SecProbe.io

December  14, 2012

Via E-mail
David Chong
Chief Financial  Officer
China Recycling Energy Corporation
12/F, Tower A
Chang An International Building
No. 88 Nan Guan Zheng Jie
Xi’an City, Shaanxi Province
China

Re: China Recycling Energy Corporation
 Form 10-K for Fiscal Year Ended December 31 , 2011
Filed March 22 , 2012
File No. 1-34625

Dear Mr. Chong :

We have reviewed your filing and have the following comment s.  We have limited  our
review to only your financial statements and related disclosures and do not intend to expand our
review to ot her portions of your document .  In some of our comments, we may ask you to
provide us with information so we may better understand your discl osure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circ umstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to this comment , we may have  additional comments.

Form 10 -K for Fiscal Y ear Ended December 31, 20 11

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations , page 33

Liquidity and Capital Resources, page 43

1. Please describe  how cash is transferred to your  PRC subsidi aries, and conversely, how
earnings are transferred from your PRC subsidi aries to the parent company.  If
applicable, p lease also de scribe any restrictions that impac t your ability to transfer cash
within the corporate structure, including the nature of re strictions on the net assets of

David Chong
China Recycling Energy Corporation
December 14, 2012
Page 2

 your subsidiaries, the amount of those net assets and the potential impact on your
liquidity.

Item 9A. Controls and Procedures, page 81

2. Please tell us whether there have been changes in the qualifications of your accounting
staff and outside consultants responsible for the preparation of your financial statements
in accordance with US GAAP as set forth in your response letters dated December 8,
2010 (comment 4) and January 31, 2011 (comment 3).  For example, please  tell us: (i)
whether you still engage a US licensed CPA to assist in the conversion and consolidation
of the financial statements of your subsidiaries prepared in accordance with PRC GAAP
to US GAAP and preparation of financial statement footnotes that co mply with the
disclosure requirements of US GAAP, and if so, the nature and extent of the involvement
of the US CPA in preparing your financial statements in accordance with US GAAP, and
(ii)  whether you have added any personnel holding a license to pract ice public
accounting in the US or with education, knowledge and on -going training in US GAAP
and SEC Rules and Regulations together with a summary of that  education, knowledge
and on -going training.

Item 8. Financial Statements and Supplementary Data, p age 50

Notes to Consolidated Financial Statements, page 55

2. Summary of Significant Accounting Polices, page 57

Fair Value of Financial Instruments, page 60

3. Please tell us your consideration of disclosing the fair value long term debt obligations
together with the related carrying amounts  and the method s and significant assumptions
used to estimate the fair of the instruments .  Please refer to ASC 825 -10-50-10 and 11.

8. Accrued Liabilities and Other Payables, page 64

4. The amount of accrued liabi lities and other payables disclosed in the table summarizing
the components of accrued liabilities and other payables at December 31, 2011 differs
from the amount stated in the balance sheet.  Please revise or advise.

15. Convertible Notes Payable and Re volving Finance Agreement, page 70
Convertible Note Agreement with China Cinda, page 72

5. Please tell us the fair value of the debt discount attributable to the embedded conversion
featur es at the date s of issuance of the convertible debt.  Please also tell  us the fair value
of the embedded conversion features attributable to the notes as of the dates you
extinguished the debt obligations and the amount of the gain or loss recognized.  In
addition, we understand that you recognized the gain or loss attributa ble to the

David Chong
China Recycling Energy Corporation
December 14, 2012
Page 3

 extinguishments of the debt and related embedded conversion features as a component of
the changes in fair value of the conversion feature liability recognized in income.  If so,
please tell us why the gain or loss is not separately presented in  the consolidated
statements of income and comprehensive income.  If not, please tell us how the gain or
loss i s classified in the consolidated statements of income and comprehensive income.

6.  Please tell us your consideration of disclosing the principal amount of the convertible
debt, the unamortized discount and the net carrying amount of the debt as of the most
recent balance sheet date.

17. Shareholders’ Equity, page 78

7. We note your response to comment 11 in our letter dated September 22, 2010.  In your
response dated October 12, 2010 you indicate that you used the guidance in ASC 480 -10-
25-14 to record your obligation to issue a variable number of shares to settle the RMB
80,000,000 liability, a fixed monetary amount.  Please tell us why the issuan ce of
common stock to Dong at a price of $4 per share resulted in the extinguishment of the
aggregate liability recognized in 2010.  In that regard, we note that the fair market value
of your common stock on the date of issuance was below the $4 issuance p rice and that
you recognized a gain for the difference between the carrying amount of the liability and
fair market value of your common stock on the date of issuance of the shares.  In your
response, please clearly describe the payment terms of the Transf er Agreement and tell us
why the counterparty agreed to extinguish the liability upon receipt of common shares
with a fair market value less than the carrying amount of the liability.  In addition, please
confirm to us that the issuance of the shares legal ly extinguished the liability pursuant to
terms of the Transfer Agreement and the basis for that conclusion.  Also, tell us your
consideration of the guidance in ASC 480 -10-55-22.

18. Statutory Reserves, page 79

8. Please disclose whether the maximum statutory reserve amount has been reached as of
the most recent balance sheet date.

Signatures, page 83

9. Please note that the report should also be signed by your principal financial officer and
principal accounting officer in your behalf and in their ca pacities as the principal
financial officer and principal accounting officer in the second signature block.  Please
revise.  Refer to the signature section and General Instruction D(2) of Form 10 -K.

We urge all persons who are responsible for the accura cy and adequacy of the disclosure
in the filing  to be certain that the filing  include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts  relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

David Chong
China Recycling Energy Corporation
December 14, 2012
Page 4

 In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsibl e for the adequacy and accuracy of the disclosure in the filing s;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Tony Watson, Accountant,  at (202) 551 -3318  if you have questions
regarding our comments.  Pleas e contact me at (202) 551 -3344  with any other questions.

Sincerely,

 /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief