UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
 

Investment Company Act file number: 811-22081


China Finance, Inc.
(Exact name of registrant as specified in charter)


1330 Ave of Americas, 21st floor, New York NY 10019
 (Address of principal executive offices)  (Zip code)


Wei Wei
1330 Ave of Americas, 21st floor, New York NY 10019
 (Name and address of agent for service)


Registrant's telephone number, including area code: (212) 823-0530


Date of fiscal year end: December 31


Date of reporting period: September 30, 2008

 
 
ITEM 1.  SCHEDULE OF INVESTMENTS
 
China Finance, Inc.
 
Schedule of Investments
 
           
Market Value
 
As of September 30, 2008
 
Shares
   
  (Note 1)
 
               
Common Stocks - 24.05%
           
 
Small and Medium Sized Enterprises (or operating companies)
           
 
in the People's Republic of China
           
               
*
China Organic Agriculture, Inc. - 1.97%
           
 
(par value $0.001)
    1,729,273       605,246  
*
Gulf Resources, Inc. - 3.69%
               
 
(par value $0.001)
    3,339,000       1,135,260  
*
Home System Group - 0.31%
               
 
(par value $0.001)
    480,000       96,000  
* µ
Jade Art Group, Inc. - 18.08%
               
 
(par value $0.001)
    4,340,700       5,556,096  
*
CellTeck, Inc. - 0.00%
               
 
(par value $0.001)
    3,480,750       -  
                   
 
  Total Common Stocks (Cost $9,164,596)
    $ 7,392,602  
                   
Loans Receivable - 67.22%
               
                   
 
Shenzhen HuaYinTong Electronics - 42.99%
               
 
(9.00%, due on October 15, 2008)
            13,213,652  
 
Shenzhen HuanYaTong Investment Ltd. - 24.23%
               
 
(8.50%, due on April 1, 2009)
            7,446,197  
                   
 
Total Loans Receivable
          $ 20,659,849  
                   
Real Estate Held for Investment (a)  - 5.01%
          $ 1,541,513  
                   
 
Total Investments - 96.28%
          $ 29,593,964  
 
Other Assets less Liabilities - 3.72%
            1,142,289  
                   
 
Net Assets - 100.00%
          $ 30,736,253  
 
(a)
The Company’s real estate held for investment consists of a building and related land use rights. The Company values the real estate based on the cost to purchase and construct a building on the real estate.  The Company evaluates the market price semi-annually for possible impairment loss, and, as needed, a certified independent agent performs a property inspection and a market price evaluation.
                     
*
Non-income producing security.
           
µ
Affiliated issuer (Note 2).
             
                     
                   
 (Continued)
 
 
China Finance, Inc.
 
Schedule of Investments
 
As of September 30, 2008
 
The following information is based upon the federal income tax cost of portfolio investments as of September 30, 2008.
 
Gross unrealized appreciation
  $ 1,215,396  
Gross unrealized depreciation
    (2,987,390 )
Net unrealized appreciation
       
(depreciation)
  $ (1,771,994 )
         
Federal income tax cost
  $ 9,164,596  
 
The difference between the acquisition cost and the federal income tax cost of portfolio investments is due to certain timing differences in the recognition of capital losses under accounting principles generally accepted in the United States and income tax regulations.
 
 
ITEM 2.  CONTROLS AND PROCEDURES
 
(a)
The Principal Executive Officer and the Principal Financial Officer have concluded that the registrant’s disclosure controls and procedures are effective based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 as of a date within 90 days of the filing of this report.
 
(b)
There were no changes in the registrant's internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
ITEM 3.  EXHIBITS

Certifications for each principal executive officer and principal financial officer of the registrant as required pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) are filed herewith as Exhibit A.
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
China Finance, Inc.
 
By: (Signature and Title)
/s/  Ann Yu  
 
Ann Yu
 
 
Chairman, Chief Executive Officer and Principal Executive Officer
 
 
China Finance, Inc.
 
 
Date: November 25, 2008
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 
By: (Signature and Title)
/s/  Ann Yu  
 
Ann Yu
 
 
Chairman, Chief Executive Officer and Principal Executive Officer
 
 
China Finance, Inc.
 
 
Date: November 25, ,2008
 
 
By: (Signature and Title)
/s/  Liang Liao  
 
Liang Liao
 
 
Chief Financial Officer and Principal Financial Officer
 
 
China Finance, Inc.
 

Date: November 25, 2008
 
Exhibit A

I,  Ann Yu, certify that:
 
1.      I have reviewed this report on Form N-Q of China Finance, Inc.;
 
2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.      Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
 
4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
 
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
 
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.     The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: November 25, 2008

/s/ Ann Yu
Ann Yu, Chairman, Chief Executive Officer and Principal Executive Officer
 
 
I, Liang Liao, certify that:
 
1.      I have reviewed this report on Form N-Q of China Finance, Inc.;
 
2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.      Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
 
4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
 
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
 
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.     The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
 
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

Date: November 25, 2008

/s/ Liang Liao
Liang Liao, Chief Financial Officer and Principal Financial Officer