normal College, Shenyang Maryland (a wholly owned subsidiary of the Company) and
Jiansu Province Suzhong Construction Group, Ltd. The final judgment stated that Shenyang
Maryland should pay Shenyang Normal College RMB 5,210,454 along with the interest
calculated from June 2, 2000 to the payment date using the interest rate of six- 14




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) month
loan per Peoples Bank of China. The interest payable calculated was RMB 2,152,262 as of
March 31, 2008.  As of December 31, 2007, the payable to Shenyang Normal College was RMB
14,561,185 (approximately $1,997,510). The gain on settlement of debt as of September 30,
2008 was calculated as follows: AmountDebt recorded as of December 31, 2007
     
     
     
        RMB            14,561,185Minus: Amount should pay per final judgment
     (5,210,454
        )Interest calculated per final judgment
        
     (2,152,262
        )Gain on settlement of debt as of September 30, 2008
        
        
     
        RMB            7,198,469US$            1,087,805 11.
Loss
on Termination Project  On
July 20, 2007, Xinchao and Yindu ceased development on Xi Ta project and disposed of the
associated assets. Shenyang Heping District Investment Promotion Bureau, the agency
overseeing development of the Xi Ta area, is expanding the project and, as a consequence
of the expansion, reached an agreement with the Company to re-acquire the land use rights
for the Xita Project in exchange for refunding the land transfer fee of $4,437,397 and
reimbursing the Company for amounts expended on the development in the amount of
$1,646,024. On July 20, 2007, the local government approvals and procedures were
completed for transferring the land use rights back to the local government and the
Company received reimbursement of the land transfer fee and the amount expended on the
development in August 2007. As of September 20, 2007, the Companys loss on termination of
the project amounted to $1,510,865. 12.
Stock Options  On January 31, 2008, the Company issued a non-incentive stock option for 10,000 shares to a non-employee
director with an exercise price of $0.65 that will expire on January 31, 2010.  The options vested and
became exercisable over a term of two years. Compensation expense as of September 30, 2008 related to the
outstanding stock options was $3,301. Risk-free interest rate
     2.00%Expected life of the options
     2 yearExpected volatility
     121.79%Expected dividend yield
     0 %  On January 31, 2007, the Company issued a non-incentive stock option for 10,000 shares to a non-employee
director with an exercise price of $4.65 which will expire on January 31, 2009.  The options vested and
became exercisable over a term of two years. Compensation expense as of September 30, 2007 related to the
outstanding stock options was $20,524. Risk-free interest rate
     2.00%Expected life of the options
     2 yearExpected volatility
     83.76%Expected dividend yield
     0 %  15




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) Options outstanding
at September 30, 2008 and related weighted average price and intrinsic value is as follows: ExercisePrices

     TotalOptionsOutstanding

     WeightedAverageRemainingLife(Years)

     TotalWeightedAverageExercise Price

     OptionsExercisable

     WeightedAverageExercise Price

     AggregateIntrinsicValue$
        4.65
        
        
     
        10,000
        

     
        0.16
        

     $
        2.33
        

     
        7,083
        

     $
        2.33
        

     
        --$
        0.65
        

     
        10,000
        

     
        0.66
        

     $
        0.33
        

     
        2,083
        

     $
        0.33
        

$
        1,000 A summary of option
activity as of September 30, 2008, and changes during the periods then ended is presented
     below: Options
     SharesOutstanding at January 1, 2007
     173,568Granted
     10,000Exercised
     --Forfeited or expired
     173,568Outstanding at December 31, 2007
     10,000Granted
     10,000Exercised
     --Forfeited or expired
     --Outstanding at September 30, 2008
     20,000Exercisable at September 30, 2008
     11,667  13.
Disposal of subsidiary Beijing
 Xinchao  was  registered  in Beijing  on March 27,  2008,  which was 100% owned by
 Shenyang      Xinchao with a registered  capital  amounting to $4,255,440 (RMB
 29,800,000) and a defined period of      existence of 10 years. Soon
after Beijing Xinchao registered, the Company changed its business development plan in
Beijing City and disposed of Beijing Xinchao in May 2008 in the amount of $4,255,440
(RMB29,800,000). No gain/loss of the disposal was realized. Beijing Xinchao had no
operations before disposal. The disposal amount was fully received on September 30, 2008. 14.
Income
Tax The
Company is registered in the State of Nevada and has operations primarily in three tax
jurisdictions  the Peoples Republic of China, Hong Kong and the United States. For
operations in the US, the Company has incurred net accumulated operating losses for
income tax purposes.  The Company believes that it is more likely than not that these net
accumulated operating losses will not be utilized in the future. Therefore, the Company
has provided full valuation allowance for the deferred tax assets arising from the losses
at these locations as of September 30, 2008. Accordingly, the Company has no net deferred
tax assets. 16




