UNITED STATES 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 1934For the quarterly period ended June 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 August 8, 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 June 30, 2008 (Unaudited) and
December 31, 2007
     3Statements of Operations for the Three-Month and Six-Month Periods
Ended June 30, 2008 and 2007 (Unaudited)
     4Statements of Cash Flows for the Six-Month Periods
Ended June 30, 2008 and 2007 (Unaudited)
     5Notes to the Financial Statements
     6Item 2.  Managements Discussion and Analysis of
Financial Condition and Results of Operations
     20Item 3.  Quantitative and Qualitative Disclosures
About Market Risk
     24Item 4T.  Controls and Procedures
     24PART II.
     Other Information
     25Item 6. Exhibits
     25Signatures
     26  2




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

     $10,985,244
        

     $10,044,579Accounts receivable, net
        
        
     211,023
        

     325,058Receivable on disposal of subsidiaries
     --
        

     30,701,957Other receivable, net
     160,946
        

     1,070,863Properties held for resale
     7,451,835
        
 
     7,696,437Total current assets
     18,809,048
        
 
     49,838,893Property and equipment, net
     52,398,626
        
 
     50,632,336Deferred tax assets
     164,030
        
 
     --Total assets
     $71,371,704
        

     $100,471,229LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Short-term loans
     $17,945,700
        

     $25,231,297Accounts payable and accrued expenses
     7,119,511
        

     8,615,415Other payable
     1,561,749
        

     5,723,489Payable to disposed subsidiaries
     766,186
        

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

     8,898,502Advances from buyers
     1,990,051
        

     2,034,019Taxes payable
     8,704,598
        

     8,552,316Current portion of long-term debt
     5,836,000
        

     --Total current liabilities
     45,707,874
        

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

     5,486,968Total liabilities
     45,707,874
        

     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
     2,630,135
        

     1,468,546Retained earnings
     17,817,650
        

     18,753,485Total stockholders' equity
     25,663,830
        

     25,434,773Total liabilities and stockholders' equity
     $71,371,704
        

     $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
                                 FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2008 AND 2007
                                                     (UNAUDITED) Three month periods ended June 30,
     Six month periods ended June 30,2008
        
     2007

     2008
        
     2007RevenueReal estate Sales
        
        
     $
        743,298
        

     $
        1,391,785
        

     $
        2,218,685
        

     $
        1,624,800Rental and management fee income
     1,470,838
        

     1,503,961
        

     2,914,196
        

     2,862,234Total revenues
     2,214,136
        

     2,895,746
        

     5,132,881
        

     4,487,034Cost of revenue
     1,063,061
        

     2,789,805
        

     2,016,680
        

     3,231,860Gross profit
     1,151,075
        

     105,941
        

     3,116,201
        

     1,255,174Operating expensesSelling expenses
     36,788
        

     55,479
        

     82,088
        

     73,721General and administrative expenses
     723,473
        

     1,815,557
        

     2,104,557
        

     2,194,338Depreciation and amortization
     730,659
        

     534,922
        

     1,460,224
        

     1,115,243Total operating expenses
     1,490,920
        

     2,405,958
        

     3,646,869
        

     3,383,302Loss from operations
     (339,844
        )

     (2,300,017
        )

     (530,668
        )

     (2,128,127
        )Other income (expense)Gain on settlement of debt
     --
        

     --
        

     1,075,843
        

     --Other income, net
     4,843
        

     4,534,832
        

     (235,715
        )

     6,484,101Impairment loss
     --
        

     --
        

     --
        

     (199,542
        )Interest and finance costs
     (609,439
        )

     (701,136
        )

     (1,409,324
        )

     (1,295,259
        )Total other income (expense)
     (604,596
        )

     3,833,696
        

     (569,196
        )

     4,989,300Income (loss) before income taxes
     (944,440
        )

     1,533,679
        

     (1,099,865
        )

     2,861,172Provision for income taxes
     (202,900
        )

     537,557
        

     (164,030
        )

     1,015,645Net income (loss)
     (741,540
        )

     996,122
        

     (935,834
        )

     1,845,527Other comprehensive income:Foreign currency translation adjustment
     493,543
        

     196,309
        

     1,161,590
        

     229,720Net comprehensive income (loss)
     (247,997
        )

     1,192,431
        

     225,755
        

     2,075,247Net income (loss) per share - basic and diluted
     $(0.06
        )

     $0.08
        

     $(0.08
        )

     $0.16Weighted average number of shares - outstanding basic and diluted
     11,759,966
        

     11,782,036
        

     11,759,966
        

     11,782,036 Basic and diluted weighted average shares outstanding are the same as there is no antidilutive effect. The accompanying notes are an integral part of these unaudited
consolidated financial statements. 4




GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 FOR THE NINE MONTH PERIODS ENDED JUNE 30, 2008 AND 2007
                                                     (UNAUDITED) 2008
     
     2007Cash flows from operating activities:Net income (loss)
     $(935,834
        )
     
