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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 Service)   Copy to:
     
Tracie A. Coop
Secretary 		  Leonard B. Mackey, Jr., Esq.
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, 2011

 

 

TABLE OF CONTENTS

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

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS
                        
CHINA — “A” SHARES
                        
Information Technology — (4.0%)
                        
HAND Enterprise Solutions Co., Ltd. # † (2)
     11,238,137             $ 30,956,121  
 
                      
TOTAL CHINA — “A” SHARES — (Cost $3,164,274)
             4.0 %     30,956,121  
 
                    
 
                        
HONG KONG
                        
Consumer Discretionary — (6.7%)
                        
FU JI Food & Catering Services * ^ # (2)
     5,462,000               —  
Huiyin Household Appliances Holdings Co., Ltd. # †
     160,413,750               32,310,570  
Ports Design, Ltd. (1)
     4,549,500               9,607,201  
Shangri-La Asia, Ltd. (1)
     3,316,683               8,531,428  
Yorkey Optical International Cayman, Ltd. #
     4,860,926               667,277  
 
                      
 
                     51,116,476  
 
                      
Consumer Staples — (3.0%)
                        
Chaoda Modern Agriculture (Holdings), Ltd. (1)
     26,651,357               10,702,052  
Natural Beauty Bio-Technology, Ltd. #
     47,710,000               10,405,470  
Sun Art Retail Group, Ltd. * #
     1,598,500               2,054,867  
 
                      
 
                     23,162,389  
 
                      
Health Care — (1.4%)
                        
China Shineway Pharmaceutical Group, Ltd. (1)
     3,041,000               5,126,432  
Golden Meditech Co., Ltd. #
     35,040,000               5,844,008  
 
                      
 
                     10,970,440  
 
                      
Information Technology — (1.8%)
                        
China Innovationpay Group, Ltd. *
     146,000,000               6,462,124  
Tencent Holdings, Ltd. (1)
     291,000               7,578,660  
 
                      
 
                     14,040,784  
 
                      
Telecommunications — (2.1%)
                        
China Mobile, Ltd. #
     1,636,500               16,260,759  
 
                      
Utilities — (3.1%)
                        
China Water Affairs Group, Ltd. # (1)
     19,976,000               6,560,726  
Enn Energy Holdings, Ltd.
     5,084,000               17,153,971  
 
                      
 
                     23,714,697  
 
                      
TOTAL HONG KONG — (Cost $117,124,213)
             18.1 %     139,265,545  
 
                    
See notes to schedule of investments.

1

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                        
 
HONG KONG — “H” SHARES
                        
Consumer Discretionary — (5.0%)
                        
Boshiwa International Holding, Ltd. # (1)
     24,932,000             $ 14,169,817  
Wumart Stores, Inc. # (1)
     9,810,750               24,518,536  
 
                      
 
                     38,688,353  
 
                      
Consumer Staples — (0.8%)
                        
Asian Citrus Holdings, Ltd. (1)
     6,677,000               5,782,139  
 
                      
Health Care — (14.6%)
                        
China Medical System Holdings, Ltd. # †
     72,353,760               69,711,499  
Shandong Weigao Group Medical Polymer Co., Ltd. (1)
     18,352,000               25,051,193  
Sinopharm Group Co., Ltd. (1)
     6,056,800               17,600,087  
 
                      
 
                     112,362,779  
 
                      
Industrials — (1.0%)
                        
Fook Woo Group Holdings, Ltd. * (1)
     25,314,000               7,469,508  
 
                      
Telecommunications — (0.9%)
                        
ZTE Corp. (1)
     2,250,826               7,031,440  
 
                      
TOTAL HONG KONG — “H” SHARES — (Cost $73,474,709)
             22.3 %     171,334,219  
 
                    
TOTAL HONG KONG (INCLUDING “H” SHARES) — (Cost $190,598,922)
             40.4 %     310,599,764  
 
                    
 
SINGAPORE
                        
Consumer Staples — (4.0%)
                        
China Fishery Group, Ltd. # (1)
     13,594,872               16,383,448  
Hsu Fu Chi International, Ltd. #
     4,091,084               14,416,719  
 
                      
 
                     30,800,167  
 
                      
Information Technology — (0.4%)
                        
CDW Holding, Ltd. # †
     48,208,000               3,205,319  
 
                      
TOTAL SINGAPORE — (Cost $17,306,081)
             4.4 %     34,005,486  
 
                    
 
TAIWAN
                        
Consumer Discretionary — (7.4%)
                        
FamilyMart Co., Ltd. #
     4,501,652               24,978,388  
Far Eastern Department Stores, Ltd. (1)
     11,247,604               24,495,831  
See notes to schedule of investments.