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) The
provision for income taxes from continuing operations on income consists of the following
for the years ended September 30, 2008 and 2007: 9-30-2008
     9-30-2007US current income tax expense (benefit)Federal
     $              
              --
     $              
              --State
     --
     --HK current income tax expense
     --
     --PRC current income tax expense
     --
     3,548,240Total provision for income tax
     $              
              --
     $      
       3,548,240 The following is a
reconciliation of the provision for income taxes at the U.S. federal income tax rate to
     the income taxes reflected in the Statement of Operations: 9-30-2008
     9-30-2007Tax expense (credit) at statutory rate - federal
     34%
     34%State tax expense net of federal tax
     6%
     6%Changes in valuation allowance
     (40%)
     (40%)Foreign income tax - HK
     17.5%
     17.5%Valuation allowance
     (17.5%)
     (17.5%)Foreign income tax - PRC
     (25%)
     30%Tax expense at actual rate
     (25%)
     47% United States of
America As
of September 30, 2008, the Company in the United States had approximately $120,325 in net
operating loss carry forwards available to offset future taxable income. Federal net
operating losses can generally be carried forward 20 years. The deferred tax assets for
the United States entities at September 30, 2008 consists mainly of net operating loss carry
forwards and were fully reserved as the management believes it is more likely than not
that these assets will not be realized in the future. The following table sets forth the significant components of the net deferred tax assets for operation
in the US as of September 30, 2008 and December 31, 2007. 9-30-2008
     12-31-2007Net operation loss (gain) carry forward
     $           (399,164)
     $        (278,840)Total deferred tax assets
     159,666
     121,111Less: valuation allowance
     (159,666)
     (121,111)Net deferred tax assets
     $           
      --
     $           
      --  Hong Kong As
of September 30, 2008, the Company in the Hong Kong had approximately $124,276 in net
operating loss carry forwards available to offset future taxable income. There is no time
limit for the losses to carry forward. The deferred tax assets for the Hong Kong entities
at September 30, 2008 consists mainly of net operating loss carry forwards and were fully
reserved as the management believes it is more likely than not that these assets will not
be realized in the future. 17




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) The
following table sets forth the significant components of the net deferred tax assets for
operation in the US as of September 30, 2008 and December 31, 2007. 9-30-2008
     12-31-2007Net operation loss (gain) carry forward
     $           (124,276)
     $        23,722,801Total deferred tax assets
     21,748
     --Less: valuation allowance
     (21,748)
     --Net deferred tax assets
     $           
      --
     $           
      --  Peoples
Republic of China (PRC) Pursuant
to the PRC Income Tax Laws, the Company's subsidiary is generally subject to Enterprise
Income Taxes ("EIT") at a statutory rate of 33%, which comprises 30% national income tax
and 3% local income tax. The subsidiary is qualified as a new technology enterprises and
under PRC Income Tax Laws, it subject to a preferential tax rate of 18%. Beginning
January 1, 2008, the new Enterprise Income Tax ("EIT") law will replace the existing laws
for Domestic Enterprises ("DES") and Foreign Invested Enterprises ("FIEs"). The new
standard EIT rate of 25% will replace the 33% rate currently applicable to both DES and
FIEs. The two years tax exemption, three years 50% tax reduction tax holiday for
production-oriented FIEs will be eliminated. The Companys applicable EIT rate under new
EIT law is 25% which was approved by local Tax department. As
of September 30, 2008 and December 31, 2007, the Companys PRC subsidiary had net
operating loss carry forwards which can be carried forward 5 years to offset future
taxable income. The deferred tax assets for Shenyang Maryland, Xinchao and Yindu at
September 30, 2008 consist mainly of net operating loss carry forwards and they were
fully reserved as the management believes they are more likely than not that these assets
will not be realized in the future. The
following table sets forth the significant components of the net deferred tax assets for
operation in PRC as of September 30, 2008 and December 31, 2007. 9-30-2008
     12-31-2007Net operation loss (gain) carry forward
     $           6,726,988
     $        5,383,109Total deferred tax assets
     964,448
     707,372Less: valuation allowance
     (964,448)
     (707,372)Net deferred tax assets
     $           
      --
     $           
      --  Aggregate net deferred tax assets The
following table sets forth the significant components of the aggregate net deferred tax
assets      of the Company as of September 30, 2008 and December 31, 2007: 9-30-2008
     12-31-2007Aggregate:Total deferred tax assets
     $              1,145,862
     $            828,483Less: valuation allowance
     (1,145,862)
     (828,483)Net deferred tax assets
     $           
      --
     $           
      -- 18




