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Table of Contents

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-05749
 
THE CHINA FUND, INC.
 
(Exact name of registrant as specified in charter)
c/o STATE STREET BANK AND TRUST COMPANY
2 AVENUE DE LAFAYETTE
P.O. BOX 5049
BOSTON, MA 02206-5049
 
(Address of principal executive offices)(Zip code)
     
(Name and Address of Agent for   Copy to:
Service)    
     
Elizabeth A. Watson   Leonard B. Mackey, Jr., Esq.
Secretary   Clifford Chance U.S. LLP
The China Fund, Inc.   31 West 52nd Street
4 Copley Place, 5th Floor   New York, New York 10019
Boston, MA 02116    
Registrant’s telephone number, including area code: (888) 246-2255
Date of fiscal year end: October 31
Date of reporting period: January 31, 2010
 
 

 

TABLE OF CONTENTS

Item 1. Schedule of Investments
Item 2. Controls and Procedures
Item 3. Exhibits
SIGNATURES
Certifications

Table of Contents

Item 1. Schedule of Investments.

 

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
January 31, 2010 (Unaudited)
                     
Name of Issuer and Title of Issue   Shares         Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS
                   
HONG KONG
                    
Consumer Discretionary — (4.5%)
                    
FU JI Food & Catering Services ^ * # (2)
     5,462,000         $ —  
Intime Department Store Group Co., Ltd. (1)
     12,568,629           10,761,574  
Ports Design, Ltd. (1)
     4,549,500           12,271,961  
Shangri-La Asia, Ltd.
     3,061,555           5,353,134  
Yorkey Optical International Cayman, Ltd. #
     7,758,926           1,578,429  
 
                  
 
                 29,965,098  
 
                  
Consumer Staples — (1.6%)
                    
Chaoda Modern Agriculture (Holdings), Ltd. (1)
     10,507,357           10,349,544  
 
                  
Energy — (1.6%)
                    
Fushan International Energy Group, Ltd.
     12,018,000           10,382,955  
 
                  
Health Care — (6.3%)
                    
China Pharmaceutical Group, Ltd.
     12,918,000           6,603,164  
China Shineway Pharmaceutical Group, Ltd.
     11,184,000           19,641,642  
Golden Meditech Co., Ltd. * # (1)
     35,040,000           6,902,744  
Natural Beauty Bio-Technology, Ltd. #
     47,740,000           8,666,980  
 
                  
 
                 41,814,530  
 
                  
Utilities — (1.8%)
                    
Xinao Gas Holdings, Ltd. (1)
     5,084,000           12,096,891  
 
                  
TOTAL HONG KONG — (Cost $56,169,941)
     15.8 %    104,609,018  
 
                  
HONG KONG — “H” SHARES
                    
Consumer Staples — (3.8%)
                    
Wumart Stores, Inc. #
     14,888,000           24,919,882  
 
                  
Financials — (0.8%)
                    
China Pacific Insurance Group Co., Ltd. *
     1,463,442           5,445,523  
 
                  
Health Care — (8.7%)
                    
Shandong Weigao Group Medical Polymer Co., Ltd. # (1)
     7,808,000           28,651,735  
Sinopharm Medicine Holding Co., Ltd. * # ~ (1) (2)
     7,786,000           29,220,259  
 
                  
 
                 57,871,994  
 
                  
Industrials — (0.9%)
                    
Anhui Expressway Co., Ltd.
     8,426,300           5,836,943  
 
                  
Materials — (0.8%)
                    
Zijin Mining Group Co., Ltd.
     6,402,000           5,226,022  
 
                  
See notes to schedule of investments.

1

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                       
Name of Issuer and Title of Issue   Shares           Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                      
HONG KONG — “H” SHARES (continued)
                      
Telecommunications — (1.3%)
                      
ZTE Corp. (1)
     1,461,926           $ 8,583,344  
 
                    
TOTAL HONG KONG — “H” SHARES —
(Cost $59,825,982)
     16.3 %      107,883,708  
 
                    
TOTAL HONG KONG (INCLUDING “H” SHARES)
(Cost $115,995,923)
     32.1 %      212,492,726  
 
                    
SINGAPORE
                      
Consumer Staples — (4.4%)
                      
China Fishery Group, Ltd. * # (1)
     13,255,000             16,502,739  
Hsu Fu Chi International, Ltd. #
     9,484,000             12,819,863  
 
                    
 
                   29,322,602  
 
                    
Financials — (0.7%)
                      
