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Table of Contents

 
 
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: July 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
July 31, 2010 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS
                        
 
                        
HONG KONG
                        
Consumer Discretionary — (10.2%)
                        
FU JI Food & Catering Services ^ * # (2)
     5,462,000             $ —  
Huiyin Household Appliances Holdings Co., Ltd. * # † (2)
     160,413,750               39,445,665  
Intime Department Store Group Co., Ltd. # (1)
     12,568,629               12,961,186  
Ports Design, Ltd. #
     4,549,500               11,690,916  
Shangri-La Asia, Ltd.
     3,061,555               6,219,757  
Yorkey Optical International Cayman, Ltd. #
     7,758,926               1,558,298  
 
                      
 
                     71,875,822  
 
                      
Consumer Staples — (2.9%)
                        
Chaoda Modern Agriculture (Holdings), Ltd. (1)
     10,507,357               11,281,942  
Natural Beauty Bio-Technology, Ltd. #
     47,710,000               8,844,968  
 
                      
 
                     20,126,910  
 
                      
Energy — (1.0%)
                        
Fushan International Energy Group, Ltd. (1)
     12,018,000               6,947,089  
 
                      
Health Care — (4.6%)
                        
China Pharmaceutical Group, Ltd. (1)
     10,862,000               6,111,046  
China Shineway Pharmaceutical Group, Ltd. (1)
     7,372,000               19,883,539  
Golden Meditech Co., Ltd. * # (1)
     35,040,000               6,721,632  
 
                      
 
                     32,716,217  
 
                      
Utilities — (1.7%)
                        
Xinao Gas Holdings, Ltd. (1)
     5,084,000               12,030,270  
 
                      
TOTAL HONG KONG — (Cost $90,797,042)
             20.4 %     143,696,308  
 
                    
 
                        
HONG KONG — “H” SHARES
                        
Consumer Staples — (4.6%)
                        
Wumart Stores, Inc. #
     14,888,000               32,737,730  
 
                      
Health Care — (7.1%)
                        
Shandong Weigao Group Medical Polymer Co., Ltd. # (1)
     4,588,000               20,673,585  
Sinopharm Medicine Holding Co., Ltd. (1)
     7,786,000               29,069,444  
 
                      
 
                     49,743,029  
 
                      
Industrials — (1.4%)
                        
Anhui Expressway Co., Ltd. # (1)
     5,212,300               3,288,136  
Fook Woo Group Holdings, Ltd. *
     19,836,000               6,690,826  
 
                      
 
                     9,978,962  
 
                      
See notes to schedule of investments.

1

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 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)
                        
Materials — (0.6%)
                        
Zijin Mining Group Co., Ltd. (1)
     6,402,000             $ 4,129,312  
 
                      
Telecommunications — (1.5%)
                        
ZTE Corp. (1)
     3,212,889               10,258,213  
 
                      
TOTAL HONG KONG — “H” SHARES —
(Cost $55,881,335)
             15.2 %     106,847,246  
 
                    
TOTAL HONG KONG (INCLUDING “H” SHARES) —
(Cost $146,678,377)
             35.6 %     250,543,554  
 
                    
 
                        
SINGAPORE
                        
Consumer Staples — (5.0%)
                        
China Fishery Group, Ltd. # (1)
     13,255,000               18,327,805  
Hsu Fu Chi International, Ltd. #
     9,484,000               16,740,779  
 
                      
 
                     35,068,584  
 
                      
Financials — (0.5%)
                        
Financial One Corp. * #
     12,030,000               3,716,103  
 
                      
Information Technology — (0.4%)
                        
CDW Holding, Ltd. # †
     53,208,000               3,032,854  
 
                      
TOTAL SINGAPORE — (Cost $22,801,778)
             5.9 %     41,817,541  
 
                    
 
                        
TAIWAN
                        
Consumer Discretionary — (5.7%)
                        
FamilyMart Co., Ltd. #
     4,501,652               9,805,899  
Far Eastern Department Stores, Ltd.
     19,066,931               18,654,276  
Synnex Technology International Corp.
     2,809,240               6,399,879  
Tatung Co., Ltd. *
     29,742,000               5,420,546  
 
                      
 
                     40,280,600  
 
                      
Consumer Staples — (2.9%)
                        
Lien Hwa Industrial Corp. #
     16,476,881               9,667,026  
Uni-President Enterprises Corp.
     9,112,638               10,820,787  
 
                      
 
                     20,487,813  
 
                      
Financials — (7.2%)
                        
Cathay Financial Holding Co., Ltd.
     6,454,000               10,151,251  
Fubon Financial Holdings Co., Ltd. *
     4,948,000               6,068,513  
KGI Securities Co., Ltd.
     16,984,780               7,023,213  
See notes to schedule of investments.