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) 15.
Other
comprehensive income  Balances
of related after-tax components comprising accumulated other comprehensive income (loss),
     included in stockholders equity, at September 30, 2008 and December 31, 2007
are as follows: 2007Balance as of December 31, 2006
     $               468,344Change for 2007
     1,000,202Balance as of December 31, 2007
     1,468,546Change in 2008
     724,567Balance as of September 30, 2008
     $            2,193,113  16.
Segment
Information  Statement  of
 Financial  Accounting  Standards  No.  131  ("SFAS  131"),  "Disclosure  About  Segments
 of an      Enterprise and Related  Information"  requires use of the "management
 approach" model for segment  reporting.      The  management  approach  model is based
on the way a  company's  management  organizes  segments  within the      company for
making operating  decisions and assessing  performance.  Reportable segments are based on
products      and services,  geography,  legal  structure,  management  structure,  or
any other manner in which  management      disaggregates a company. During
the years ended September 30, 2008 and December 31, 2007, the Company is organized into
two main business segments: (1) Property for sale, (2) Rental income and Income of
management fee of commercial buildings. The following table presents a summary of
operating information and certain year-end balance sheet information for the nine months
ended September 30, 2008 and year ended December 31, 2007: 19




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2008(Unaudited) 9-30-2008
               
     12-31-2007Revenues from unaffiliated customers:Selling of properties
        
        
     $3,035,256
        
     
     $4,378,993Rental income & Management fee
     4,453,451
        
     
     5,296,634Consolidated
     $7,488,707
        
     
     $9,675,627Operating loss:Selling of properties
     $486,023
        
     
     $708,291Rental income & Management fee
     (41,426
        )
     
     494,988Corporation (1)
     (1,440,199
        )
     
     (7,098,244
        )Consolidated
     $(912,750
        )
     
     $(5,894,965
        )Net income (loss) before taxes:Selling of properties
     $(871,536
        )
     
     $2,637,332Rental income & Management fee
     28,650
        
     
     494,988Corporation (1)
     263,462
        
     
     (1,177,571
        )Consolidated
     $(579,424
        )
     
     $1,954,749Net income (loss):Selling of properties
     $(871,536
        )
     
     $1,122,522Rental income & Management fee
     28,650
        
     
     494,988Corporation (1)
     263,462
        
     
     22,708,21Consolidated
     $(579,424
        )
     
     $24,325,722Identifiable assets:
     
     
     28,650Selling of properties
     $263,462
        
     
     $5,350,282Rental & management fee
     (579,424
        )
     
     49,953,769Corporation (1)
     7,475,747
        
     
     45,167,178Consolidated
     $66,723,822
        
     
     $100,471,229Depreciation and amortization:Selling of properties
     $--
        
     
     $--Rental & management fee
     2,196,386
        
     
     2,326,018Corporation (1)
     18,144
        
     
     17,703Consolidated
     $2,214,530
        
     
     $2,343,721Capital expenditures:Selling of properties
     $74,119
        
     
     $79,187Rental & management fee
     8,582
        
     
     5,765,432Corporation (1)
     --
        
     
     4,878,509Consolidated
     $82,701
        
     
     $10,723,128 (1).
Unallocated loss from Operating income (loss) and Net income (loss) before taxes are
primarily related to general         corporate expenses. 20