2

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                        
 
TAIWAN (continued)
                        
Test-Rite International Co., Ltd. *
     8,457,000             $ 7,772,035  
 
                      
 
                     57,246,254  
 
                      
Consumer Staples — (2.2%)
                        
Lien Hwa Industrial Corp. *
     933,148               763,722  
Uni-President Enterprises Corp. (1)
     10,023,901               16,442,597  
 
                      
 
                     17,206,319  
 
                      
Financials — (8.6%)
                        
Chinatrust Financial Holding Co., Ltd.
     17,527,288               15,803,766  
Fubon Financial Holdings Co., Ltd.
     5,195,134               8,467,733  
KGI Securities Co., Ltd. *
     16,984,780               9,601,079  
Ruentex Development Co., Ltd. (1)
     12,694,000               19,017,558  
Yuanta Financial Holdings Co., Ltd. (1)
     17,683,593               12,633,109  
 
                      
 
                     65,523,245  
 
                      
                         
      Face Amount                  
Financials — (0.9%)
                        
Taiwan Life Insurance Co., Ltd. 4.0% 12/28/14 # † @
   NT$200,000,000             7,141,683
 
                      
 
      Shares                  
Materials — (1.6%)
                        
China Metal Products Co., Ltd. #
     12,420,374               12,275,863  
 
                      
TOTAL TAIWAN — (Cost $80,652,636)
             20.7 %     159,393,364  
 
                    
UNITED STATES
                        
Consumer Staples — (1.1%)
                        
China New Borun Corp., ADR * (1)
     1,202,859               8,287,699  
 
                      
Energy — (0.5%)
                        
Far East Energy Corp. * #
     16,392,823               4,262,134  
 
                      
Health Care — (2.8%)
                        
Mindray Medical International, Ltd., ADR (1)
     291,700               7,899,236  
WuXi PharmaTech Cayman, Inc., ADR *
     883,490               13,764,774  
 
                      
 
                     21,664,010  
 
                      
Information Technology — (1.2%)
                        
Hollysys Automation Technologies, Ltd. * (1)
     925,700               6,452,129  
See notes to schedule of investments.

3

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)
                        
 
                        
UNITED STATES (continued)
                        
VanceInfo Technologies, Inc., ADR * (1)
     134,000             $ 2,710,820  
 
                      
 
                     9,162,949  
 
                      
TOTAL UNITED STATES — (Cost $48,199,523)
             5.6 %     43,376,792  
 
                    
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS — (Cost $339,921,436)
             75.1 %     578,331,527  
 
                    
 
                        
EQUITY LINKED SECURITIES
                        
Consumer Discretionary — (1.1%)
                        
Shanghai Yuyuan Tourist Mart Co., Ltd. Access Product (expiration 03/26/14) 144A,* (4)
     4,293,036               8,197,093  
 
                      
Consumer Staples — (1.8%)
                        
Wuliangye Yibin Co., Ltd. Access Product (expiration 12/11/13) 144A,* (4)
     931,000               5,496,380  
Wuliangye Yibin Co., Ltd. Access Product (expiration 01/20/15) 144A,* (3)
     1,403,507               8,276,481  
 
                      
 
                     13,772,861  
 
                      
Financials — (4.8%)
                        
Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 01/17/12) 144A,* (3)
     1,114,259               7,703,528  
Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 04/01/13) 144A,* (4)
     2,661,500               18,400,514  
Zhejiang China Commodities City Group Co., Ltd. Access Product (expiration 01/17/12) 144A,* (3)
     5,543,940               10,694,260  
 
                      
 
                     36,798,302  
 
                      
Health Care — (1.1%)
                        
Jiangsu Yuyue Medical Equipment Co., Ltd. Access Product (expiration 02/01/16) 144A, (4)
     1,936,000               8,421,838  
 
                      
Industrials — (3.3%)
                        
China Railway Construction Corp., Ltd. Access Product (expiration 01/17/12) 144A,* (3)
     3,932,600               3,216,867  
China Railway Construction Corp., Ltd. Access Product (expiration 12/16/13) 144A,* (4)
     2,650,000               2,169,701  
Qinghai Salt Lake Potash Co., Ltd. Access Product (expiration 01/20/15) 144A, *(3)
     178,729               1,529,440  
See notes to schedule of investments.

4

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
EQUITY LINKED SECURITIES (continued)
                        
Industrials (continued)
                        
Shanghai Qiangsheng Holding Co., Ltd. Access Product (expiration 01/17/12) 144A,* (3)
     4,237,252             $ 4,173,659  
Shanghai Qiangsheng Holding Co., Ltd. Access Product (expiration 11/13/14) 144A,* (4)
     6,245,400               6,151,669  
Suning Appliance Co., Ltd. Access Product (expiration 01/20/15) 144A,* (3)
     4,311,019               8,307,333  
 
                      
 
                     25,548,669  
 
                      
Materials — (1.2%)
                        
Tangshan Jidong Cement Co., Ltd. Access Product (expiration 01/20/15) 144A,* (3)
     987,700               3,328,549  
Tangshan Jidong Cement Co., Ltd. Access Product (expiration 08/11/15) 144A, (4)
     1,849,387               6,240,668  
 