2

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                        
 
                        
TAIWAN (continued)
                        
Ruentex Development Co., Ltd.
     12,694,000             $ 21,708,964  
Yuanta Financial Holdings Co., Ltd.
     10,520,593               5,876,968  
 
                      
 
                     50,828,909  
 
                      
                         
    Face Amount                
Financials — (1.0%)
                        
Taiwan Life Insurance Co., Ltd. 4.0% 12/28/14 # † @
   $ 200,000,000               7,034,188  
 
                      
                         
    Shares                
Information Technology — (1.9%)
                        
WPG Holdings Co., Ltd.
     6,320,000               13,037,028  
 
                      
Materials — (1.8%)
                        
China Metal Products Co., Ltd. #
     9,200,278               12,575,785  
 
                      
TOTAL TAIWAN — (Cost $93,939,467)
             20.5 %     144,244,323  
 
                    
 
                        
UNITED KINGDOM
                        
Health Care — (6.5%)
                        
China Medical System Holdings, Ltd. # †
     72,353,760               45,474,335  
 
                      
TOTAL UNITED KINGDOM — (Cost $9,925,900)
             6.5 %     45,474,335  
 
                    
 
                        
UNITED STATES
                        
Consumer Discretionary — (0.3%)
                        
The9, Ltd., ADR * # (1)
     358,900               1,916,526  
 
                      
Energy — (0.7%)
                        
Far East Energy Corp. * # †
     14,565,477               4,915,848  
 
                      
Health Care — (3.1%)
                        
Mindray Medical International, Ltd., ADR (1)
     291,700               9,025,198  
WuXi PharmaTech Cayman, Inc., ADR * (1)
     883,490               13,252,350  
 
                      
 
                     22,277,548  
 
                      
Information Technology — (2.1%)
                        
Hollysys Automation Technologies, Ltd. * # (1)
     808,200               7,888,032  
Sina Corp. * (1)
     162,700               6,960,306  
 
                      
 
                     14,848,338  
 
                      
TOTAL UNITED STATES
— (Cost $48,909,600)
             6.2 %     43,958,260  
 
                    
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
— (Cost $322,255,122)
             74.7 %     526,038,013  
 
                    
See notes to schedule of investments.

3

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
EQUITY LINKED SECURITIES
                        
 
                        
Consumer Discretionary — (1.2%)
                        
Shanghai Yuyuan Tourist Mart Co., Ltd. Access Product (expiration 03/26/14) 144A, (4)
     429,303,600             $ 8,782,504  
 
                      
Consumer Staples — (1.8%)
                        
Shenzhen Agricultural Products Co., Ltd. Access Product (expiration 01/17/12) 144A, (3)
     2,857,920               7,095,235  
Wuliangye Yibin Co., Ltd. Access Product (expiration 01/20/15) 144A, (3)
     1,403,507               5,754,379  
 
                      
 
                     12,849,614  
 
                      
Financials — (7.1%)
                        
Citic Securities Co., Ltd. Access Product (expiration 09/23/13) 144A, (4)
     2,475,000               4,683,321  
Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 01/17/12) 144A, (3)
     1,665,600               11,508,005  
Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 04/01/13) 144A, # (2) (4)
     2,661,500               18,388,902  
Zhejiang China Commodities City Group Co., Ltd. Access Product (expiration 01/17/12) 144A, (3)
     2,771,970               9,389,921  
Zhejiang Guyuelongshan, Ltd. Access Product (expiration 10/07/13) 144A, (4)
     3,658,900               6,010,856  
 
                      
 
                     49,981,005  
 
                      
Industrials — (3.9%)
                        
Shanghai International Airport Co., Ltd. Access Product (expiration 01/20/15) 144A, (3)
     2,526,700               4,952,332  
Shanghai International Airport Co., Ltd. Access Product (expiration 10/26/10) 144A, (4)
     1,800,000               3,528,266  
Shanghai Qiangsheng Holding Co., Ltd. Access Product (expiration 11/13/14) 144A, # (2) (4)
     4,800,000               5,009,002  
Suning Appliance Co., Ltd. Access Product (expiration 01/20/15) 144A, (3)
     4,311,019               7,953,830  
Xinjiang Tebian Electric Apparatus Stock Co., Ltd. Access Product (expiration 10/26/10) 144A, # (4)
     2,335,140               5,745,652  
 