Financial One Corp. *
     12,030,000             4,364,898  
 
                    
Information Technology — (0.4%)
                      
CDW Holding, Ltd. # †
     54,708,000             2,821,806  
 
                    
TOTAL SINGAPORE — (Cost $22,845,878)
     5.5 %      36,509,306  
 
                    
TAIWAN
                      
Consumer Discretionary — (4.9%)
                      
FamilyMart Co., Ltd. #
     4,501,652             8,412,591  
Far Eastern Department Stores, Ltd.
     19,066,931             18,263,572  
Synnex Technology International Corp.
     2,809,240             5,786,264  
 
                    
 
                   32,462,427  
 
                    
Consumer Staples — (2.6%)
                      
Lien Hwa Industrial Corp. #
     16,476,881             7,762,382  
Uni-President Enterprises Corp.
     9,112,638             9,755,595  
 
                    
 
                   17,517,977  
 
                    
Financials — (7.2%)
                      
Cathay Financial Holding Co., Ltd. *
     6,454,000             10,949,940  
Fubon Financial Holdings Co., Ltd. *
     4,948,000             5,792,750  
KGI Securities Co., Ltd.
     16,984,780             8,028,241  
Ruentex Development Co., Ltd.
     12,694,000             16,053,265  
See notes to schedule of investments.

2

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                     
Name of Issuer and Title of Issue   Shares         Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                    
TAIWAN (continued)
                    
Yuanta Financial Holdings Co., Ltd.
     10,520,593         $ 6,718,215  
 
                  
 
                 47,542,411  
                     
    Face              
    Amount              
Financials — (0.9%)
                    
Taiwan Life Insurance Co., Ltd., 4.0% 12/28/14 † @ (2)
     200,000,000           6,260,565  
 
                  
                     
    Shares              
Information Technology — (4.0%)
                    
HTC Corp.
     891,900           8,794,481  
Taiwan Secom Co., Ltd. #
     4,738,000           7,638,108  
WPG Holdings Co., Ltd.
     6,320,000           9,852,126  
 
                  
 
                 26,284,715  
 
                  
Materials — (1.9%)
                    
China Metal Products Co., Ltd.
     9,200,278           12,383,771  
 
                  
TOTAL TAIWAN — (Cost $105,555,963)
     21.5 %   142,451,866  
 
                  
UNITED KINGDOM
                    
Health Care — (5.0%)
                    
China Medical System Holdings, Ltd. # †
     3,623,188           33,202,905  
 
                  
TOTAL UNITED KINGDOM — (Cost $9,940,990)
     5.0 %    33,202,905  
 
                  
UNITED STATES
                    
Consumer Discretionary — (0.4%)
                    
The9, Ltd., ADR (1)
     358,900           2,444,109  
 
                  
Energy — (1.1%)
                    
Far East Energy Corp. * # †
     14,565,477           7,282,738  
 
                  
Health Care — (3.0%)
                    
Mindray Medical International, Ltd., ADR (1)
     191,700           6,684,579  
WuXi PharmaTech Cayman, Inc., ADR * (1)
     883,490           13,287,690  
 
                  
 
                 19,972,269  
 
                  
Information Technology — (1.8%)
                    
Hollysys Automation Technologies, Ltd. *
     530,000           6,095,000  
See notes to schedule of investments.

3

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                       
Name of Issuer and Title of Issue   Shares           Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                      
UNITED STATES (continued)
                      
Sina Corp. * (1)
     162,700             5,883,232  
 
                    
 
                   11,978,232  
 
                    
TOTAL UNITED STATES
— (Cost $42,800,589)
       6.3 %      41,677,348  
 
                    
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS — (Cost $297,139,343)
       70.4 %      466,334,151  
 
                    
EQUITY LINKED SECURITIES
                      
Consumer Staples — (4.3%)
                      
Dalian Zhangzidao Fishery Group Co., Ltd. Access Product (expiration 01/17/12) 144A, * (3)
     1,260,565           $ 7,235,643  
Shenzhen Agricultural Products Co., Ltd. Access Product (expiration 01/17/12) 144A, (3)
     6,800,000             15,419,231  
Wuliangye Yibin Co., Ltd. Access Product (expiration 01/20/15) 144A, * (3)
     1,403,507             6,001,396  
 
                    
 
                   28,656,270  
 
                    
Energy — (1.2%)
                      
China Yangtze Power Co., Ltd. Access Product (expiration 10/26/10) 144A, (4)
     4,169,077             7,804,654  
 
                    
Financials — (3.1%)
                      
