Helen Zhang – Director, IR Yong Zhang – Chairman and CEO Tom Gurnee – CFO

Liang Hsu – Brean Murray Xin Li Zhang [ph] – Roth Capital Partners Rachel Yu [ph] – Rodman & Renshaw Rafael Mernay [ph] – Morning Glory Capital Management

Good day, everyone. Welcome to the Xinyuan Real Estate Company LTD second quarter 2010 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Helen Zhang. Please go ahead.

Hello, everyone. And welcome to Xinyuan's second quarter 2010 earnings conference call. The company's second quarter earnings results were released earlier today and available on the company's IRS site as well as on Newswire services. Before we continue, please note that the discussion today will contain forward-looking made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our registration statement and our Form 20-F and other documents filed with the US Securities and Exchange Commission. Xinyuan does not assume any obligation to update any forward-looking statements, except as required by applicable law. Today, you will hear from Mr. Yong Zhang, our chairman and chief executive officer, who will comment on current operations and provide some perspectives on the market environment. He will be followed by Mr. Tom Gurnee, our chief financial officer, who will provide some additional color on our performance, review the company's financial results, and discuss our outlook for the remainder of year 2010. Following management's prepared remarks, we'll open the call to questions. During the Q&A session, Mr. Zhang will speak in Mandarin. And I will translate his comments into English. Please note that unless otherwise stated, all figures mentioned during this conference call are in US dollars. I will now turn the call over to Xinyuan's chairman and CEO, Mr. Yong Zhang. Please go ahead, sir.

Hello, everyone. And I thank you for joining us today. Our results for second quarter for Xinyuan were reflective of new real estate government policies established in mid April. This policy is more designed to curb speculation in the real estate market, and has resulted in restricted mortgage lending, which we have seen an impact on our results. However, the impact of these policies has varied by region. In Kunshan, lending was suspended fully. Therefore, we didn't know the record and the sales until the second half of June. Suzhou government took a different approach by declaring (inaudible) to sell at no higher than registered pricing. Since our registered building price is set in December 2009, it was 20% lower than the current market price. The company took not to sell any in May and in June. In Chengdu, the pricing was – the policies were implemented quickly and the banks adjusted. As a result, our sales overall were not affected. Fortunately, we have entered this period with a solid cash position and a balance sheet. We were able to repay our floating rate notes and bonds. We're also using new debt. We also used a portion of our cash to fully pay for our bank debt. Well, we expect the third quarter will also be soft due to the continued impact of the government policy. We are expecting a better fourth quarter. We have seven projects which are now fully paid for. Four of these began presales in the second quarter. And this will begin to contribute to our sales in the fourth quarter and through the first quarter of 2011. We will be very well-positioned for growth next year, with a total of 10 active projects. Overall, we already note that there's still some market uncertainty in the short term. We are excited about our prospects for the fourth quarter and beyond. I will now turn the call over to Tom Gurnee, our chief financial officer.