     $1,845,527Adjustments to reconcile net income (loss) to operating activities -Depreciation and amortization
     1,460,224
        
     
     1,181,407Deferred tax assets
     (164,030
        )
     
     (671,009
        )Gain on settlement of debt
     (1,075,843
        )
     
     --Provision for doubtful accounts
     149,427
        
     
     --Allowance for Xita project
        
        
     
        --
        
     
     
        199,542Non-cash stock compensation expense
     3,301
        
     
     --(Increase) decrease in current assets:Accounts receivable and other receivable
     31,720,942
        
     
     (260,541
        )Advances to suppliers
     --
        
     
     (308,112
        )Prepaid expenses
     --
        
     
     71,959Properties held for resale
     713,750
        
     
     1,075,164(Increase) decrease in current liabilities:Accounts payable and other payables and accrued expenses
        
        
     
        (22,392,727
        )
     
     (1,079,438
        )Deposits held
     --
        
     
     (62,403)Advances from buyers
     (168,530
        )
     
     (822,506
        )Income and other taxes payable
     (161,997
        )
     
     2,270,676Net cash provided by operating activities
     9,148,681
        
     
     3,440,266Cash flows from investing activities:Construction in progress
     --
        
     
     (1,115,190
        )Purchase of property & equipment
     (46,217
        )
     
     (5,422,762
        )Net cash used in investing activities
        
        
     
        (46,217
        )
     
     
        (6,537,952
        )Cash flows from financing activities:Loan proceeds
     --
        
     
     7,591,864Loan repayments
     (8,643,184
        )
     
     (2,938,349
        )Advances to directors and affiliated companies
     --
        
     
     (688,884
        )Net cash provided by /(used in) financing activities
     (8,643,184
        )
     
     3,964,631Effect of exchange differences
     481,386
        
     
     229,720Net increase in cash and cash equivalents
     940,666
        
     
     1,096,665Cash and cash equivalents, beginning of period
     $10,044,579
        
     
     $1,769,744Cash and cash equivalents, end of period
     $10,985,244
        
     
     $2,866,409Supplemental disclosures of Cash Flow information:Interest paid
     $75,420
        
     
     $980,259Income taxes
     $1,106,490
        
     
     $378,621 The accompanying notes are an integral part of these unaudited
consolidated financial statements. 5




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSJUNE 30, 2008 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 into 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 Duan 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 the
reclassification of Shenyang Maryland as 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  acquired,  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  acquired the  remaining 30 percent  equity  interest in      Xinchao
through Silverstrand from Sapphire Corporation Limited on December 28, 2005. The  remaining  approximately  34  percent  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  acquired  70 percent  interest  in
Yindu from  Yungfeng,  and      Silverstrand  acquired  30  percent  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  Xinchao  Property  Company  Limited  (Shenyang
 Xinchao)  was  registered  on August  16,  2005 in      Shenyang,  Liaoning  Province,
 in the PRC with a registered  capital of $12,330,456  (RMB  100,000,000) and a
     defined  period of  existence  of 11 years to  August  15,  2016.  Shenyang  Yindu
 Property  Company  Limited      (Yindu)  was  registered  on August 16, 2005 in
Shenyang,  Liaoning  Province,  in the PRC with a registered 6




capital  of
 $6,615,228  (RMB  50,000,000)  and a  defined  period  of  existence  of 11 years to
 August  15,      2016.Xinchao  and Yindu were formed to develop a certain tract of
property  located in the Heping  District of      Shenyang,  and will feature a
 construction  area of almost  500,000  square meters with a linear site area of
     approximately  101,000 square meters.  The local  government of Heping District of
Shenyang  received back the      land use rights of the Xita project because of new
developing plan of the district.  Heping District  refunded      the land usage right
paid by Xinchao and reimbursed the development cost incurred by Xinchao. 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 on May 2008 in the amount of $4,255,440 and no gain/loss was recognized in
the disposal. The disposal amount was fully received on June 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      (GKL). Loyal Best is the
sole owner of an entity  called  Shenyang  Loyal Best Hunnan  Property  Development
 Limited      (Shenyang  Loyal  Best),  a wholly owned  foreign  enterprise  that is a
party to a  Confirmation  Letter of      Auction  with  respect  to a parcel of land
 located  at the  center  area of  Hunnan  New Zone in the city of      Shenyang,  China
(the Project).  Immediately after acquisition,  the Company decided to sell Loyal Best
at a      gain. The  Company,
 through its  wholly-owned  subsidiary  -  Silverstrand,  transferred  100% of the issued
 share      capital of Loyal Best Property  Development Limited to Celebrities
 Realestate  Development Group Co., Ltd. in      exchange for the payment of
 approximately  $48.70  million(360  million  Chinese yuan).  The  transaction was
     closed on December 15, 2007. As of June 30, 2008,  the Company fully  received the
selling amount of disposal      of Loyal Best. The  Company  engages
in the  development  and sale of high  quality  real  estate  properties  and  developed
     residential and commercial  properties includes Maryland building,  President Building, Qiyun New Village,
      Peacock Garden, and Chenglong Garden.  The Company
also engages in rental of commercial  buildings in the City      of Shenyang,  China.
Shenyang Maryland, the Companys indirect wholly-owned  subsidiary,  was one of the first
     private property developers and retailers in China. 2.
Summary
of significant accounting policies  The  accompanying
 consolidated  financial  statements  have  been  prepared  in  conformity  with
 accounting      principles  generally  accepted in the United  States of America.  The
 Companys  functional  currency is the      Chinese Renminbi (CNY);  however the
accompanying  consolidated  financial statements have been translated and      presented
in United States Dollars ($) 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 six month period ended June 30, 2008 are not
necessarily indicative of the results to be expected for the full fiscal year
ending December 31, 2008. 7