Citic Securities Co., Ltd. China (expiration 09/23/13) 144A, * (4)
     1,350,600             5,594,857  
Shanghai Yuyuan Tourist Mart Co., Ltd. (expiration 03/26/14) 144A, (4)
     2,385,020             9,687,789  
Zhejiang Guyuelongshan Access Product (expiration 10/07/13) 144A, (4)
     3,658,900             4,973,718  
 
                    
 
                   20,256,364  
 
                    
Industrials — (4.9%)
                      
Daqin Railway Co., Ltd. Access Product (expiration 11/02/11) 144A, * (4)
     4,807,000             6,865,333  
Shanghai International Airport Co., Ltd. Access Product (expiration 01/20/15) 144A, * (3)
     2,526,700             6,865,044  
Shanghai International Airport Co., Ltd. Access Product (expiration 10/26/10) 144A, (4)
     1,800,000             4,891,018  
Shanghai Qiangsheng Holding Co., Ltd. (expiration 11/13/14) 144A, (4)
     4,800,000             5,990,505  
Suning Appliance Co., Ltd. Access Product (expiration 01/20/15) 144A, (3)
     2,874,013             7,679,363  
 
                    
 
                   32,291,263  
 
                    
TOTAL EQUITY LINKED SECURITIES — (Cost $58,767,954)
       13.5 %      89,008,551  
 
                    
See notes to schedule of investments.

4

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                               
Name of Issuer and Title of Issue   Shares         Value (Note A)  
DIRECT INVESTMENTS
                    
Consumer Discretionary — (7.1%)
                    
Queenbury Investments, Ltd., (Huiyin) (acquired 05/06/08) * # † (2)
    450           47,108,700  
Industrials — (1.5%)
                    
Highlight Tech Corp., (acquired 09/12/07) * # † (2) (5) (6)
     1,683,447           3,000,000  
Qingdao Bright Moon Seaweed Group Co., Ltd., (acquired 02/28/08) * # † (2) (6)
     31,827,172           6,842,842  
 
                  
 
                 9,842,842  
 
                  
Information Technology — (2.0%)
                    
China Silicon Corp. Common Stock, (acquired 01/08-01/10) * # † (2)
    1,234,405         $ 1,049,244  
China Silicon Corp. Warrants (expiration 11/30/10), (acquired 11/30/07) * # † (2)
    685,450           —  
China Silicon Corp., Series A Preferred (acquired 11/30/07) # † (2)
    27,418           4,241,565  
HAND Enterprise Solutions, Ltd., (acquired 02/01/07) * # † (2)
    500,000           7,669,000  
teco Optronics Corp., (acquired 04/26/04) * (2)
     1,861,710           —  
 
                  
 
                 12,959,809  
 
                  
                     
    Face              
    Amount              
Industrials — (3.4%)
                    
Ugent Holdings, Ltd., 12.0% 06/04/12 (acquired 04/06/09) * # † @ (2)
    177,000,000           22,789,749  
 
                  
TOTAL DIRECT INVESTMENTS (5) — (Cost $82,889,798)
       14.0 %      92,701,100  
 
                  
                     
    Shares              
COLLATERAL FOR SECURITIES ON LOAN — (6.5%)
                    
State Street Navigator Prime Portfolio
     43,191,369           43,191,369  
 
                  
TOTAL COLLATERAL FOR SECURITIES ON LOAN
— (Cost $43,191,369)
       6.5 %      43,191,369  
 
                  
See notes to schedule of investments.

5

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                                               
      Principal            
Name of Issuer and Title of Issue     Amount         Value (Note A)  
SHORT TERM INVESTMENTS
                          
UNITED STATES
                          
Repurchase Agreement with State Street Bank and Trust, 0.14%, 01/29/10 (7)
       15,130,000             15,130,000  
 
                    
TOTAL UNITED STATES
— (Cost $15,130,000)
           2.3 %     15,130,000  
 
                    
TOTAL INVESTMENTS** — (Cost $497,118,464)
           106.7 %     706,365,171  
 
                    
OTHER ASSETS AND LIABILITIES
           (6.7 )%     (44,193,284 )
 
                    
 
                          
NET ASSETS
           100.0 %   $ 662,171,887  
 
                    
 
Notes to Schedule of Investments
 
(A)   Portfolio securities listed on recognized United States or foreign securities exchanges are valued at the last quoted sales price in the principal market where they are traded. Listed securities with no such sales price and unlisted securities are valued at the mean between the current bid and asked prices, if any, of two brokers. Short-term investments having maturities of sixty days or less are valued at amortized cost (original purchase cost as adjusted for amortization of premium or accretion of discount) which when combined with accrued interest approximates market value. Open end investment companies are valued at net asset value per share. Securities for which market quotations are readily available are valued at current market value. Securities for which market quotations are not readily available are valued at fair value using methods determined in good faith by or at the direction of the Board of Directors considering relevant factors, data and information including, if relevant, the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. Direct Investments not traded on an exchange are valued at fair value as determined by the Board of Directors based on financial and other information supplied by the Direct Investment Manager regarding each Direct Investment. Forward currency contracts are valued at the current cost of offsetting the contract.
 
