December 5, 2008

My Fellow Shareholders:

In light of the current turmoil in the global financial markets, andseveral exciting developments at our Company, I wanted to share some thoughtsdirectly with you.

We believe that China Finance offers an opportunity that is unique amonginvestment companies. While we are a publicly traded closed end fund, ourflexible yet focused business model is designed to permit varied initiativesto maximize potential value for our shareholders. I believe that steps taken,planned and underway at the Company will significantly enhance our ability togrow revenues and earnings into 2009 and beyond.

While the main thrust of our business activities has been and willcontinue to be providing financial services (such as guarantee, loan and otherfinancing services) to small and medium sized (SME) China-based companies, wehave extended our investment strategy to include directly acquiring positions(including controlling positions) in enterprises where we see substantialgrowth and revenue potential. A case in point is our recently announcedintention to purchase 80% of the shares of Wenxi Baiyu Magnesium forapproximately $11.4 million. This potential purchase, which is still innegotiations, is representative of the type of direct investments we arelooking to make in the future as we seek to expand our revenues and provideconsistent and growing shareholder value. We expect our future directinvestments to be in companies that have earned a minimum of $30 million inrevenue during their most recent fiscal year.

As previously announced, we are also in the process of seeking a listingon the NYSE Alternext US (formerly the American Stock Exchange) that shouldincrease our Company's visibility within the investment community, expose ourCompany to more investors, and raise our profile within our target markets toallow us to attract more (and potentially greater) revenue producingopportunities. While there can be no assurance that we will become listed, weare working with the NYSE to provide materials and information they haverequested to keep the process moving forward.

As you know, the current global market turmoil has led to declines instock markets around the world. We believe our share price, while stillvolatile, has held up relatively well. In late October, I became a shareholderof China Finance for the first time by acquiring 300,000 shares at a cost ofapproximately $1.4 million. While this was a strategic personal investmentdecision, and did not reflect any position of the Company, my purchase speaksto my faith and confidence in the long-term prospects of China Finance. Ibelieve we have the expertise and depth of management to continue identifyingopportunities both through the financial services arena (loans or guaranteesto China-based companies) and direct investments with Chinese companies thathave demonstrated strong growth and compelling potential.

Obviously, I believe that the prospects for China Finance are bright, andI am excited about our initiatives and future.

I thank you for your continued support and interest, and I look forward tocontinuing communication about our initiatives into 2009 and beyond. For thelatest information about China Finance, you may bookmark our updated website:http://www.chinafinanceinc.com .

Sincerely, Ann Yu Chief Executive Officer China Finance Inc. ABOUT CHINA FINANCE, INC.

China Finance, Inc. provides financial support and services -- primarilyin the form of surety guarantees, loan guarantees, or short-term loans -- toprivately owned SMEs when they seek access to capital or to be acquired by aUnited States reporting company. China Finance provides its services throughits wholly owned indirect subsidiary, Shenzhen Hua Yin Guaranty and InvestmentLimited Liability Corporation, which is located in the financial district ofShenzhen, China. The Company also directly invests in the equity of SMEsthrough its wholly owned subsidiary, Value Global International Limited, aBritish Virgin Islands company.

FORWARD-LOOKING STATEMENTS

The foregoing contains forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. Statements relating toexpected operating results and future performance, as well as future eventsand developments, are forward-looking statements and are not historical innature. Generally, the words "looking forward", "believe", "expect", "intend","estimate", "anticipate", "likely", "project", "may", "will" and similarexpressions identify forward-looking statements. The Company warns that anyforward-looking statements in this release involve numerous risks anduncertainties and assumptions that may cause actual results, levels ofactivity, performance or achievements to differ materially from thoseexpressed or implied by any forward-looking statement. These risks anduncertainties include, but are not limited to, the risk that the value of ourportfolio securities will decline resulting in a decline in the value of theCompany's stock, we might not achieve our anticipated development milestones,the market for our services will not grow as expected and we might not achieveour expectations. If these or other significant risks and uncertainties occur,or if our underlying assumptions prove inaccurate, our actual results coulddiffer materially. While the Company is an operating company, the Company isregistered as a "closed-end" investment company under the Investment CompanyAct of 1940, as amended, and is subject to the types of investment risks thateffect investment companies. You are urged to consider the operating andinvestment objectives and strategies, expenses and history of the Company,along with all risks and uncertainties noted above, and to review the riskfactors and financial information about the Company available in the Company'sregistration statement on Form N-2, and the Company's Annual and Semi-AnnualReports and other regulatory filings accessible on the SEC's website athttp://www.sec.gov . In light of the uncertainty inherent in forward-lookingstatements, you should not consider their inclusion to be a representationthat such forward-looking matters will be achieved. Moreover, pursuant to thePrivate Securities Litigation Reform Act of 1995, such statements speak onlyas of the date they were made, and the company undertakes no obligation toupdate publicly any forward-looking statements, whether as a result of futureevents, new information or otherwise. Past performance is no guarantee offuture results, and like all investments, you may lose money on an investmentin the Company's stock.

For more information, please contact: Investor Relations China America Financial Communications Group Darren Minton Tel: +1-212-823-0523 Email: chinafinance@cafcg.comSOURCE China Finance, Inc.