Thank you, Chairman. Let me begin this review by commenting on recent government policy initiatives and their impact on our sales rates. As most of you know, on April 17th, 2010, the central government published the circular giving guidelines, not necessarily orders, to the provinces and municipalities on actions that could be taken to moderate residential real estate price increases going forward. The menu of measures included differentiating first home buyers versus second home buyers, freezing up third home buyers, tighter scrutiny over what constitutes a family unit for determining first and second home buyers, distinguishing residents and non-residents for mortgages, and the – even allowing for rolling backup prices to original permits, et cetera. These policy measures have been inconsistently applied by regions – in the regions we do business in. And so, let me address the policy status and the impact by the area where we operate. Let's start with Kunshan. Kunshan before April – before this April announcement was approximately 60% of our sales rate in the first quarter and in April until the policy took place. In Kunshan, the policy is implemented mostly at the discretion of different banks. Under these rules, only official city residents, that is hukow holders. Hukow is a Chinese form of registration. Only Hukow holders in the city of Kunshan or taxpayers in the city of Kunshan are eligible for the most attractive first home buyer mortgages of 80% principal and a 15% discount to the benchmark mortgage lending rate. Local second home buyers are eligible for 50% mortgages at the benchmark rate plus 10%. Non-local residents, including Shanghai residents, are eligible for second home buyer terms on their first Kunshan home purchase. However, banks such as the Agriculture Bank of China, the Hanshu [ph] Bank have stopped giving mortgages to non-local residents, even if they're first home buyers. So it differs bank by bank, actually, within that area. Third home buyers are eligible to 40% to 45% mortgages, in other words, less than half. And up to 150% of the benchmark rate. But some banks still choose to restrict – to suspend mortgage lending to third home buyers, both local and non-local. The impact, well the impact's been quite severe in the short term. Pre-policy sales rate – before the policy was published, we were selling 200 to 300 units per month. April was 191. It was a very strong month until the announcement. May was zero. June was 22. After half the month, it was zero. And July was at 31. So it's bounced off bottom, but it's a fraction of what it was before the policy change. In Suzhou, the policy is a bit more restrictive to non-residents – non-local residents. Official city residents may still enjoy the first-time – first home buyer terms. Second and third home buyer terms are similar to Kunshan. Mortgage lending to second and third non-local homebuyers was absolutely suspended. And in addition to this, Suzhou alone was the sole province doing this. In addition, on May 12th, the local government decreed that sales prices in Suzhou – in our project, Suzhou International City Garden, shall not exceed prices registered at the time of the presales permit grant for a period of 90 days from the decree or expiration of that given sales permit. For example, In December 2009, we received the sales permit for three buildings at the Suzhou International City Garden at a registered average price of RMB9,800 per square meter. Apartments sold in April before the policy change transacted at – the prices had moved up. And they transacted at RMB11,300 per square meter. In April 2010, we received the sales permit for another building at an average price of RMB12,000 per square meter. Our current prevailing list price averages about RMB12,500 per square meter. Rather than roll back on those three buildings that we applied for a sales permit – rather than roll back those prices to December 2009, we chose simply not to sell in those buildings. And we would have had to discount by over 20%. So we have not rolled back those prices, and in response to the – in response to this – and thus, we have chosen to await expiration of the decree before we resume full activity on these three buildings. The impact here Suzhou has already been fairly acute. From a pre-policy change sales rate of about 50 to 70 units per month, it was 68 in April, none in May, two in June, and 21 in July. July sales were at an ASP of – just so you know, July sales were at an ASP of RMB12,430 per square unit. So we're holding price. And we were bouncing up bottom, but still at low levels. Zhengzhou interpreted the policy changes quickly and differently from Kunshan and Suzhou. Residents of the Henan province are considered as Zhengzhou local residents as long as they can provide a local working certificate. Local second and third home buyer terms are similar to Suzhou's. But mortgage lending was suspended to second and third non-local buyers. The impact here was not as severe as most of our customers in Zhengzhou are local residents or can provide a local working certificate. For Zhengzhou Colorful Garden, a pre-policy sales rate of 35 to 75 units per month reached 74 units in April, dropped to 32 units in May, 37 in June, and 38 in July. And the ASP has edged up during that period. Our JV, JianXin, which also operates in the Henan province in Zhengzhou, the unit sales did not a miss a beat. From a pre-policy sales rate of 50 units to 90 units per month, we achieved 96 units in April, 73 in May, 62 in June, back to 82 in July. In addition to these, we also successfully opened our Zhengzhou Modern City project by selling out our initial allotted sales permit with 185 unit sales in May, 34 in June, and just 4 in July because we ran out of inventory. But in ASP, it's RMB7,100 per square meter. We did receive a new sales permit on August 1st. And sales in August were very brisk on that sales permit. Chengdu, meanwhile, implemented the same first home buyer rules as Kunshan, but is mostly specific to third home buyers. Both local and non-local second home buyers can apply for a 50% mortgage at a 110% benchmark rate. Third home mortgages are suspended completely for both local and non-local residents. The wait-and-see sentiment affected sales rates. From 214 units sold in April, we sold 72 in May, 30 in June, with a moderate recovery into 75 units in July. Due to the high mix of owner occupancy in Chengdu, the impact was not as severe as Kunshan. So that describes how these policy changes affect us in the short term by region. So let me comment now on our second quarter results. As we expected last quarter at this time, GFA sales did drop to 86,200 square meters from 126,900 square meters in the first quarter. As explained earlier, the Kunshan International City Garden project was the hardest hit, with GFA sales falling 69% sequentially. Zhengzhou Modern City made to be selling 22,000 square meters or 8% of the total project. And virtually, all the units are included in our maintenance sales permit. A second permit, as noted, was issued on August 1st. Second quarter contract sales fell to $97 million or 32% below the first quarter. Our area of ASP was virtually flat quarter-to-quarter despite the fact that project-by-project ASPs were higher. Now, you could say we fell victim to mix as softness in Kunshan at an ASP of RMB8,446 was offset by new Chengdu Splendid II and Modern City projects at ASPs of RMB6,000 and RMB7,000. We have not lowered any prices on any of