    The Fund’s investments in China companies involve certain risks not typically associated with investments in securities of U.S. companies or the U.S. Government, including risks relating to (1) social, economic and political uncertainty; (2) price volatility, lesser liquidity and smaller market capitalization of securities markets in which securities of China companies trade; (3) currency exchange fluctuations, currency blockage and higher rates of inflation; (4) controls on foreign investment and limitations on repatriation of invested capital and on the Fund’s ability to exchange local currencies for U.S. dollars; (5) governmental involvement in and control over the economy; (6) risk of nationalization or expropriation of assets; (7) the nature of the smaller, less seasoned and newly organized China companies, particularly in China; and (8) the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation.
 
^   Security is deemed worthless.
 
*   Denotes non-income producing security.
 
#   Illiquid security. At January 31, 2010, these illiquid securities amounted to $289,084,261, which represents 43.66% of total net assets.
 
†   Affiliated issuer (see Note B).
 
@   The security contains a feature or option to be converted into common stock.
 
~   Restricted security. At January 31, 2010, these restricted securities amounted to cost of $16,252,377 and valued at $29,220,259, which represents 4.41% of total net assets.
 
(1)   A portion or all of the security was held on loan. As of January 31, 2010, the market value of the securities loaned was $41,080,727.

6

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
 
(2)   Security valued at fair value using methods determined in good faith by or at the direction of the Board of Directors.
 
(3)   Equity linked securities issued by Citigroup Global Markets Holdings.
 
(4)   Equity linked securities issued by Credit Lyonnais (CLSA).
 
(5)   Direct investments are generally restricted as to resale and do not have a readily available resale market. On the date of acquisition of each direct investment, there were no market quotations on similar securities, and such investments were therefore valued in good faith by the Board of Directors at fair market value.
 
(6)   The Fund holds a put option which allows the Fund to sell the investment for a value at least equal to the purchase price under certain circumstances.
 
(7)   Repurchase agreement, dated 01/29/10, due 02/01/10 with repurchase proceeds of $15,130,013 is collateralized by US Treasury Bill 0.14% due 07/22/10 with a market value of $15,434,189.
 
144A    Securities restricted for resale to Qualified Institutional Buyers. At January 31, 2010, these restricted securities amounted to $89,008,551, which represented 13.44% of total net assets.
 
ADR     American Depositary Receipt.
 
**   At January 31, 2010, the cost of investment securities for tax purposes was $497,118,464. Net unrealized appreciation of investment securities for tax purposes was $209,246,707, consisting of unrealized gains of $230,139,624 on securities that had risen in value since their purchase and $20,892,917 in unrealized losses on securities that had fallen in value since their purchase.
Fair Value Measurement
In accordance with FASB ASC 820-10, Fair Value Measurements and Disclosures, the Fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). FASB ASC 820-1035-39 to 55 provides three levels of the fair value hierarchy as follows:
•   Level 1 — Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date.
 
•   Level 2 — Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active.

7

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
•   Level 3 — Inputs that are unobservable.
The following is a summary of the inputs used as of January 31, 2010 in valuing the Fund’s investments carried at value:
ASSETS VALUATION INPUT
                                 
Description   Level 1     Level 2     Level 3     Total  
COMMON STOCK AND OTHER EQUITY INTERESTS
                                
Hong Kong
                                
Consumer Discretionary
   $ 29,965,098     $ —     $ —     $ 29,965,098  
Consumer Staples
     10,349,544       —       —       10,349,544  
Energy
     10,382,955       —       —       10,382,955  
Health Care
     41,814,530       —       —       41,814,530  
Utilities
     12,096,891       —       —       12,096,891  
 