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 June 30, 2008 and
     December 31, 2007, the Company reserved $5,657,780 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 June 30, 2008
and December 31, 2007, properties held for sale amounted to $7,451,835 and
$7,696,437, 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: Building and land use rights
     8 - 26 yearsLeasehold improvements
     20 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixtures
     5 years As of June 30, 2008
and December 31, 2007 Property, Plant & Equipment consist of the following: 6-30-2008

     12-31-2007(Audited)Building
     
     
     $
        62,391,540
        
        
     $
        58,605,918Automobile
     1,210,562
        
        
     1,115,768Office equipment & Furniture
     430,474
        

     948,066Others
     15,603
        

     10,93064,588,179
        

     60,680,682Accumulated depreciation
     12,189,553
        

     10,048,346Property and equipment, net
     $52,398,626
        

     $50,632,336 Depreciation expense
for the six month periods ended June 30, 2008 and 2007 and totaled $1,460,224 and
     $1,115,243 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. 8




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 six month periods ended June 30, 2008, 2007 and 2006. As of June 30, 2008
fixed assets  totaling  $36,245,512  have been pledged as  securities to various banks in
     respect of borrowings totaling $23,781,700. 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 June 30, 2008
and December 31, 2007, the Company had no construction-in-progress balance. Revenue Recognition Real estate sales Real estate sales are
reported in  accordance  with the  provisions of SFAS No. 66,  Accounting  for Sales of
     Real  Estate.  Profit from the sales of  development  properties,  less 5% business
tax, is recognized by the      full accrual method when the sale is consummated.  A sale
is not considered  consummated until (1) the parties      are bound by the terms of a
contract,  (2) all consideration has been exchanged,  (3) any permanent  financing
     of which the seller is  responsible  has been  arranged,  (4) all  conditions
 precedent  to closing have been      performed,  (5) the seller does not have
substantial  continuing  involvement  with the property,  and (6) the      usual risks
and rewards of ownership have been  transferred to the buyer.  Sales  transactions not
meeting all      the  conditions of the full accrual  method are accounted for using the
deposit  method of  accounting.  Under      the deposit method,  all costs are
capitalized as incurred,  and payments received from the buyer are recorded      as a
deposit  liability.  Real estate rental income,  less 5% business tax, is recognized on
the straight-line      basis over the terms of the tenancy agreements. For land sales,  the
Company  recognizes the revenue when title of the land  development  right is transferred
     and collectability is assured. For the reimbursement
on infrastructure  costs, the Company recognizes the income(loss),  which is at the fair
     market  value  agreed  between the Company and the PRC  government,  when they enter
into a binding  agreement      with the government agreeing on the reimbursement. Real Estate
Capitalization and Cost Allocation Real estate held for
 development  or sale 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 9




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 three month
 periods ended June 30, 2008,      the Company did not have any construction therefore
no interest was capitalized. Other income Other income consists
of land leveling  income,  which was one-time  service  performed which was requested by
     our  customers  and gain on  settlement of debt.  These  revenues are  recognized
 when the services have been      performed and the settled amount has been paid in
accordance with the terms of the agreement. Foreign currencies-
The Companys principal country of operations is in The Peoples Republic of China. The
financial position and results of operations of the Company are determined
using the local currency (Renminbi or Yuan) as the functional currency. The
results of operations denominated in foreign currency are translated at the average
rate of exchange during the reporting period. Assets and
 liabilities of the Company have been  translated at year- end exchange  rates,  while
revenues and      expenses  have been  translated at average  exchange  rates in effect
 during the year.  Resulting  cumulative      translation  adjustments have been recorded
as other  comprehensive  income (loss) as a separate  component of      stockholders'
equity. Equity  denominated
 in the functional  currency is translated at the historical  rate of exchange at the
time      of  capital  contribution.  All  translation  adjustments  resulting  from the
 translation  of the  financial      statements  into the reporting  currency (US Dollars)
are dealt with as an exchange  fluctuation  reserve in      shareholders equity. 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 10