                      
 
                     27,189,082  
 
                      
TOTAL EQUITY LINKED SECURITIES — (Cost $86,952,104)
             14.0 %     98,802,205  
 
                    
 
                        
DIRECT INVESTMENTS
                        
Industrials — (1.3%)
                        
Qingdao Bright Moon Seaweed Group Co., Ltd., (acquired 02/28/08) * # † (2) (5) (6)
     31,827,172               9,038,917  
 
                      
 
                     9,038,917  
 
                      
See notes to schedule of investments.

4

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
DIRECT INVESTMENTS (continued)
                        
Information Technology — (1.9%)
                        
China Silicon Corp. Common Stock, (acquired 01/08 - 06/10) * # † (2) (5)
     1,304,093             $ —  
China Silicon Corp. Warrants (expiration 11/30/10), (acquired 11/30/07) * # † (2) (5)
     685,450               —  
China Silicon Corp., Series A Preferred (acquired 11/30/07) # † (2) (5)
     27,418               —  
HAND Enterprise Solutions, Ltd., Common Stock (acquired 02/01/07) * # † (2) (5)
     500,000               —  
HAND Enterprise Solutions, Ltd., Preferred (acquired 02/11/10) # † (2) (5)
     8,027,241               13,100,000  
 
                      
 
                     13,100,000  
                         
    Face Amount                  
Industrials — (3.2%)
                        
Ugent Holdings, Ltd., 12.0% 06/04/12 (acquired 04/06/09) # † @ (2) (5)
   $ 177,000,000               22,787,548  
 
                      
TOTAL DIRECT INVESTMENTS — (Cost $40,960,198)
             6.4 %     44,926,465  
 
                    
 
                        
 
   Shares                
 
                      
COLLATERAL FOR SECURITIES ON LOAN — (9.2%)
                        
State Street Navigator Prime Portfolio
     65,012,868               65,012,868  
 
                      
TOTAL COLLATERAL FOR SECURITIES ON LOAN
— (Cost $65,012,868)
             9.2 %     65,012,868  
 
                    
 
                        
SHORT TERM INVESTMENTS
                        
 
                        
UNITED STATES
                        
Repurchase Agreement with State Street Bank and Trust, 0.01%, 08/02/10 (7)
     23,693,000               23,693,000  
 
                      
TOTAL UNITED STATES
— (Cost $23,693,000)
             3.4 %     23,693,000  
 
                    
TOTAL INVESTMENTS** — (Cost $538,873,292)
             107.7 %     758,472,551  
 
                    
OTHER ASSETS AND LIABILITIES
             (7.7 )%     (54,174,685 )
 
                    
 
                        
NET ASSETS
             100.0 %   $ 704,297,866  
See notes to schedule of investments.

5

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2010 (Unaudited)
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.
 
†   Affiliated issuer (see Note B).
 
@   The bond contains a feature or option to be converted into common stock.
 
(1)   A portion or all of the security was held on loan. As of July 31, 2010, the market value of the securities loaned was $61,559,360.
 
(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. The securities continue to be valued in good faith by Board of Directors at fair market value as of July 31, 2010.
 
(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 07/30/10, due 08/02/10 with repurchase proceeds of $23,693,020 is collateralized by U.S. Treasury Bill 0.01% due 04/30/15 with a market value of $24,216,462.
 
    144A Securities restricted for resale to Qualified Institutional Buyers. At July 31, 2010, these restricted securities amounted to $98,802,205, which represented 14.00% of total net assets.
 
ADR   American Depositary Receipt.
 
**   At July 31, 2010, the cost of investment securities for tax purposes was $538,873,292. Net unrealized appreciation of investment securities for tax purposes was $219,599,259, consisting of unrealized gains of $253,678,946 on securities that had risen in value since their purchase and $34,079,687 in unrealized losses on securities that had fallen in value since their purchase.

6

Table of Contents

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
Summary of Fair Value Disclosure
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 820-10-35-39 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.
 
