SecProbe.io

November 5, 2010
 Xinyu Peng Chief Financial Officer and Secretary China Recycling Energy Corporation 12/F, Tower A, Chang An International Building No. 88 Nan Guan Zheng Jie Xi An City, Shan Xi Province, China 710068

Re:  China Recycling Energy Corporation
Form 10-K for the Fiscal Year Ended December 31, 2009
Filed March 16, 2010 Form 10-Q for the Quarterly Period Ended June 30, 2010 Filed August 16, 2010 File No. 1-34625
 Dear Mr. Peng:
We have reviewed your response letter da ted October 12, 2010 and have the following
comments.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.

Form 10-K for Fiscal Year Ended December 31, 2009

Item 8.  Financial Statements and Supplementary Data, page 26

Report of Independent Registered Public Accounting Firm, page 26

1. We reviewed your response to comment two in our letter dated September 22, 2010.  Please confirm that you intend to include th e conformed signature of your independent
accountant in the amendment you intend to f ile upon conclusion of our review.

Xinyu Peng
China Recycling Energy Corporation
November 5, 2010 Page 2

Consolidated Statements of Cash Flows, page 30

 2. We reviewed your response, along with the analysis provided in the appendix, to
comment three in our letter dated Septem ber 22, 2010.  We acknowledge the guidance in
ASC 230-10-45-22 that certain cash receipts and payments ma y have aspects of more
than one class of cash flows, and that th e appropriate cash flow  classification should
depend on the activity that is likely to be the predominate source of cash flows.  As such,
it appears that the construc tion costs of power generati ng systems and the related
proceeds from the sale of these systems should be consistently presented as either operating or investing activities dependent on the predominant source of cash flows.
Please tell us how you are applying the refere nced guidance in determining whether cash
flows from the acquisition/construction and sa le of power generation systems should be
classified as operating or i nvesting activities.  In your  response, please address the
following questions with respect to the conso lidated statement of cash flows provided in
the appendix:
• We note that the increase in construction in  progress is classified in cash flows
from operating activities while principal collections on sales type leases are
classified in cash flows from investing ac tivities.  Please tell  us your basis in
GAAP for these cash flow classifications in light of the guidance in ASC 230-10-
45-22.
• We note that sales of systems are clas sified as cash outflows from investing
activities in the initial investment in sales type lease line item.  Please tell us why
the sale of systems results in cash outflows.

• It seems as though sales of power generati ng systems net of the costs of systems
subject to sales and lease back arrang ements represent non-cash income and
expense.  If you consider construction expenditures and collection of principal on
sales type leases as investing cash flows, please tell us why you should not
present gross profit from the sale of sy stems as a reduction to cash flows from
operating activities in the adjustments to reconcile net income (loss) to net cash
provided by operating activities.

Notes to Consolidated Financial Statements, page 31

Note 19.  Stock-Based Compensation, page 47

3. We reviewed your response to comment si x in our letter dated September 22, 2010.  It
appears that the guidance at ASC 505- 50-30-11 through ASC 505- 50-30-17 should be
followed when determining the measurement da te for equity instruments issued in a
share-based payment transaction with nonemplo yees.  If you disagree, please explain in
greater detail why such guidance is not appli cable.  Given this guidance, as previously
requested, please tell us in more detail the basis for your determination that the

Xinyu Peng
China Recycling Energy Corporation
November 5, 2010 Page 3

measurement date for the warrants issued to  non-employees was the same as the grant
date.  Refer to the guidance in AS C 505-50-30-11 through ASC 505-50-30-17 and
discuss why you believe: (i) performance was complete on the grant date or (ii) a performance commitment to earn the equity  instruments was probable on the grant date
because of sufficiently large disincentives for nonperformance.  With respect to the latter, please explain in detail the sufficiently large disincentives for nonperformance.
 Item 9A. Controls and Procedures, page 51

Internal Controls over Financial Reporting, page 51
 4. We note that you conduct substantially all of your  operations outside of the United States.
In order to enhance our unders tanding of how you prepare y our financial statements and
assess your internal control over financial reporting, we ask that you provide us with
following information:

• In connection with your process to dete rmine whether your in ternal control over
financial reporting was effective, please describe whether and how you
considered controls to addr ess financial reporting risks that are relevant to all
locations where you have operations.