within those fiscal years. The management
is currently evaluating the effect of this pronouncement on financial statements. In  September  2006,
 FASB issued SFAS 158  Employers  Accounting  for  Defined  Benefit  Pension and Other
     Postretirement  Plans  an  amendment of FASB  Statements No. 87, 88, 106, and 132(R) This
Statement  improves      financial  reporting  by  requiring  an employer to  recognize
 the over funded or under  funded  status of a      defined  benefit  postretirement
 plan  (other than a  multiemployer  plan) as an asset or  liability  in its
     statement of  financial  position
 and to  recognize  changes in that funded  status in the year in which the      changes
occur through  comprehensive  income of a business entity or changes in unrestricted  net
assets of a      not-for-profit  organization.  This Statement also improves  financial
 reporting by requiring an employer to      measure the funded  status of a plan as of
the date of its year-end  statement of  financial  position,  with      limited
 exceptions.  An employer with publicly traded equity  securities is required to
initially  recognize      the funded status of a defined benefit  postretirement plan and
to provide the required disclosures as of the      end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity  securities      is
 required to  recognize  the funded  status of a defined  benefit  postretirement  plan
and to provide the      required  disclosures  as of the end of the fiscal  year ending
 after June 15,  2007.  However,  an employer      without publicly traded equity
 securities is required to disclose the following  information in the notes to
     financial  statements for a fiscal year ending after  December 15, 2006, but before
June 16, 2007,  unless it      has applied the recognition provisions of this Statement
in preparing those financial statements: a.   A brief
description of the provisions of this Statement b.   The date
that adoption is required c.   The date
the employer plans to adopt the recognition provisions of this Statement, if earlier. The  requirement  to
measure  plan assets and benefit  obligations  as of the date of the  employers  fiscal
     year-end  statement of financial  position is effective for fiscal years ending
after  December 15, 2008. The      management is currently evaluating the effect of this
pronouncement on financial statements. In December  2007,
 the FASB  issued  SFAS No. 160,  Noncontrolling  Interests  in  Consolidated  Financial
     Statements.  This  Statement  amends  ARB 51 to  establish  accounting  and
 reporting  standards  for  the      noncontrolling  (minority)  interest  in a
 subsidiary  and  for the  deconsolidation  of a  subsidiary.  It      clarifies  that a
 noncontrolling  interest in a  subsidiary  is an ownership  interest in the
 consolidated      entity  that  should be  reported  as equity  in the  consolidated
 financial  statements.  SFAS No.  160 is      effective for the Companys fiscal year
beginning  October 1, 2009.  Management is currently  evaluating the      effect of this
pronouncement on financial statements. In March 2008, the
FASB issued FASB Statement No. 161, Disclosures about Derivative  Instruments and Hedging
     Activities.  The new standard is intended to improve  financial  reporting about
derivative  instruments and      hedging activities by requiring enhanced  disclosures to
enable investors to better understand their effects      on an entitys  financial
 position,  financial  performance,  and cash flows. It is effective for financial
     statements  issued for fiscal years and interim  periods  beginning  after  November
 15,  2008,  with early      application  encouraged.  The new  standard  also  improves
 transparency  about the location and amounts of      derivative  instruments in an entitys
financial statements;  how derivative  instruments and related hedged      items are
accounted for under Statement 133; and how derivative  instruments and related hedged
items affect      its financial  position,  financial  performance,  and cash flows.
 Management is currently  evaluating  the      effect of this pronouncement on financial
statements. In December 2007, the
FASB issued SFAS No. 141(R),  Business  Combinations.  This Statement  replaces SFAS
     No. 141, Business  Combinations.  This Statement retains the fundamental
 requirements in Statement 141 that      the  acquisition  method of  accounting  (which
 Statement  141 called the purchase  method) be used for all      business  combinations
 and for an acquirer to be identified for each business  combination.  This Statement
     also  establishes  principles  and  requirements  for how the acquirer:  a)
 recognizes  and measures in its      financial  statements the identifiable  assets
acquired,  the liabilities  assumed,  and any  noncontrolling      interest in the
acquiree;  b) recognizes and measures the goodwill acquired in the business combination
or a      gain from a  bargain  purchase  and c)  determines  what  information  to
 disclose  to enable  users of the      financial  statements to 11