•   Level 3 – Inputs that are unobservable.
The following is a summary of the inputs used as of July 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
   $ 32,430,157     $ —     $ 39,445,665     $ 71,875,822  
Consumer Staples
     20,126,910       —       —       20,126,910  
Energy
     6,947,089       —       —       6,947,089  
Health Care
     32,716,217       —       —       32,716,217  
Utilities
     12,030,270       —       —       12,030,270  
 
                        
Total Hong Kong
     104,250,643       —       39,445,665       143,696,308  
 
                        
Hong Kong — “H” Shares
                                
Consumer Staples
     32,737,730       —       —       32,737,730  
Health Care
     49,743,029       —       —       49,743,029  
Industrials
     9,978,962       —       —       9,978,962  
Materials
     4,129,312       —       —       4,129,312  
Telecommunications
     10,258,213       —       —       10,258,213  
 
                        
Total Hong Kong — “H” Shares
     106,847,246       —       —       106,847,246  
 
                        
Singapore
                                
Consumer Staples
     35,068,584       —       —       35,068,584  
Financials
     3,716,103       —       —       3,716,103  
Information Technology
     3,032,854       —       —       3,032,854  
 
                        
Total Singapore
     41,817,541       —       —       41,817,541  
 
                        

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                                 
Description   Level 1     Level 2     Level 3     Total  
Taiwan
                                
Consumer Discretionary
     40,280,600       —       —       40,280,600  
Consumer Staples
     20,487,813       —       —       20,487,813  
Financials
     50,828,909       —       7,034,188       57,863,097  
Information Technology
     13,037,028       —       —       13,037,028  
Materials
     12,575,785       —       —       12,575,785  
 
                        
Total Taiwan
     137,210,135       —       7,034,188       144,244,323  
 
                        
United Kingdom
                                
Health Care
     45,474,335       —       —       45,474,335  
 
                        
Total United Kingdom
     45,474,335       —       —       45,474,335  
 
                        
United States
                                
Consumer Discretionary
     1,916,526       —       —       1,916,526  
Energy
     4,915,848       —       —       4,915,848  
Health Care
     22,277,548       —       —       22,277,548  
Information Technology
     14,848,338       —       —       14,848,338  
 
                        
Total United States
     43,958,260       —       —       43,958,260  
 
                        
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
     479,558,160       —       46,479,853       526,038,013  
 
                        
EQUITY LINKED SECURITIES
                                
Consumer Discretionary
     8,782,504       —       —       8,782,504  
Consumer Staples
     12,849,614       —       —       12,849,614  
Financials
     49,981,005       —       —       49,981,005  
Industrials
     27,189,082       —       —       27,189,082  
 
                        
TOTAL EQUITY LINKED SECURITIES
     98,802,205       —       —       98,802,205  
 
                        
DIRECT INVESTMENTS
                                
Industrials
     —       —       31,826,465       31,826,465  
Information Technology
     —       —       13,100,000       13,100,000  
 
                        
TOTAL DIRECT INVESTMENTS
     —       —       44,926,465       44,926,465  
 
                        
COLLATERAL FOR SECURITIES ON LOAN
     —       65,012,868       —       65,012,868  
SHORT TERM INVESTMENTS
                                
United States
     —       23,693,000       —       23,693,000  
 
                        
TOTAL INVESTMENTS
   $ 578,360,365     $ 88,705,868     $ 91,406,318     $ 758,472,551  
 
                        
As of July 31, 2010, there was no significant security transfer activity from Level 1 to Level 2 or from Level 2 to Level 1.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Fund during the period ending July 31, 2010:

8

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                                                                 
                                                            Change in
                                                            Unrealized
                                                            Appreciation
                                                            (Depreciation)
                                    Change in                   from
    Balance as of   Net   Accrued   Realized   Unrealized   Net Transfers           Investments
Investments in   October 31,   Purchases   Discounts   Gain   Appreciation   in and/or out   Balance as of   Held at July 31,
Securities   2009   (Sales)   (Premiums)   (Loss)   (Depreciation)   to Level 3   July 31, 2010   2010
 
COMMON STOCK AND OTHER EQUITY INTERESTS                                        
Consumer Discretionary
   $ —     $ 38,458,859     $ —     $ —     $ 986,806     $ —     $ 39,445,665     $ 986,806  
     
Financials
     —       6,178,274       —       —       855,914       —       7,034,188       855,914  
     
Health Care
     27,918,189       (15,299 )     —       —       1,166,555       (29,069,445 )     —       1,166,555  
     