• If you have an internal aud it function, please describe it and explain how, if at all,
that function impacted your evaluation of your internal control over financial reporting.

• If you maintain your books and records in accordance with U.S. GAAP, describe
the controls you maintain to ensure that the activities you conduct and the
transactions you consummate are recorded in accordance with U.S. GAAP.

• If you do not maintain your books and reco rds in accordance with U.S. GAAP,
tell us what basis of accounting you us e and describe the process you go through
to convert your books and records to U.S.  GAAP for SEC reporting.  Describe the
controls you maintain to ensure that you have made all necessary and appropriate
adjustments in your conversi ons and disclosures.
 5. We would like to understand more about the background of the people who are primarily
responsible for preparing and s upervising the preparation of your financial statements and
evaluating the effectiveness of your internal control over financial reporting and their
knowledge of U.S. GAAP and SEC rules and regulations.  Do not identify people by
name, but for each person, please tell us:
• what role he or she takes in preparing your financial statements and evaluating the
effectiveness of your internal control;

Xinyu Peng
China Recycling Energy Corporation
November 5, 2010 Page 4

• what relevant education and ongoing traini ng he or she has had relating to U.S.
GAAP;

• the nature of his or her contractual or other relationship to you;

• whether he or she holds and maintains any professional designations such as
Certified Public Accounta nt (U.S.) or Certified Management Accountant; and

• about his or her professional experience, including experience in preparing and/or
auditing financial statements prepared  in accordance with U.S. GAAP and
evaluating effectiveness of internal control over financial reporting.
 6. If you retain an accounting firm or other sim ilar organization to prepare your financial
statements or evaluate your internal cont rol over financial repor ting, please tell us:

• the name and address of the acc ounting firm or organization;

• the qualifications of their employees who perform the services for your company;

• how and why they are qualified to prepar e your financial statements or evaluate
your internal control over financial reporting;

• how many hours they spent last year performing these services for you; and

• the total amount of fees you paid to each accounting firm or organization in connection with the preparation of your financial statements and in connection
with the evaluation of internal control ove r financial reporting for the most recent
fiscal year end.
 7. If you retain individuals who are not your employees and are not employed by an
accounting firm or other similar organization to prepare your financial statements or
evaluate your internal control over financial reporting, do not provide us with their
names, but please tell us:
• why you believe they are qualified to pr epare your financial statements or
evaluate your internal contro l over financial reporting;

• how many hours they spent last year performing these services for you; and

• the total amount of fees you paid to each individual in connection with the
preparation of your financial statements and in connection with the evaluation of
internal control over financial reporting for the most recent fiscal year end.

Xinyu Peng
China Recycling Energy Corporation November 5, 2010 Page 5

8. We note that you identify Mr. Sean Shao, member of your audit committee, as a financial expert in your Proxy Statement filed April 30, 2010.  Please describe the financial expert’s qualifications, including the extent of the financial expert’s knowledge of U.S.
GAAP and internal control over financial reporting.
 Form 10-Q for Quarterly Period Ended June 30, 2010

 Part I. Financial Information, page 3

 Item 1. Financial Statements, page 3

 Consolidated Balance Sheets, page 3

 9. We reviewed your response to comment 11 in our letter dated September 22, 2010.  In
your response you state that you classified th e shares to be issu ed as a non-current
liability.  However, shares to be issued are classified as temporary equity between total
liabilities and equity.  Please classify the obl igation as a non-current liability in future
filings.

You may contact Adam Phippen at 202-551-3336 if you have any questions.  In his
absence you may contact me at (202) 551-3344.

Sincerely,

William H. Thompson
        A c c o u n t i n g  B r a n c h  C h i e f