evaluate the nature and
 financial  effects of the business  combination.  SFAS No.      141(R) will apply
 prospectively  to business  combinations  for which the  acquisition  date is on or
after      Companys fiscal year beginning  October 1, 2009. While the Company has not
yet evaluated this statement for      the impact,  if any, that SFAS No. 141(R) will have
on its consolidated  financial  statements,  the Company      will be required to expense
costs related to any  acquisitions  after  September 30, 2009. The management is
     currently evaluating the effect of this pronouncement on financial statements. In May 0f 2008, FSAB issued SFASB No.162, The Hierarchy of
Generally Accepted Accounting Principles.  The pronouncement mandates the GAAP hierarchy
reside in the accounting literature as opposed to the audit literature.  This has the
practical impact of elevating FASB Statements of Financial Accounting Concepts in the
GAAP hierarchy.  This pronouncement will become effective 60 days following SEC approval.
 The company does not believe this pronouncement will impact its financial statements. In May of 2008, FASB issued SFASB No. 163, Accounting for
Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.  The
scope of the statement is limited to financial guarantee insurance (and reinsurance)
contracts.  The pronouncement is effective for fiscal years beginning after December 31,
2008.  The company does not believe this pronouncement will impact its financial
statements. Reclassifications Certain
amounts in the 2007 financial statements have been reclassified to conform to
the 2008 presentation. These reclassifications had on effect on previously
reported results of operations or retained earnings. 3.
Receivable
on disposal of subsidiaries  The amount of
 receivable  on disposal of  subsidiaries  as of June 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  $30,701,957 in of the period ended      June 30, 2008. 4.
Properties
held for resale  Properties held for
resale at June 30, 2008 and December 31, 2007 by project is as follows: 6-30-2008
        
     12-31-2007(Audited)Qiyun New Village
     
     
     $
        1,511,068
        

     $
        1,595,366Peacock Garden
     245,953
        

     231,244Chenglong Garden
     5,036,016
        

     5,250,960President Building
     217,829
        

     204,801Maryland Building
     267,347
        

     251,358Others
     173,623
        

     162,708Total
     $7,451,836
        

     $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  shall be due and payable      immediately  after the trial
period when the property  buyers exercise their option whether or not to complete
     the  purchase.  If the buyer  chooses  not to buy the  property,  the 10%
 refundable  deposit or $6,039  (RMB      50,000) will be refunded to the buyers (less
any unpaid  rental due) and monthly  installments  received  over      the 5-year  trial
period will have been  recognized  as rental  income in the year in which they arose. 12




As
of      June 30, 2008 and December 31, 2007,  $879,468 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
June 30      2008 and December 31, 2007. 5.
Accounts
payable and accrued expenses  Accounts payable and
accrued expenses comprised of following as of June 30, 2008 and December 31, 2007: 6-30-2008

     12-31-2007(Audited)Accounts payable
     
     
     $
        4,312,505
        

     $
        6,090,281Payroll and welfare payable
     102,512
        

     71,090Interest and other accrued expenses
     2,704,494
        

     2,454,044Total
     $7,119,511
        

     $8,615,415 6.
Tax
payables  Tax payables consist
of the following as of June 30, 2008 and December 31, 2007: 6-30-2008
        
     12-31-2007(Audited)Income tax payable
     
     
     $
        5,927,621
        
        
     $
        5,944,954Business tax
     516,255
        

     519,634Land appreciate payable
     2,189,650
        

     2,069,781Other levies
     71,072
        

     17,947Total
     $8,704,598
        

     $8,552,316  7.
Short-term
loans  Short-term loans as of June 30, 2008 and December 31, 2007
are comprised as follow: Nature
     Due on
     Interest perAnnum
     6-30-2008
        
     12-31-2007(Audited)Bank loan  in default
     
     
     
     12-31-2004
     
     
        7.56%
        
     $
        2,188,500
        
        
     $
        9,931,413Bank loan
        
        
     
        10-23-2008
        
     
        10.206%
        
     
        15,757,200
        

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

     485,069Total
        
        
     
        
        
     
        
        
     $
        17,945,700
        

     $25,231,297  The Company acted as
an agent and borrowed mortgage loans amounting $485,069 as of December 31, 2007 under
     its employees name using properties held by the Company. All balances of mortgage
loans were cleared as of      March 31, 2008 and the pledged assets were released too. As
of June 30, 2008 and December 31, 2007, the      carrying values of stock of properties
of $0 and $484,764 have been pledged for the Companys mortgage      loans. 13




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 terms
of this settlement      agreement, $1,228,163 loan interest accrued as of December 31,
2007 may be waived if the Company repays the      loan principle per the installments
schedule. The Company is required to pay back the loan principal in a      three step
installments started with the first payment amounting $685,871 due on December 20, 2007
according      to the agreement.  The Company paid the first installment on time as of
December 31, 2007. The 2nd and 3rd      instalments are approximately $5 million (RMB 35
million) is due in June, 2008 and $2.86 million (RMB 20      million) is due on September
2008. Assets of the Company are pledged against these bank loans. Subsequently      on
April 15, 2008, the Company paid the loan principle off amounting to $5,712,000 (RMB
40,000,000). As of June 30, 2008
and 2007, the Company incurred interest expense amounting $1,409,324 and $1,295,259
     respectively. The Company had a
default loan amounting to $23,166,667 with due dates in 2003 and 2004. The defaulted
loans      borrowed from Industrial and Commercial Bank of China was assigned to a third
party. The Company entered      into an agreement with the third party on July 30, 2007
to buy back the loans for $7,581,333.  As of      September 30, 2007, the total
consideration of $7,581,333 was fully paid.  According to the agreement, the
     outstanding interest payable associated with the non-performing loan amounting to
$439,014 was also forgiven  as of December 31,
2007. The assets pledged with the loan were released before the year ended 2007. As of
     December 31, 2007, the Company realized gain on settlement of debt amounted to
$11,115,201. 8.
Long-term
debts  secured  Nature
     Due on
     Interest perAnnum
     6-30-2008
        