our projects, and do not currently plan to do so. Now, revenue under the percentage of completion method decreased 15% from the first quarter of 2010 to $94.5 million. US GAAP percentage of completion revenue declined less than contract sales in the period, primarily due to the fact that we accelerated construction activities and spending in Kunshan, such that the project percentage of completion rose sharply from 61% in the first quarter to 67% in the second. And since the PoC method applies the percentage to completion cumulative project sales, in the period of increasing construction activity, reported revenue may rise substantially despite low current period sales. Gross margin was recorded at $20.2 million in the second quarter or 21.3% of revenue versus $24.7 million and 22.3% of revenue in Q1. There's really nothing earth-shaking to report here, except to note that the drop in margin percent was simply due to a lower cumulative change and estimates impact than Q1, as noted in our press release. Selling, general, and administrative expenses rose $510,000 from Q1 to Q2 in dollar terms, and from – to 8.9% from 7.1% in revenue terms. This was a disappointed for us, but there were two major factors. We did increase promotional spending for two new projects in Q2. That would be Chengdu Splendid II and Zhengzhou Modern City. So when we open new projects, we do promote heavily in that period. We incurred over $1 million – in addition to that, we incurred over $1 million of legal consulting and accounting fees in the second quarter, primarily regarding a cancelled secondary offering and the retirement of debt that we made in April 2010. We expect overall SG&A spending to drop by at least $500,000 next quarter despite promotion of our new Suzhou project in August. Income taxes were 31.2% of pre-tax income versus 34% last quarter. We don't see this as evidence of a generally lower effective tax rate, though, going forward. Balance sheet, cash on hand did decrease by $69 million in the quarter. And outstanding debt increased by $30 million to $327 million. And debt less cash increased by $99 million from $5 million to $104 million. Normally, on the surface, that's not a good trend, unless when it reflects on what major transactions took place in the quarter. In the second quarter, we have paid the final land premium payment of $138 million on Chengdu Splendid project in April, one month ahead of time in order to – so that we could accelerate the permitting process and get to presales as quickly as possible. We also repaid $105 million in floating rate notes and convertible bond obligations in April. But that was partially offset by a new three-year note of $40 million. So excluding the land premium payment, we generated $40 million of operating cash flow. Real estate property under development dropped $20 million in the quarter to $636 million, and was noted in the land payments. The Chengdu payment was recorded in the accounts payable in the Q1 balance sheet. That's why it doesn't show as a big drop in real estate under development. Under land acquisitions, we had no new land acquisitions in Q2. And we really have no plans to acquire new land in Q3. We are focused on executing on our projects and our existing land bank. And every project we own is being pushed forward at full speed at this time. JianXin, the 45% owned joint venture of ours with Jiantou, on June 8th, we called off this potential deal, which we originally announced in September 30th, due to concerns about the ultimate land value-added tax settlement. We have since received settlement notice from the tax authorities in July. And we felt comfortable enough to restart the acquisition process, including public auction. So we're continuing on with that auction process. So let me comment on the 2010 outlook right now. At this time last quarter, we were kind of a state of great uncertainty regarding on what the impact of the April 2010 government policy announcement would have on each of our projects. We felt it was inadvisable to give guidance to the second quarter of 2010 or for the year because we simply did not know how each location's governing authority would interpret that policy. Since that time, each municipality and province that we operate in has clarified their interpretation of the April announcement as mentioned earlier. While we continue to be uncertain about the length of the timing this measure will remain in place and we're reluctant to predict an easing of these restrictions any time soon, we do feel the restrictions are unlikely to get more severe in the future. We've coordinated our outlook for the next two quarters without assuming more or even a slight improvement in Kunshan and Zhengzhou GFA sales rates. Let's just call this customer coping with the new policies. It's not a rollback of those policies. Now, other active locations are projected as essentially recurrent sales range. We have included the effect of new presales permits in Q3 for Zhengzhou Modern City and Suzhou Colorful Garden. Permits for Zhengzhou Royal Palace and Chengdu Splendid are expected in the middle of Q4 2010. So the third quarter 2010 outlook, GFA sales in the third quarter are expected to fall slightly to about 80,000 square meters from 86,200 square meters we just recorded in the second quarter. And this is due to the fact that the effect of the policy change will be felt for a full quarter. The first half of April was very strong before the policies came into place. Contract sales in the quarter are expected to reach about $80 million to $85 million. As noted earlier, we have no plans to lower ASPs. That being said, our guidance does allow 10% to 20% price erosion from pre-policy change levels in Kunshan and Suzhou, if required. Revenue under the percentage of completion method should total $95 million to $100 million given our uninterrupted construction schedules. Net income is projected at $9 million to $11 million for the quarter. Now, let's look at total year 2010. As mentioned before, Q4 in 2010 will see two additional projects to become active with mid-Q4 presales permits being issued. That would be Zhengzhou Royal Palace and Chengdu Splendid. Full year GFA sales are expected to reach 420,000 to 430,000 square meters. Full year contract sales will reach $460,000 to $470,000 million and no ASPs from Q3 – there’s no ASP changes from Q3 assumptions this point in time. Full year revenue under the percentage completion method works out to approximately $425 to $435 million and net income should fall between $43 million, $47 million, $48 million. Now, I don’t think this call is complete without giving some thoughts on 2011. I will not be giving out numbers for 2011 today, but thought I would clarify what our project pipeline looks like. Zhengzhou Century East and Zhengzhou Century East A and B are expected to receive presales permits in the first quarter of 2011. When that happens, there will be 11 concurrent active projects in Xinyuan, far higher than anything achieved by this company before. By year end 2011, after selling out Chengdu Splendid 1 and Zhengzhou Colorful Garden, there will still be nine of our projects at the height of their sales cycles, or more projects if we acquire the JianXin joint venture or any more land parcels this year. In short, we’re very excited about our growth potential and we’re fully focused on executing all of our projects to realize that potential in 2011. Those are the end of my comments and I’d like to encourage questions.