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. 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.
 Factors that could have a material and adverse  impact on actual results are described
 under the heading Risk Factors in our annual report on Form 10-KSB,  filed with the
Securities and Exchange  Commission on April 16, 2007,  and under the caption Item 1A.
Risk Factors  below.  We do not undertake any obligation to publicly  release the
results of any revisions to these  forward-looking  statements  that may be made to
reflect  events or  circumstances  after the date  hereof or to reflect  the  occurrence
 of  unanticipated events. (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  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. 
     The President Building comprises three blocks of commercial towers
located in the financial district, Heping Street, of Shenyang City. While the original intention was to
sell the buildings, management subsequently decided to retain most of the properties for leasing purposes.
The buildings maintain a high occupancy rate with tenants who are mostly international companies,
25 of them are Fortune 500 companies. Great China Internationals head office is situated on the 25/F and
26/F of the 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 330 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 which 194 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. 21




Recent Projects Xi
Ta Project. In December 2005, we, through our subsidiaries Silverstrand and Shenyang
Maryland International, acquired Shenyang Xinchao Property Company and Shenyang Yindu
Property Company, which together held 100% of the rights granted for a mixed-use
development located in the Heping District of Shenyang known as the Xita Urban
Reconstruction Project the Xita Project confirmation letter issued by the Heping District
Government in 2004. The confirmation letter, as subsequently amended, contemplated a
99,000 square meter project located in the Xi Ta area in the city of Shenyang. Under the
confirmation letter we paid a land transfer fee of RMB 33,228,480. Shenyang Heping
District Investment Promotion Bureau, which is the agency overseeing development of the
Xi Ta area decided to expand the project and, as a consequence of the expansion, reached
an agreement with us to reacquire the land use rights for the Xita Project in exchange
for refunding the land transfer fee of RMB 33,228,480 (approximately $4,437,397), and
reimbursing us for amounts expended on the development in the amount of RMB 12,345,180
(approximately $1,646,024). In July 2007, the local government approvals and procedures
were completed for transferring the land use rights back to the local government and we
received reimbursement of the land transfer fee of RMB 33,228,480. We received the
remaining RMB 12,345,180 in August 2007. We incurred a net loss on the terminated Xi Ta
Project of $1,510,865. Chessboard
Mountain. Our subsidiary, Shenyang Jitian Property Company Limited, was established
on February 22, 2006 for a new project development known as Chessboard Mountain
Residential project located in the Chessboard Mountain International Tourism Development
District in Shenyang City. In February 2006, Shenyang Jitian Property Company was
confirmed as the highest bidder in a public auction for the Chessboard Mountain
Residential project. The total purchase price for the 420,317 square meters land use
rights was approximately $56.7 million, which was obtained through bank financing. In
December 2006, we completed the sale of Shenyang Jitian Property Company to two unrelated
companies in exchange for a total cash payment of $1,399,970 (the amount of our invested
capital in Shenyang Jitian Property Company) and assumption of all bank debt incurred in
connection with the acquisition of the Chessboard Mountain Residential project. In
connection with the sale, Great Chinas subsidiary, Shengyang Maryland International
Industry Company Limited, entered into a Land Consolidation and Development Agreement
with respect to the Chessboard Mountain Residential Project. Under the development
agreement, Shenyang Maryland was engaged to arrange for necessary permitting, site
preparation and installation of development infrastructure. As the developer/contractor,
the contract provides for Shenyang Maryland to be paid a total of approximately RMB 104
million ($13.3 million) in staged amounts upon completion of different aspects of the
development work provided for by the agreement. As of December 31, 2007, Shenyang
Maryland had been paid a total of approximately RMB53.98 million ($7.4 million) under the
development agreement. Loyal
Best. On August 7, 2007, Silverstrand completed the acquisition of all of the issued
share capital of Loyal Best Property Development Limited (Loyal Best), a Hong
Kong limited company. Loyal Best was the sole owner of an entity called Shenyang Loyal
Best Hunnan Property Development Limited (Shenyang Loyal Best), a wholly
owned foreign enterprise that is a party to a Confirmation Letter of Auction with respect
to a parcel of land located at the center area of Hunnan New Zone in the city of
Shenyang, China (the LB Project). Silverstrand paid US$4,010,000 to acquire
the share capital of Loyal Best and paid and an additional US$20,500,000 to satisfy all
director loan notes issued by Loyal Best, which funds were used to make Shenyang Loyal
Bests land transfer fee payment on the project of US$20,000,000. In September 2007,
Shenyang Loyal Best closed funding under a bridge loan agreement with Shenyang Huahai
International Investment Co., Ltd. (Shenyang Huahai) whereby Shenyang Huahai loaned RMB
450,000,000, or approximately US$60 million, to Shenyang Loyal Best for use in connection
with development of the LB Project. In December 2007, Silverstrand completed the sale of
all of the share capital of Loyal Best to an unrelated third party in exchange for cash
consideration of 360 million Chinese yuan (approximately US$48.7 million) and the
assumption by the purchaser of the loan from Shenyang Huahai for development of the LB
Project. Of the cash sales price, Silverstrand had received $18 million by December 31,
2007. The balance of approximately $30.7 million was reflected on our year-end financial
statements as a receivable and was received by us as of the end of March 2008. In
connection with the sale of Loyal Best, we agreed to pay a finders fee to an
unrelated third party of approximately $8.9 million. Junhui
Development Agreement. In November 2007, our indirect subsidiary, Shenyang Xinchao
Property Co., Ltd. (Xinchao), entered into a joint development agreement with
Beijing Century Junhui Investment Ltd. (Junhui),
an unrelated third party, pursuant to which each of Xinchao and Junhui agreed to invest
RMB 40 million (approximately $US5.4 million) as share capital in a newly-formed entity
whose purpose shall be to jointly develop a commercial and residential project in Nanjing
Street, Heping District, Shenyang, China. Subsequent to entering into the joint
development agreement, Junhui and Xinchao were unsuccessful in obtaining the property for
the project and, in accordance with the terms of the joint development agreement, the
amount of Xinchaos investment was refunded. 22