     12-31-2007(Audited)Bank loan  Long Term
     
     
     
     6-12-2009
     
     
        9.711%
        
     $
        --
        
        
     $
        5,486,968Bank loan - Current
        
        
     
        6-12-2009
        
     
        9.711%
        
     
        5,836,000
        

     
        --Total
        
        
     
        
        
     
        
        
     $
        5,836,000
        

     $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
owned. The long-term debt is due on June 12, 2009. 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 June 30, 2008 and      December 31, 2007 respectively. 10.
Gain on Settlement of Debt  In
January 2008, the Company received the final judgment from Supreme Peoples Court 2007
(No. 97)      dated on December 21, 2007 regarding the law suit between Shenyang Normal
College, Shenyang      Maryland (a wholly owned subsidiary of the Company) and Jiangsu
Province Suzhong Construction      Group, Ltd. The judgment of Supreme Court is the final
judgment per Chinese law. The
judgments are summarized that Shenyang Maryland should pay Shenyang Normal College
$650,265 (RMB 5,210,454) along with the interest calculated from June 2, 2000 to the
payment date using the interest rate of six-month loan per Peoples Bank of China. The
interest shall be paid within 15 days after the judgment takes effect. The corresponding
interest expense calculated was RMB 2,152,262 ($300,822) from June 2, 2000 to January 20,
2008 per judgment.  According to the judgment, the accounts payable shall be released
after Shenyang Maryland pays the $650,265 payable with interest in the amount of $300,822. 14




The
Company  has paid off the balance  payable to the  Shenyang  Normal  College  with
 interest  per      judgment on January 20, 2008. The
gain on settlement of debt as of June 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 June 30, 2008
        
        
     
        RMB            7,198,469US$            1,075,843 11.
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 June 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 June 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 %  Options outstanding
at June 30, 2007 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
        

     
        0.29
        

     $
        2.33
        

     
        7,083
        

     $
        2.33
        

     
        --$
        0.65
        

     
        10,000
        

     
        0.79
        

     $
        0.33
        

     
        2,083
        

     $
        0.33
        

$
        4,200 15




A summary of option
activity as of June 30, 2008, and changes during the periods then ended is presented
     below: Options
     SharesOutstanding at January 1, 2007
     173,568Granted
     10,000Exercised
     --173,568Forfeited or expiredOutstanding at December 31, 2007
     10,000Granted
     10,000Exercised
     --Forfeited or expired
     --Outstanding at June 30, 2008
     20,000Exercisable at June 30, 2008
     9,166  12.
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 their 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
operation before disposal. The disposal amount was fully received on June 30, 2008. 13.
Income
Tax The Company is registered in the State of Nevada and has operations in primarily three tax jurisdictions
 the Peoples Republic of China, Hong Kong and the United States. For operation in the US, the Company
has incurred net accumulated operating losses for income tax purposes.  The Company believes that it is
more likely than not that these net accumulated operating losses will not be utilized in the future.
Therefore, the Company has provided full valuation allowance for the deferred tax assets arising from
the losses at these locations as of June 30, 2008. Accordingly, the Company has no net deferred tax
assets. The provision for income taxes from continuing operations on income consists of the following for the
years ended June 30, 2008 and 2007: 6-30-2008
     6-30-2007US current income tax expense (benefit)Federal
     $              
              --
     $              
              --State
     --
     --HK current income tax expense
     --
     --PRC current income tax expense
     (164,030)
     1,015,645Total provision for income tax
     $       (164,030)
     $       
                     1,015,645 16




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: 6-30-2008
     6-30-2007Tax 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
     0%
     0%Foreign income tax - PRC
     (25%)
     30%Tax expense at actual rate
     (15%)
     35% United States of
America As of June 30, 2008, the Company in the United States had approximately $83,748 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 June 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 June 30, 2008 and December 31, 2007. 6-30-2008
     12-31-2007(Audited)Net operation loss (gain) carry forward
     $           (362,588)
     $        (278,840)Total deferred tax assets
     149,585
     121,111Less: valuation allowance
     (149,585)
     (121,111)Net deferred tax assets
     $           
      --
     $           
      --  Hong Kong As of June 30, 2008, the Company in the Hong Kong had approximately $121,693 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 June 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 Hong Kong as of June 30, 2008 and December 31, 2007. 6-30-2008
     12-31-2007(Audited)Net operation loss (gain) carry forward
     $           (121,693)
     $        23,722,801Total deferred tax assets
     21,296
     --Less: valuation allowance
     (21,296)
     --Net deferred tax assets
     $           
      --
     $           
      --  17