Thank you. (Operator Instructions) And we’ll take our first question with Liang Hsu from Brean Murray. Liang Hsu – Brean Murray: Hi. Good morning, Tom.

Hi, Liang. Liang Hsu – Brean Murray: Hey. First question is that it seems like each of local government has his own policy on the – regarding the risk of financing. Do you try to look at that on a relative basis – how the impact on your upcoming projects – your new projects down the road? Which part will be more severely impacted by the policy?

You just hit on why we're a little bit bullish because we’re operating in cities that – where we don’t have that problem, particularly Zhengzhou. Most of our new projects are in Zhengzhou and we’re having a very favorable experience in Zhengzhou since this policy change. And Modern City sold out very quickly in May and August is then even a faster sales rate than that on the new sales permit. So we feel really good about Zhengzhou. The other new projects coming in are Chengdu, where we understand the market – our understanding currently is that the market very solid there. And then there’s Suzhou. We haven’t heard anything untoward about Suzhou. And we’re nowhere near a Tier 1 city like we are in Kunshan. So we’re pretty comfortable that we were in the right places to diversify our revenue base. We got caught a little bit this year with 60%. Kunshan got hot at second half of last year and first part of this year, and suddenly it became 60% of our sales. We found ourselves a bit dependent on that. But that’s not going to be the case by the end of the year. Liang Hsu – Brean Murray: Okay. So Suzhou’s problem is already back to normal. You already got a new sales permit at a higher price. So the sales getting back to normal?

No, no. I wouldn’t say back to normal. No. Maybe that wasn’t clear enough. We have two sales permits there. One is from December for three buildings and we had a new one in April for one building. They’re unrelated. They’re different buildings. The three building one, the government pronounced on May 12 that it would be 90 days. They would not let us sell above that presale permit price – registered price of RMB9,800. So on August 12th, we expect that to go away. But even when that pricing restriction goes away, we’re still left with the mortgage issues as – in common with the other provinces. So no, it’s not back to dancing the streets but it should take – we will free up those three buildings for sales at current prevailing prices and we will go back to – so it should make a market difference. I’m not sure whether it’s going to be several multiples of where we are now. Liang Hsu – Brean Murray: Okay. Great. And are you going to continue to have exposure to Chengdu, right? It seems like the second quarter sales on Chengdu is coming lower than my already lowered expectations. How about on the policy from Chengdu?

Let me let the chairman take a couple of this, right? Do you want to let the chairman take this one?

: The second reason is the government policy, actually, has had an impact to the Chengdu market.