(3)
Results
of Operations Comparison
of operations for September 30, 2008 with September 30, 2007: The
Company incurred net income from operations of $356,411 for the three-month period ended
September 30, 2008, compared to net income from operations of $2,059,799 for the
comparable period in 2007.  For the nine months ended September 30, 2008, the Company has
a net loss from operations of $579,424 compared to net income from operations of
$4,116,386 for the comparable period in 2007, representing a decrease of $4,695,810 or
114.08%.  Components of operating activity resulting in this decrease in net income from
operations are discussed below. Total
revenues increased by $1,096,258 or 17.15% to $7,488,707 for the nine months ended
September 30, 2008 compared to $6,392,449 for the same period in 2007.  For the third
quarter of 2008 total revenues were $2,355,825 compared to $1,905,415 for the comparable
quarter in 2007.  Real estate income during the first nine months of 2008 increased by
$701,037 or 30.03% over the same period in 2007, and the rental and management fee income
increased by $395,221 or 9.74% during the period in 2008 compared to 2007. These changes
are mainly attributable to the increased sales volume of the remaining building units in
2008 compared to 2007. Cost
of properties sold during the third quarter of 2008 increased by $493,212, or 74.25%,
over the same period in 2007, which is primarily attributable to the increased
maintenance cost of the President Building.  However, for the nine months ended September
30, 2008, cost of properties decreased by $721,968, or 18.53%, compared to 2007, which we
attribute to the increase in the number of carport sales in 2008, which do not have a
separate property cost. Selling
expenses increased by $8,907 or 11.56% to $85,981 for the nine months ended September 30,
2008 compare to $77,074 for the corresponding period in 2007. The increase is
attributable to the need for business development  during the first six months of 2008,
so there was little change in selling expenses in the third quarter of 2008 compared to
2007. General
and administrative expenses decreased by $4,326,607, or 59.65%, to $2,926,827 for the
nine months ended September 30, 2008 compared to $7,253,434 for the corresponding period
in 2007. General and administrative expenses decreased by $4,236,826, or 83.75%, to
$822,270 for the three months ended September 30, 2008 compared to $5,059,096 for the
corresponding period in 2007. The primary reason for the decrease in the third quarter of
2008 was an accrual for bad debt in the third quarter of 2007 and consulting
fees in 2007. Agent
fee decreased by $2,649,007 or 100% in the third quarter of 2008 compared to the
corresponding period in 2007.  The agent fee paid in the third quarter of 2007 was a
one-time cost arising from the disposal of a subsidiary in that quarter. Depreciation
and amortization expense increased by $464,007, or 26.51%, to $2,214,530 for the nine
months ended September 30, 2008, compared to $1,750,523 for the corresponding period in
2007, and increased by $119,026, or 18.74%, to $754,306 for the three months ended
September 30, 2008, compared to $635,280 for the corresponding period in 2007.  The
increase in depreciation and amortization expense is attributable to the growth of fixed
assets held by the Company for business operations. Other
income decreased by $16,353,915, or 98.00%, to $333,327 for the nine months ended
September 30, 2008 from $16,687,242 in the same period in 2007, and decreased by
$10,795,419, or 92.28% to $902,523 for the three months ended September 30, 2008 from
$11,697,942 in the same period in 2007.  The substantial decrease in other income is due
primarily to several non-routine transactions, such as gain on settlement of debt in the
amount of $15,918,226 in 2007 and land leveling income of $5,960,265 in 2007. 23




