SecProbe.io

January 4, 2011
 Xinyu Peng Chief Executive 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 Fiscal Year Ended December 31, 2009 Filed March 16, 2010 Form 10-Q for Quarterly Periods Ended June 30, 2010 and September 30, 2010 Filed August 16, 2010 and November 15, 2010 File No. 1-34625

Dear Mr. Peng:
We have reviewed your response letter date d December 8, 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 facts and circumstances please 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

 Consolidated Statements of Cash Flows, page 30

 1. We reviewed your response to comment tw o in our letter dated November 5, 2010.  We
understand you have now concluded that cash  expenditures for construction of power
generating stations sold pursuant to sales-t ype leases should be cl assified as operating
cash outflows since such expenditures are like the production of  inventory in a
manufacturing environment.  We also unders tand that cash inflows related to your
investment in sales-type leases  consist of principal and intere st and that you believe that

Xinyu Peng China Recycling Energy Corporation January 4, 2011 Page 2

principal collections should be classified as  investing cash inflows.  In addition, we
understand that sales of systems results in an  increase in the investment in sales-type
leases, and that you believe that the increase  should be presented as an investing cash
outflow.  However, it seems as though your i nvestment in sales-t ype leases is like
accounts and/or short- and long- term notes receivable from customers arising from sales
and that the change in the inve stment should be classified as  an adjustment to reconcile
net income to net cash provided by or used  for operating activities, which would be
consistent with your classification of cash out flows related to cons truction of the power
generating systems.  As such, please tell us the following:
• the basis in GAAP, citing specific ASC paragraphs, for classifying the increase in the
investment in sales-type l eases as investing cash outflow s when the investment (both
short- and long-term) arises from sales of power generating systems, which are
classified as operati ng cash inflows; and
• why you believe it is appropriate to classi fy principal collections as investing cash
inflows when collections re present a reduction in the i nvestment recognized upon the
sale of power generating systems and the ba sis in GAAP for your classification, citing
specific ASC paragraphs.
 Notes to Consolidated Financial Statements, page 31

 Note 19.  Stock-Based Compensation, page 47

 2. We reviewed your response to comment three in our letter dated November 5, 2010,
which is the same response you submitted to comment six in our letter dated September
22, 2010.  Please tell us why you believe the issu ance of warrants to non-employees in
exchange for services is not  within the scope of ASC 505- 50 and that the guidance in
ASC 450-20-25 should be applied.  In th at regard, please note that ASC 505-50
specifically addresses the date an issuer shal l use to measure the fair value of equity
instruments issued to non-employees, the pe riods and manner an issuer shall use to
recognize the fair value of the equity instruments and how the equity instruments shall be
accounted for before the measurement date fo r purposes of recognizing the cost of the
transaction.  Please also note that we acknowledge a liability  should be recognized on the
grant date and that the cost should be r ecognized as the serv ices are performed.
Notwithstanding, we believe that the fair valu e of the warrants should be measured based
on the guidance in ASC 505-50 as of the date at which a commitment for performance by the counterparty to earn the equity instrume nt is reached or the date at which the
counterparty’s performance is complete, whiche ver is earlier.  As such, as previously
requested, please tell us the basis for your de termination that the measurement date for
the warrants was the grant date in ligh t of the guidance in ASC 505-50-30-11 through
ASC 505-50-30-17.  Specifically discuss why you believe: (i) performance was complete
on the grant date or (ii) a performance comm itment to earn the equity instruments was
probable on the grant date because of sufficien tly large disincentives for nonperformance.
If you concluded the warrants were fully ve sted and nonforfeitable on the grant date
despite their vesting terms because their issuan ce was irrevocable and you agreed to take

Xinyu Peng China Recycling Energy Corporation January 4, 2011 Page 3

no action to cause the warrants to become void or revoked or thei r issuance to be
otherwise terminated, please c onfirm that fact and tell us  the facts and circumstances
supporting that conclusion.  Otherwise, pleas e explain in detail th e sufficiently large
disincentives for nonperformance.
 Item 9A. Controls and Procedures, page 51

Internal Controls over Financial Reporting, page 51
 3. We reviewed your response to comment five  in our letter dated November 5, 2010.  We
understand that your CFO is responsible for reviewing the financ ial reports under US
GAAP and ensures the financial statements and other financial information fairly
presents the financial conditi on, results of operations and cas h flows in accordance in US
GAAP.  We also understand that your CFO ha s a U.S. MBA education and many years of
experience in banking, investment, financing an d accounting areas in China and the U.S.
Please tell us about the CF O’s education, knowledge, experience and on-going training in
US GAAP and SEC Rules and Regulations.  In  addition, please tell about the education,
knowledge, experience and on-going traini ng in US GAAP and SEC Rules and
Regulations of your Vice President of Accoun ting and other personnel identified in your
response.

4. We reviewed your response to comment si x in our letter dated November 5, 2010.  We
note that you engaged Deloitte to provide c onsulting services and provide assistance in
conducting your evaluation and assessment of in ternal control over financial reporting for
fiscal 2010.  Please tell us how and why Deloit te is qualified to evaluate your internal
control over financial reporting.  In add ition, please tell us whether you engaged an
accounting firm or other similar organizati on to provide assistance in conducting your
evaluation and assessment of in ternal control over financial reporting for fiscal 2009.  If
so, please provide the information requested in  our previous comment.  Otherwise, please
tell us the role each of the persons identifie d in your response to comment five in our
letter dated November 5, 2010 had in conductin g the evaluation and assessment of your
internal control over financia l reporting in fiscal 2009.
 Form 10-Q for Quarterly Period Ended September 30, 2010

 Part I. Financial Information, page 3

 Item 1. Financial Statements, page 3

 5. Please refer to ASC 505-10-50-2 a nd tell us your consideratio n of disclosing the changes
in the separate accounts comprising stockhol ders’ equity and of the changes in the
number of shares of common stock outstanding  in a separate statement of stockholders’
equity or in the notes to  financial statements.

Xinyu Peng China Recycling Energy Corporation January 4, 2011 Page 4

  You may contact me at (202) 551- 3344 if you have any questions.
          S i n c e r e l y ,
William Thompson
         A c c o u n t i n g  B r a n c h  C h i e f