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 June 30, 2008 and December 31, 2007: 6-30-2008
     12-31-2007(Audited)Aggregate:Total deferred tax assets
     $              170,881
     $            121,111Less: valuation allowance
     (170,881)
     (121,111)Net deferred tax assets
     $           
      --
     $           
      --  14.
Other
comprehensive income  Balances of related after-tax components comprising accumulated other comprehensive income (loss),
     included in stockholders equity, at June 30, 2008 and December 31, 2007 are as follows: Balance as of December 31, 2006
     $               468,344Change for 2007
     1,000,202Balance as of December 31, 2007
     1,468,546Change in 2008
     1,161,590Balance as of June 30, 2008
     $            2,630,135  15.
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 June 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 years ended June 30, 2008 and December 31, 2007: 18




6-30-2008
               
     12-31-2007(Audited)Revenues from unafiliated customers:Selling of properties
        
        
     $2,218,685
        
     
     $4,378,993Rental income & Management fee
     2,914,196
        
     
     5,296,634Consolidated
     $5,132,881
        
     
     $9,675,627Operating income (loss):Selling of properties
     $1,305,391
        
     
     $708,291Rental income & Management fee
     (1,323,113
        )
     
     494,988Corporation (1)
     (512,946
        )
     
     (7,098,244
        )Consolidated
     $(530,668
        )
     
     $(5,894,965
        )Net income (loss) before taxes:Selling of properties
     $1,305,391
        
     
     $2,637,332Rental income & Management fee
     (1,323,113
        )
     
     494,988Corporation (1)
     (1,082,142
        )
     
     (1,177,571
        )Consolidated
     $(1,099,865
        )
     
     $1,954,749Identifiable assets:Selling of properties
     $7,524,740
        
     
     $5,350,282Rental & management fee
     52,484,435
        
     
     49,953,769Corporation (1)
     11,362,529
        
     
     45,167,178Consolidated
     $71,371,704
        
     
     $100,471,229Depreciation and amortization:Selling of properties
     $--
        
     
     $--Rental & management fee
     1,453,275
        
     
     2,326,018Corporation (1)
     6,949
        
     
     17,703Consolidated
     $1,449,047
        
     
     $2,343,721Capital expenditures:Selling of properties
     $--
        
     
     $79,187Rental & management fee
     --
        
     
     5,765,432Corporation (1)
     42,217
        
     
     4,878,509Consolidated
     $42,217
        
     
     $10,723,128 (1).
Unallocated loss from Operating income (loss) and Net income (loss) before taxes are
primarily related to general         corporate expenses. 19




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. Great China Holdings has five completed real estate
 projects  located in the city of Shenyang in which it has been selling and/or leasing
units: 
     President  Building  comprises  three blocks of commercial  buildings,  including two  commercial  towers,
         situated in Shenyang City,  Heping North Street,  which is the financial  district of Shenyang.  While the
         original  intention was to sell a majority of the office  buildings,  management  subsequently  decided to
         retain most of the  properties  for leasing  purposes.  The buildings  maintain a high occupancy rate with
         tenants that are primarily  international  companies,  25 of which are Fortune 500 companies.  Great China
         Holdings head office is situated on the 25th and 26th Floors of President Building.
     Chenglong  Garden,  situated  in  Shenyang  Huanggu  District,  comprises  12 blocks of modern  apartments
         consisting of 865  residential  apartments,  a number of retail shops and ancillary  facilities  including
         basement  car parking  facilities  and parks.  As of December 31,  2007,  853 units had been sold,  and 12
         residential units and 3197.78 square meters of commercial space remained available for sale and lease.
     Qiyun New Village is situated along the Nanyun  Riverside and consists of 347  residential  units,  326 of
         which had been sold as of December 31, 2007.
     Peacock  Garden is situated in Shenyang  City,  Heping  North  Street,  is in the  commercial  district of
         Shenyang and is  comprised of 197  low-density  residential  apartments,  194 of which had been sold as of
         December 31, 2007.
     The Maryland Building consists of 12,858 square meters of commercial space. 20




Recent Projects Xi
Ta Project. In December 2005, we, through our subsidiaries Silverstrand and Shenyang
Maryland International, acquired Shenyang Xinchao Property Company and Shenyang Yindu
Property Company, which together held 100% of the rights granted for a mixed-use
development located in the Heping District of Shenyang known as the Xita Urban
Reconstruction Project the Xita Project confirmation letter issued by the Heping District
Government in 2004. The confirmation letter, as subsequently amended, contemplated a
99,000 square meter project located in the Xi Ta area in the city of Shenyang. Under the
confirmation letter we paid a land transfer fee of RMB 33,228,480. Shenyang Heping
District Investment Promotion Bureau, which is the agency overseeing development of the
Xi Ta area decided to expand the project and, as a consequence of the expansion, reached
an agreement with us to reacquire the land use rights for the Xita Project in exchange
for refunding the land transfer fee of RMB 33,228,480 (approximately $4,437,397), and
reimbursing us for amounts expended on the development in the amount of RMB 12,345,180
(approximately $1,646,024). In July 2007, the local government approvals and procedures
were completed for transferring the land use rights back to the local government and we
received reimbursement of the land transfer fee of RMB 33,228,480. We received the
remaining RMB 12,345,180 in August 2007. We incurred a net loss on the terminated Xi Ta
Project of $1,504,604. 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. 21