Yes. So we were a little bit surprised. Chengdu reacted at more of a wait-and-see reaction than the other provinces. And there’s more of a market sentiment issue than it is a policy issue in Chengdu. So we did see market sentiment change there. There was also in June 1, development that did predatory opening prices they sent rolled back, and so that had an impact in June. So market sentiment needs to come back in Chengdu a little bit. Liang Hsu – Brean Murray: Okay. And do you think that will come back anytime soon?

The chairman just said that when that building gets 50% complete, that we should see a lot more sales activity and we will get other sales permits to go along with it. Do you want to comment further?

(interpreted) We believe that by the end of this year, sales in Chengdu will be splendid. It will pick up because our price is competitive in the market. Even though there’s a wait-and-see attitude in Chengdu, but we think that the market is gradually coming back and we believe that the market sentiment will resume later.

Yes, Chengdu has one of the strongest migration patterns of all the cities we operate in of people moving in. So it’s a short – we think it’s a short term blip in market sentiment there because the people keep coming. Liang Hsu – Brean Murray: Okay, good to know that. And just looking at the G&A in terms of the percentage revenue. The higher sequentially, is that a case of low revenue or is that going to be the right range going forward?

No, no. I just tried to comment on that in my prepared statement tonight. Very clearly, we had some unusual items. Number one, we had big splash promotions on two projects. Chengdu Splendid II, but more so Modern City in Zhengzhou. We did spend significant promotion dollars ahead of the maiden sales permit. We usually do that. After that, spending drops off. We have a smaller project in Suzhou that is opening up in August. We will have some spending there, but not near where it was last month. Second, the legal fees and accounting fees killed us in the quarter. We had to recognize failed secondary expenses from last year and this year into this quarter and we called off that secondary, canceled it. And so we had to take fees that would normally be taken against proceeds, those had to be taken to the P&L. In addition to that, we retired the floating rate notes in April and we incurred substantial legal fees there because we had to accelerate the convertible bonds. We had to get a consent from the convertible bonds. There was a change in trustees because HSBC got out of the trustee business with us. So we had all sorts of unforeseen legal fees. Those should drop by at least $500,000. So yes, part of the percentage increase was because of the sales drop. No question about it. But a big portion of this is one time, one shot deal, particularly in legal and accounting fees. Liang Hsu – Brean Murray: Okay. Good. And then, my final question is regarding Jiantou acquisition. So there is a delay in that because of the land tax. So when do you expect that you’re going to complete the acquisition of Jiantou since you are already in the process?

Let me be clear to all listeners what has really happened here. So yes, September last year, we announced we made an offer to them that had been accepted. We went to auction with that. And in discussions here, we were in the midst of negotiations for land value added tax. Land value added tax is applied on the deemed rate basis in this province, the Henan province, but we were accruing at the full statutory rate. It was unclear how that was going to be settled with the tax authorities and it was a lot of money, it was a RMB100 million. So we decided to call off that auction. That was our decision and we called off the auction because we wanted to take away the risk of a tax issue. Since then in July, we got final notification – we’ve been working with the tax authorities, we got final notification from the district tax authorities with an official assessment of RMB200,000, which was great. And so, we have nailed that to our certainty such that we feel very comfortable going back in now and finishing up the auction process. You asked when it’s going to be done. We expect it to be posted early next week. There’s 20 days left to be posted then there's a short auction period. To make a long story short, we’re thinking by the end of September. Liang Hsu – Brean Murray: Then you will become 100% owners of Jiantou?

Correct. And then of course, the revenue then becomes reportable, consolidated and et cetera. Just so you know that – you obviously have to wonder what’s left there. Well, there’s going to be – the main asset that will be there at the end of September will be EP Zhengzhou II [ph], a very nice project with very nice margin that is expected to start pre-selling in Q1 of next year. So we could be up to 12 projects in Q1 of next year if we do the JianXin deal. Liang Hsu – Brean Murray: Okay. Great. Thanks so much for taking my call. Thank you.

Sure.

Thank you. (Operator Instructions) And we will take our next question from Xin Li Zhang [ph] with Roth Capital Partners. Xin Li Zhang – Roth Capital Partners: Hi. Thank you for taking my questions. I am representing Kun Tao from Roth Capital Partners. And I notice that you do cover some information on Kunshan. Could you please provide some more color and some updates on the current sales on the project in Kunshan?