                        
Total Hong Kong
     104,609,018       —       —       104,609,018  
 
                        
Hong Kong — “H” Shares
                                
Consumer Staples
     24,919,882       —       —       24,919,882  
Financials
     5,445,523       —       —       5,445,523  
Health Care
     28,651,735       —       29,220,259       57,871,994  
Industrials
     5,836,943       —       —       5,836,943  
Materials
     5,226,022       —       —       5,226,022  
Telecommunications
     8,583,344       —       —       8,583,344  
 
                        
Total Hong Kong — “H” Shares
     78,663,449       —       29,220,259       107,883,708  
 
                        
Singapore
                                
Consumer Staples
     29,322,602       —       —       29,322,602  
Financials
     4,364,898       —       —       4,364,898  
Information Technology
     2,821,806       —       —       2,821,806  
 
                        
Total Singapore
     36,509,306       —       —       36,509,306  
 
                        
Taiwan
                                
Consumer Discretionary
     32,462,427       —       —       32,462,427  
Consumer Staples
     17,517,977       —       —       17,517,977  
Financials
     47,542,411       —       6,260,565       53,802,976  
Information Technology
     26,284,715       —       —       26,284,715  
Materials
     12,383,771       —       —       12,383,771  
 
                        
Total Taiwan
     136,191,301       —       6,260,565       142,451,866  
 
                        
United Kingdom
                                
Health Care
     33,202,905       —       —       33,202,905  
 
                        
Total United Kingdom
     33,202,905       —       —       33,202,905  
 
                        
United States
                                
Consumer Discretionary
     2,444,109       —       —       2,444,109  
Energy
     7,282,738       —       —       7,282,738  

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                                 
Description   Level 1     Level 2     Level 3     Total  
Health Care
     19,972,269       —       —       19,972,269  
Information Technology
     11,978,232       —       —       11,978,232  
 
                        
Total United States
     41,677,348       —       —       41,677,348  
 
                        
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
     430,853,327       —       35,480,824       466,334,151  
 
                        
EQUITY LINKED SECURITIES
                                
Consumer Staples
     28,656,270       —       —       28,656,270  
Energy
     7,804,654       —       —       7,804,654  
Financials
     20,256,364       —       —       20,256,364  
Industrials
     32,291,263       —       —       32,291,263  
 
                        
TOTAL EQUITY LINKED SECURITIES
     89,008,551       —       —       89,008,551  
 
                        
DIRECT INVESTMENTS
                                
Consumer Discretionary
     —       —       47,108,700       47,108,700  
Industrials
     —       —       32,632,591       32,632,591  
Information Technology
     —       —       12,959,809       12,959,809  
 
                        
TOTAL DIRECT INVESTMENTS
     —       —       92,701,100       92,701,100  
 
                        
COLLATERAL FOR SECURITIES ON LOAN
     —       43,191,369       —       43,191,369  
SHORT TERM INVESTMENTS
                                
UNITED STATES
     —       15,130,000       —       15,130,000  
 
                        
TOTAL INVESTMENTS
     519,861,878       58,321,369       128,181,924       706,365,171  
 
                        
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Fund during the period ending January 31, 2010:
                                                         
                                                    Change in
                                                    Unrealized
                                                    Appreciation
                                                    (Depreciation)
                                    Net           related to assets
                            Change in   Transfers           still
    Balance as of   Net           Unrealized   in and/or   Balance as of   held at
    October 31,   Purchases   Realized Gain   Appreciation   out to   January 31,   January 31,
Investments in Securities   2009   (Sales)   (Loss)   (Depreciation)   Level 3   2010   2010
 
COMMON STOCK AND OTHER EQUITY INTERESTS
                                                        
Financials
   $ —     $ 6,178,274     $ —     $ 82,291     $ —     $ 6,260,565     $ 82,291  
Health Care
     27,918,189       —     —     1,302,070       —       29,220,259       1,302,070  
     
 
     27,918,189       6,178,274       —     1,384,361       —       35,480,824       1,384,361  
     
DIRECT INVESTMENTS
                                                        
Consumer Discretionary
     47,108,700       —       —       —       —       47,108,700       —  
Industrials
     34,180,814       (1,499,999 )     (6,473 )     (41,751 )     —       32,632,591       (48,224 )

9

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
                                                         
                                                    Change in
                                                    Unrealized
                                                    Appreciation
                                                    (Depreciation)
                                    Net           from
                            Change in   Transfers           Investments
    Balance as of   Net           Unrealized   in and/or   Balance as of   Held at
    October 31,   Purchases   Realized Gain   Appreciation   out to   January 31,   January 31,
Investments in Securities   2009   (Sales)   (Loss)   (Depreciation)   Level 3   2010   2010
 