(4)
Cash
Flow Discussion Net
cash flows provided by operating activities for first nine months of September 30, 2008
and 2007 are $8,235,786 and $18,089,952, respectively. The decrease is mainly
attributable to the Company receiving $17,056,254 from disposal of a subsidiary in 2007
that did not recur in 2008. Net
cash flows used in investing activities for the first nine months of September 30, 2008,
is $82,701compared to $1,678,741 of cash flow provided by investing activities for 2007.
The investing activity change was primarily due to reimbursement of a project terminated
by the local government resulting in a return top the Company of $7,861,324 in 2007. Net
cash flows used in financing activities for the nine months ended September 30, 2008, was
$10,886,967 compared to $17,343,307 for 2007.  This change is attributable to lower
overall loan repayments in 2008 compared to 2007. (5)
Liquidity
and Capital Resources Current
liabilities exceeded current assets by $26,242,138 as of September 30, 2008. The working
capital deficit was incurred primarily due to Short Term Loans of 21,652,400.   It is
has become common practice in China, for banks and companies to renegotiate loan
extensions on an annual basis.  This is driven by the ever changing banking regulatory
environment and a situation where banks are becoming more conservative. 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 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. (6)
Contractual Obligations The following table
is a summary of the Companys contractual obligations as of September 30, 2008: Total

     Less thanone year

     1-3 Years

     ThereafterShort-Term Debt
     
     
     $
        21,652,400
        

     $
        21,652,400
        

     $
        --
        

     $
        --Long-Term Debt
     --
        

     --
        

     --
        

     --Amounts due to related parties
     --
        
     --
        
     --
        
     --Construction commitments
        
        
     
        --
        
     --
        
     --
        
     --Total Contractual Cash Obligations
     $21,652,400
        
     $21,652,400
        
     $--
        
     $-- 24




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 overly rapid 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 Item 4T.  Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the Exchange Act) are designed to ensure that information
required to be disclosed in reports filed or submitted under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in rules
and forms adopted by the Securities and Exchange Commission (SEC), and that such
information is accumulated and communicated to management, including the Chief Executive
Officer and the Chief Financial Officer, to allow timely decisions regarding required
disclosures. In connection with the preparation of this report, Great
China Internationals management, under the supervision and with the participation of the
Chief Executive Officer and Chief Financial Officer, reassessed the effectiveness of the
design and operation of our disclosure controls and procedures as of September 30, 2008.
 Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that Great China Internationals disclosure controls and procedures were
effective as of the end of the fiscal quarter on September 30, 2008, to ensure that
information that is required to be disclosed by Great China International in the reports
it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms. Notwithstanding
the foregoing, a control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that it will detect or uncover failures within
Great China International to disclose information that is otherwise required to be set
forth in its periodic reports. Changes in Internal Control over Financial Reporting There were no changes in our  internal  control  over  financial  reporting  during the three months ended
September 30, 2008, that have materially  affected,  or are likely to materially  affect,  our internal control
over financial reporting. 25




PART II. OTHER INFORMATION Item 6. Exhibits Copies of the
following documents are included or furnished as exhibits to this report pursuant to Item
601 of Regulation S-K. Exhibit No.
     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)31.2
     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 26




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: November 14, 2008
        
     By:
     
     /s/ Jiang PengJiang Peng, Chairman of the Board(Principal Executive Officer)   Date: November 14, 2008
     
     By:
     
     /s/ Sun DongqingSun Dongqing, Chief Financial Officer(Principal Financial and Accounting Officer) 27