I’m going to say a few things then I’m going to turn it over to chairman. As I read to you – I probably read it too fast so let me tell you what happened then. In April, we sold 191 units, in May, zero. In other words, in May and June, the banks weren't giving mortgages to anybody, anybody. So from May and June, it was zero until the second half of June when we sold 22, and in July we sold 31. Now there is momentum there building. The number of visitors – of groups of visitors has gone down from about 500 per month in April to 200 in May and June, then was back to 300 in July and is trending upward now. We won't show effects, maybe August, maybe September, October we should see nice – some nice recovery. Although I’m very modest in my outlook on that recovery. Let me have the chairman comment on what he sees happening in Kunshan for the rest of the year.

(interpreted) The May impact of Kunshan sales is mainly coming from the mortgage before settlement of third home buyers. Of the customers of the Kunshan project, about 50% are from other regions who are investing and buying property in Kunshan. And next, we will focus on the sales to Shanghai. This is the nearby (inaudible) from Shanghai. We still believe that it shows that the Kunshan project will be very good because the ASP – the selling price in Shanghai is above RMB20,000 per square meter. While in Kunshan, our selling price is less than that. And also, in terms of the distance from Shanghai to the project, it takes only about 30 minutes by subway. And we hope that by the end of this year, our monthly contract will be in the range of RMB30 million to RMB50 million.

I just want to comment on one other thing here, also. And that is that the banks are inconsistent with regards to Kunshan project. So it’s not all government policy, several of the banks – some banks are lending, some are not. And they’re all consulting their headquarters back in Beijing and getting completely – they were paralyzed for two months. Like the Agricultural Bank of China is not lending at all right now. So other interpretations going on, we have to figure that people have learned to cope with this in some manner and get back – somewhere back to normal. Xin Li Zhang – Roth Capital Partners: Okay. So how long do you think this government policy will continue to impact, for instance, the market in Kunshan? Some banks are lending and some banks are not lending, so how long do you think this uncertainty will last?

Well, there’s a question – if I answer that and you believe me, I should be paid a lot more. Let’s just put it this way, in our model going forward, we've assumed just the modest recovery over time. No magic potion. Let’s ask the chairman. Let me ask the chairman. He’s the expert. What does the chairman think about policy in Kunshan overtime?

(interpreted) Because of the competitiveness of our projects, the low price, we believe after – next year and so it will look up greatly. Xin Li Zhang – Roth Capital Partners: Okay

I should note this too about Kunshan. Back in the fourth quarter and first quarter, we were actually selling it too fast. Faster than we were constructing and probably at lower ASPs than we probably could have enjoyed. So there’s a little bit of healthy correction here in that construction time will match up pretty well better with sales rates. So still there’s no pressure for us to do anything about prices in Kunshan. Xin Li Zhang – Roth Capital Partners: Okay. Could you provide some similar information about Suzhou?

I’ll let the chairman comment on Suzhou.

(interpreted) For the marketing, Suzhou is more frustrating. In terms of the sales volume for Suzhou, the whole city is reduced by 80% and ASP rate is by 10%. So compared to the overall contribution, we believe that the sales for us in Suzhou is – will gradually pick up second half of the year and we don’t have any sense to reduce our ASP levels. Xin Li Zhang – Roth Capital Partners: Okay.

I should note this. I want to make sure – subtlety that on – there's a permit out there for three buildings that we're not selling on until the expiration of this announcement on May 12th. That's on August 12. So that would be an interesting deadline to watch to see if that loosens up and we're able to price or to re-apply for sales permit at a higher price. The second permit we have, which is just for one building, we're not even offering all units for sale. We're only offering those units where we registered prices above RMB12,000. We do have an average price of RMB12,000 in the registered price, so we have inventory there ready to go, but we're not just selling because the of price restriction. And that price restriction is temporary. Xin Li Zhang – Roth Capital Partners: Okay. So that 80% of decrease of sales that's – I just like to clarify it, is that quarter-by-quarter or is that full year – on a yearly basis?

The chairman was talking about Suzhou as a city, not about us. And he was talking about the immediate impact from April until May and June, I believe. Xin Li Zhang – Roth Capital Partners: Okay. So 80% of decrease in sales in terms of volume and 10% of the price decrease because of the policy in tax.

Correct. That does not apply to us. We did not do a 10% price decrease, although we could. And my guidance numbers are – I leave some room, although the company has no intention to do so. And it did not fall 80%. And if it did fall in the quarter by approximately 40%, but it didn't fall 80% on GFA. Xin Li Zhang – Roth Capital Partners: So its 40%, compared to last quarter in terms of sales.