 
     27,918,189       44,621,834       —       —       3,009,275       (29,069,445 )     46,479,853       3,009,275  
     
DIRECT INVESTMENTS
                                                                
Consumer Discretionary
     47,108,700       (38,515,190 )     —       —       (8,593,510 )     —       —       —  
     
Industrials
     34,180,814       (4,489,023 )     —       (19,421 )     2,154,095       —       31,826,465       2,134,674  
     
Information Technology
     13,437,401       315,400       —       (567,320 )     (85,481 )     —       13,100,000       4,899,999  
     
 
     94,726,915       (42,688,813 )     —       (586,741 )     (6,524,896 )     —       44,926,465       7,034,673  
     
 
   $ 122,645,104     $ 1,933,021     $ —     $ (586,741 )   $ (3,515,621 )   $ (29,069,445 )   $ 91,406,318     $ 10,043,948  
     
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 July 31, 2010 was $44,926,465 or 6.4% 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.

9

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                         
Security   Acquisition Date     Cost     Value  
China Silicon Corp. Common Stock
     01/08 - 06/10     $ 1,276,641     $ —  
China Silicon Corp., Series A Preferred*
     11/30/2007       6,552,874     $ —  
HAND Enterprise Solutions, Ltd. Preferred
     02/11/2010     $ 3,164,274     $ 13,100,000  
HAND Enterprise Solutions, Ltd. Common Stock
     02/01/2007       —       —  
Qingdao Bright Moon Seaweed Group Co., Ltd.
     02/28/2008       7,121,480       9,038,917  
Ugent Holdings, Ltd.
     04/06/2009       22,844,928       22,787,548  
 
                    
 
           $ 40,960,197     $ 44,926,465  
 
                    
 
*   The purchase of China Silicon Corp., Series A Preferred resulted in the Fund receiving 685,450 shares of China Silicon Corp. common stock warrants. 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.
NOTE B – Investments in Non-Controlled Affiliates*:
                                         
    Balance of   Gross   Gross   Balance of    
    Shares Held   Purchases   Sales   Shares Held   Value
    October 31,   and   and   July 31,   July 31,
Name of Issuer   2009   Additions   Reductions   2010   2010
 
CDW Holding, Ltd.
     54,708,000       —       1,500,000       53,208,000     $ 3,032,854  
China Medical System Holdings, Ltd. (1)
     3,623,188       68,840,572       110,000       72,353,760       45,474,335  
 
                                        
China Silicon Corp. Common Stock
     1,171,572       135,521       —       1,304,093       —  
China Silicon Corp., Series A Preferred
     27,418       —       —       27,418       —  
 
                                        
China Silicon Corp. Warrants
     685,450       —       —       685,450       —  
 
                                        
Far East Energy Corp.
     14,565,477       —       —       14,565,477       6,335,983  
HAND Enterprise Solutions, Ltd. Common Stock
     500,000       —       —       500,000       —  
HAND Enterprise Solutions, Ltd. Preferred Stock
     —       8,027,241       —       8,027,241       12,734,977  
 
                                        
Highlight Tech. Corp.
     2,525,170       —       2,525,170       —       —  
Huiyin Household Appliances Holdings Co., Ltd. (2)
     450       160,413,300       —       160,413,750       54,338,322  
Qingdao Bright Moon Seaweed Group Co., Ltd.
     31,827,172       —       —       31,827,172       9,198,053  
 
                                        
Taiwan Life Insurance Co., Ltd.
     —       200,000,000       —       200,000,000       7,639,288  

10

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THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2010 (Unaudited)
                                         
    Balance of   Gross   Gross   Balance of    
    Shares Held   Purchases   Sales   Shares Held   Value
    October 31,   and   and   July 31,   July 31,
Name of Issuer   2009   Additions   Reductions   2010   2010
 
teco Optronics Corp
     1,861,710       —       1,861,710       —     $ —  
Ugent Holdings, Ltd.
     177,000,000       —       —       177,000,000       22,797,233  
 
*   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.
 
(1)   Additional shares acquired resulting from a corporate action.
 
(2)   Resulting security of a corporate action from Queensbury Investments, Ltd. (Huiyin).

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: 9/13/10
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: 9/13/10
       
By:   /s/ Laura F. Healy  
  Laura F. Healy   
  Treasurer   
 
Date: 8/27/10