(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. (3)
Results
of Operations Comparison of
operations for June 30, 2008 with June 30, 2007:  The
Company  incurred net loss of $935,834 for the six months ended June 30, 2008  compared
to a net       income of $1,845,527  for the six months ended June 30, 2007,
 representing a decrease of $2,781,361       or 150.71%  semiyearly.  Components of other
net income resulting in this decrease in net income are       discussed below. Revenues
 increased by $593,885 or 36.55% semiyearly to $2,218,685 for the the six months ended
June       30,  2008  compared  to the same  period of 2007 of  $1,624,800.  Rental and
 management  fee income       increased by $51,962 or 1.82% to $2,914,196  for the six
months ended June 30, 2008 from  $2,862,234       for the comparable  period in 2007.
 These changes are mainly  attributable  to the increased  sales       volume of the
remaining building units and the sales of parking lots.. Cost
of properties  sold  decreased by $1,215,180 or 37.60% during June 30, 2008, as compared
to the       corresponding  period in 2007. The decrease is mainly attributable to the
increased sales of parking       lots of Chenglong Garden which has no cost. Operating
 and selling  expenses  increased  by $8,367 or 11.35% to $82,088 for the June 30, 2008
as       compared to $73,721 for the  corresponding  period in 2007.  The  increase is
demanded  for business       development. General
and  administrative  expenses  decreased by $89,781 or 4.09% to  $2,104,557  during June
30,       2008 compared to $2,194,338 for June 30, 2007. Total
 depreciation  expense  increased by $344,981 or 30.93% to $1,460,224 for the six months
ended       June 30, 2008,  compared to $1,115,243  for the  corresponding  period in
2007,  since the growth of       fixed assets held by the company for business expansion. Other
 income,  net decreased  $6,719,816  or 103.64% to negative  $235,715 for the six months
ended       2008  from  $6,484,101  for  the  six  months  ended  2007  due  primarily
 to  several  non-routine       transactions,  such as the land  leveling  income of
 $6,382,800,  gain on settlement of bad debt of       $754,873 in second quarter of 2007,
 however,  there are no such great transaction in 2008 except an       increase  in
sundry  income by $139,115  compared  with the amount for the  corresponding  period in
      2007, and  as well as a payment of land leveling expenses of $387,223 in March of
2008. Interest
and financing costs increased by $114,065 to $1,409,324 for the six months ended June 30,
2008 as compared to $1,295,259 for the six months ended June 30, 2007. The increase was
primarily due to change of currency exchange rate. (4)
Cash
Flow Discussion Net cash flows provided by operating activities for June 30, 2008 and 2007 were $9,148,681 and
$3,440,266, respectively. The increase in funds provided by was the receivable balance was non interest
bearing, unsecured and due on demand. The Company received the entire balance on disposal of subsidiary
amounting $30,701,957 in of the six month period ended June 30, 2008. 22




Net cash flows used in investing activities for June 30, 2008, was negative $ 46,217 compared to
negative $6,537,952 of cash flow provided for June 30, 2007. The investing activity change was primarily
due to payment of construction in progress of $1,115,190 and purchases of property & equipment of
$5,380,412. Net cash flows used in financing activities for June 30, 2008, was negative $8,643,184 compared to net
cash used in financing activities of $3,964,631 for June 30, 2007, the change could be mostly explained
by repayments of loans and borrowings to various banks totaling $7,591,864. (5)
Liquidity
and Capital Resources Current
liabilities  exceeded current assets by $26,898,826 as of June 30, 2008. The working
capital       deficit  was  incurred  primarily  due to Short Term Loans of  17,945,700.
 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 June 30, 2008: Total

     Less thanone year

     1-3 Years

     ThereafterShort-Term Debt
     
     
     $
        17,945,700
        

     $
        17,945,700
        

     $
        --
        

     $
        --Long-Term Debt
     5,836,000
        

     5,836,000
        

     --
        

     --Amounts due to related parties
     --
        
     --
        
     --
        
     --Construction commitments
        
        
     
        --
        
     --
        
     --
        
     --Total Contractual Cash Obligations
     $23,781,700
        
     $23,781,700
        
     $--
        
     $-- 23




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 June 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 June 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
June 30, 2008, that have materially  affected,  or are likely to materially  affect,  our internal control
over financial reporting. 24




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 25




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: August 14, 2008
        
     By:
     
     /s/ Jiang PengJiang Peng, Chairman of the Board(Principal Executive Officer)   Date: August 14, 2008
     
     By:
     
     /s/ Sun DongqingSun Dongqing, Chief Financial Officer(Principal Financial and Accounting Officer) 26