In terms of GFA sales, yes. Xin Li Zhang – Roth Capital Partners: GFA, okay.

You could see it on our table, on the third page of our press release. There's a table there that says Suzhou International City Garden. Our GFA in Q1 was 8,200, GFA in Q2 was 5,600. Xin Li Zhang – Roth Capital Partners: Okay. Another question is, what is your land acquisition plan for 2010?

This is one for the chairman, just a minute please.

(interpreted) We're doing a cautious attitude towards the acquisitions, at least we do not have any plans for Q3. And in Q4, we're going to starting to study the market trend and potential year [ph] alternate we'll see if there's any (inaudible) to acquire that.

I think the chairman is following a let's see it bounce off the bottom type of approach. Xin Li Zhang – Roth Capital Partners: Okay. And are your land bank payments – have been paid off already?

Yes. That was done in April. Xin Li Zhang – Roth Capital Partners: Okay. I see. Another question is have you seen any lending relief on any of your projects located in the cities?

You're talking about construction lending? Xin Li Zhang – Roth Capital Partners: Yes.

Yes, that has not been a problem, not at all. We have this – here's how it works. We start negotiating with the bank a few weeks before we get a construction permit. And then we apply – after the construction permit for the loans, and they get approve within a couple of weeks for the constructions permit. So the only projects where we don't have construction permits right now is the Century East A and B, they're right next to each other; and, for Chengdu, we don't have a construction permit yet. But we do have a base line up. And there're many banks instead and lending us money for that. This is not an issue right now in China, particularly for conventional construction loans, which is what we're using, which is all we're counting on in our projections. Xin Li Zhang – Roth Capital Partners: Okay. Thank you very much.

Thank you.

Thank you. And we'll take our next question Rachel Yu [ph] with Rodman & Renshaw. Rachel Yu – Rodman & Renshaw: Hi, Tom, Helen. This is Rachel. I'm actually asking a question for Luis Tan. And then, I just for two questions because my – almost all the questions that have been answered has been asked by other analysts. So the first question. I will ask in English first and will translate myself into Chinese.

Okay, Rachel Yu – Rodman & Renshaw: And then my first question is, and then – just follow-up question for the Chengdu Splendid I project. I know you touched base on the conference call also in the release. It looks like in the release that you're saying that the ASP is a little lower than the projected ASP. And it's because of new market building of the small commercial apartments. I'm just wondering, how much percentage of this commercial apartment build is in the Splendid I project?

I wish I knew that off the top of my head. Can you ask the chairman what percent of the Chengdu Splendid I build – just a moment.

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(interpreted) The smaller sized apartment of – which has – the measure was right about – for the year accounts for about 30% of the total GFA of the –

I think it's less actually. I'll give you an answer offline on that. Rachel Yu – Rodman & Renshaw: Okay.

They're being sold at RMB2,500 per square meter, which is what – this price was just RMB6,000. We had previously had something over RMB5,000 for those units. We just didn't have much experience and no test in the market for such units, and so we missed a little on the high side in our earlier estimates. Rachel Yu – Rodman & Renshaw: Okay. I mean, the second – just follow-up question. Just look at the ASP, it looks like the Splendid I is the only one that has experienced a slight decrease in the ASP. I'm wondering because of the – is it because your budget – you were saying you didn't lower the price that was causing the low ASP price. And so, the ASP –

You already know the answer. Here's the deal. We were not selling – all up until now, until about three months ago. We weren't selling those smaller commercially zoned properties. So that's what's driving it down. We didn't lower the price. We had never priced them before. And so, we introduced it at RMB4,500 hoping to raise them, but we found demand wasn't enough. So we didn't lower the price. We just didn't go anywhere with the price after we introduced them. And that's why the overall ASP is dropping because we held off on these apartments until the late stages of the sales cycle for Chengdu. And it's pushing down the average ASP because it's lower than the other apartments. Rachel Yu – Rodman & Renshaw: Okay, okay. And the second question, just more related to the macro environment. Can you give me more color on the – what do you think about the impact from the – given that many large real estate development such as the one crew and the one build [ph] there, they have entered or entering the second Tier or third Tier market? What do you think the near term or medium term is to (inaudible)?

Why don't you translate that yourself in Chinese for the chairman? Rachel Yu – Rodman & Renshaw: (foreign language)

(interpreted) The top 100 real estate developers only account for about 15% of the overall China real estate market. And we don't believe that it will impact materially once they enter the second Tier markets, too. And also, for large developers, they tend to have a larger land bank. And I believe that with the market uncertainties, with the large land bank, a company will be a burden for them.