Information Technology
     13,437,401       149,543       —       (627,135 )     —       12,959,809       963,672  
     
 
     94,726,915       (1,350,456 )     (6,473 )     (668,886 )     —       92,701,100       915,448  
     
 
   $ 122,645,104     $ 4,827,818       ($6,473 )   $ 715,475     $ —     $ 128,181,924     $ 2,299,809  
     
Direct Investments: The Fund may invest up to 25% of the net proceeds from its offering of its outstanding common stock in direct investments. Direct investments are generally restricted and do not have a readily available resale market. The value of these securities at January 31, 2010 was $92,701,100 or 14.00% of the Fund’s net asset value. The table below details the acquisition date, cost, and value of the Fund’s direct investments as determined by the Board of Director’s of the Fund. The Fund does not have the right to demand that such securities be registered.
                     
Security   Acquisition Date   Cost     Value  
China Silicon Corp., Series A Preferred
   11/30/2007   $ 6,552,874     $ 4,241,565  
China Silicon Corp. Common Stock
   01/08-01/10   1,110,784     1,049,244  
China Silicon Corp. Warrants*
   11/30/2007   —     —  
HAND Enterprise Solutions, Ltd.
   02/01/2007   3,164,274     7,669,000  
Highlight Tech. Corp.
   09/12/2007   3,012,948     3,000,000  
Qingdao Bright Moon Seaweed Group Co., Ltd.
   02/28/2008   7,121,480     6,842,842  
Queenbury Investments, Ltd. (Huiyin)
   05/06/2008   38,515,190     47,108,700  
teco Optronics Corp.
   04/26/2004   567,320     —  
Ugent Holdings, Ltd.
   04/06/2009   22,844,928     22,789,749  
 
                
 
       $ 82,889,798     $ 92,701,100  
 
                
 
*   Each warrant entitles the Fund to purchase twenty five shares of common stock at an exercise price of USD$2.98 per share, subject to adjustment.

10

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
January 31, 2010 (Unaudited)
NOTE B — Investments in Non-Controlled Affiliates*:
                                                 
    Balance of   Gross   Gross   Balance of        
    Shares Held   Purchases   Sales   Shares Held   Value   Income from
    October 31,   and   and   January 31,   January 31,   Non-Controlled
Name of Issuer   2009   Additions   Reductions   2010   2010   Affiliates
 
CDW Holding, Ltd.
     54,708,000       —       —       54,708,000     $ 2,821,806     $ —  
China Medical System Holdings, Ltd.
     3,623,188       —       —       3,623,188       33,202,905       840,580  
China Silicon Corp. Common Stock
     1,171,572       62,833       —       1,234,405       1,049,244       —  
China Silicon Corp., Series A Preferred
     27,418       —       —       27,418       4,241,565       149,542  
China Silicon Corp. Warrants
     685,450       —       —       685,450       —       —  
 
                                                
Far East Energy Corp.
     14,565,477       —       —       14,565,477       7,282,738       —  
HAND Enterprise Solutions, Ltd.
     500,000       —       —       500,000       7,669,000       —  
 
                                                
Highlight Tech. Corp.
     2,525,170       —       841,723       1,683,447       3,000,000       60,164  
Qingdao Bright Moon Seaweed Group Co., Ltd.
     31,827,172       —       —       31,827,172       6,842,842       —  
Queenbury Investments, Ltd. (Huiyin)
     450       —       —       450       47,108,700       —  
teco Optronics Corp.
     1,861,710       —       —       1,861,710       —       —  
Ugent Holdings, Ltd.
     177,000,000       —       —       177,000,000       22,789,749       684,721  
 
*   Affiliated issuers, as defined in the 1940 Act as amended, include issuers in which the Fund held 5% or more of the outstanding voting securities.

11

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Item 2. Controls and Procedures.
(a)   The registrant’s principal executive and principal financial officers have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this Form N-Q that includes the disclosure required by this paragraph based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b)   There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3. Exhibits.
The certification required by Rule 30a-2(a) of the 1940 Act (17 CFR 270.30a-2(a)) is attached as an exhibit to this filing.

 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE CHINA FUND, INC.
By: /s/ Jamie Skinner                                   
Jamie Skinner
President and Chief Executive Officer
Date: March 25, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Jamie Skinner                                   
Jamie Skinner
President and Chief Executive Officer
Date: March 25, 2010
By: /s/ Laura Healy                                   
Laura F. Healy
Treasurer
Date: March 30, 2010