And I should note too that in the – when we bid for that land in the last four months of last year, the big guys were there. (inaudible) was there in a couple of the auctions. Poly [ph] we beat on a couple of auctions, Everbright. So there were some big players there. They've been playing in the second Tier, Tier III cities, so maybe they're just going to try and move more of their maturity. But we're used to competing with them. Rachel Yu – Rodman & Renshaw: Okay. And the final question is, the Chinese government is now promoting – is actively promoting the public housing. I'm just wondering, what do you think the impact to Xinyuan in the medium term? (foreign language)

(interpreted) In terms of the customer segmentation, we believe that the public holding apartments appeal to low-income people. But for us, we're aiming at mid or high-income people with an annual income of about RMB50,000 to RMB100,000 a year. And the total cost of the house for them would be around RMB500,000. And with first down payment, (inaudible) to RMB100,000. For Xinyuan – For us, we have a pipeline project with our insurers total contract sales in the range of RMB2.5 billion to RMB2 billion. I'm sorry, RMB15 billion to RMB20 billion. And we used to plan to finish itself in the year 2010 and '11. But because of the newly issued government policy and tightening market expenses, then probably the contract sales will be achieved in year 2011 until 2012. It seems, we don't have the very large land bank. And we believe the land bank cannot be a burden for us compared to a large building developer. Rachel Yu – Rodman & Renshaw: Okay.

Our business model, which is past term, so when we buy land, we develop, but we don't sit on it. Rachel Yu with Rodman & Renshaw: Okay.

Okay. Anything else? Rachel Yu with Rodman & Renshaw: Thank you.

Thank you.

Thank you.

Thank you. We'll take our next question from Rafael Mernay [ph] with Morning Glory Capital Management. Rafael Mernay – Morning Glory Capital Management: Hi. Could you please comment on what you're seeing in terms of land auction prices in your market?

I'll let the chairman talk about that, too.

(interpreted) For the second Tier cities, the government actually is providing more land in an auction. With regard to the cost of the land, the premium now is less than 30%, compared to 50% to 100% land premium in last year. The council planning into – real estate marketing in China is decreasing. And also, the problem faced by the large real estate developers is very large land banks. And for smaller sized real estate developers, they are short of money, and probably the capital problem. And for us, with two fixed to the fast asset to normal business model, we want to develop faster. So in terms of the land bank, we want to maintain it in a proper level. We don't want to have a very large land bank. Rafael Mernay – Morning Glory Capital Management: Okay. Thanks. I was just wondering if you could comment on what you see in terms of the competition from the state-owned developers. Is that increasing or decreasing? And has the government measures to try to limit the amount of government-sponsored development help you at all?

(interpreted) There is always some friction with regard to state-owned company in the real estate market. And in the couple of – the past couple of months, it's very rarely for us to see state-owned companies to participate in the auction. Rafael Mernay – Morning Glory Capital Management: Okay. So there is very little competition by state-backed companies in your markets.

Yes. You're right. Rafael Mernay – Morning Glory Capital Management: Okay. Thanks. And also in terms of M&A, currently Xinyuan is trading well below book value. So what do you see in terms of opportunities that you see to acquire other companies or potential offers by competitors to acquire Xinyuan?

I'll comment on that one I think. It's amazing how little consolidation there is in this industry in China. Attributed to egos or whatever it is, it just doesn't seem to happen. I worked pretty extensively several months ago trying to get one or more deals under way and was unable to do so. So it's a difficult process. And not something – it's something we'll be vigilant on, but it's very rare indeed to see any business combinations in China in this industry. Now, as far as somebody else acquiring us, maybe the same logic prevails, I don't know. But we never – we're not getting any inquiries. Let's put it that way. Rafael Mernay – Morning Glory Capital Management: Okay. Thanks.

Sure. What's your name? Rafael Mernay – Morning Glory Capital Management: Rafael.

Okay. Thank you.

Thank you. And there are no further questions at this time. I'd like to turn the conference back over to Mr. Gurnee for any additional or closing remarks.

I just want to say thank you very much for coming to our conference call. I hope you take away from this conference call and share our optimism about the pipeline of great projects we have in diversified locations such that 2011 looks like a great year. I think the fourth quarter this year will be a great quarter. So again, thank you for dialing in.

Thank you. That does conclude today's presentation. Thank you for your participation.