                      
 
                     9,569,217  
 
                      
TOTAL EQUITY LINKED SECURITIES — (Cost $90,945,699)
             13.3 %     102,307,980  
 
                    
 
                        
DIRECT INVESTMENTS(5)
                        
Consumer Staples — (2.0%)
                        
Zong Su Foods (acquired 09/21/10) * # † (2)
     2,677               15,000,034  
Health Care — (1.9%)
                        
China Bright (acquired 08/27/10) * # † (2) (6)
     14,665,617               14,939,093  
Industrials — (1.1%)
                        
Qingdao Bright Moon Seaweed Group Co., Ltd., (acquired 02/28/08) * # † (2) (6)
     31,827,172               8,561,509  
Information Technology — (0.0%)
                        
China Silicon Corp. Common Stock, (acquired 01/08-09/10) * # † (2)
     2,301,863               —  
China Silicon Corp., Series A Preferred (acquired 11/30/07) * # † (2)
     27,418               —  
HAND Enterprise Solutions Pte, Ltd. Preferred (acquired 02/01/07) * # † (2)
     500,000               —  
 
                      
 
                     —  
 
                      
TOTAL DIRECT INVESTMENTS — (Cost $45,102,635)
             5.0 %     38,500,636  
 
                    
See notes to schedule of investments.

5

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
                         
Name of Issuer and Title of Issue   Shares             Value (Note A)  
COLLATERAL FOR SECURITIES ON LOAN
                        
State Street Navigator Prime Portfolio
     90,739,588             $ 90,739,588  
 
                      
TOTAL COLLATERAL FOR SECURITIES ON LOAN — (Cost $90,739,588)
             11.7 %     90,739,588  
 
                    
 
                        
SHORT TERM INVESTMENTS
                        
 
UNITED STATES
                        
Repurchase Agreement with State Street Bank and Trust, 0.01%, 08/01/11 (7)
     46,896,000               46,896,000  
 
                      
TOTAL UNITED STATES — (Cost $46,896,000)
             6.1 %     46,896,000  
 
                    
TOTAL INVESTMENTS** — (Cost $613,605,358)
             111.2 %     856,775,731  
 
                    
OTHER ASSETS AND LIABILITIES
             (11.2 )%     (86,586,252 )
 
                    
 
                        
NET ASSETS
             100.0 %   $ 770,189,479  
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, from 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. Securities for which market quotations are not readily available are valued at fair value in good faith by or at the direction of the Board of Directors and 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 are valued at fair value as determined by or at the direction of 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. Equity linked securities are valued at fair value primarily based on the value(s) of the security (or securities) underlying, which normally follows the same methodology as the valuation of securities listed on recognized exchanges.
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.
 
* Denotes non-income producing security.
^ Security is deemed worthless.
# Illiquid security.
† Affiliated issuer (see Note B).
@ The bond contains a feature or option to be converted into common stock.
See notes to schedule of investments.

6

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
July 31, 2011 (Unaudited)
(1) A portion or all of the security was held on loan. As of July 31, 2011, the market value of the securities loaned was $107,227,833.
(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, 2011.
(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 07/29/11, due 08/01/11 with repurchase proceeds of $46,896,039 is collateralized by US Treasury Bill 0.20% due 08/11/11 with a market value of $47,836,795.
144A Securities restricted for resale to Qualified Institutional Buyers. At July 31, 2011, these restricted securities amounted to $102,307,980, which represented 13.28% of total net assets.
ADR American Depositary Receipt
** At July 31, 2011, the cost of investment securities for tax purposes was $613,605,358. Net unrealized appreciation of investment securities for tax purposes was $243,170,373, consisting of unrealized losses of $39,265,240 on securities that had decreased in value since their purchase and $282,435,613 in unrealized gains on securities that had risen in value since their purchase.

7

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
JULY 31, 2011 (Unaudited)
Fair Value Measurement
The Fund has adopted fair valuation accounting standards which establish a definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three broad levels listed below:
•   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, 2011 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
                                
China — “A” Shares
                                
Information Technology
   $ 30,956,121     $ —     $ —     $ 30,956,121  
 
Total China — “A” Shares
     30,956,121       —       —       30,956,121  
 
Hong Kong
                                
Consumer Discretionary
     51,116,476       —       —       51,116,476  
Consumer Staples
     23,162,389       —       —       23,162,389  
Health Care
     10,970,440       —       —       10,970,440  
Information Technology
     14,040,784       —       —       14,040,784  
Telecommunications
     16,260,759       —       —       16,260,759  
Utilities
     23,714,697       —       —       23,714,697  
 
Total Hong Kong
     139,265,545       —       —       139,265,545  
 
Hong Kong — “H” Shares
                                
Consumer Discretionary
     38,688,353       —       —       38,688,353  
Consumer Staples
     5,782,139       —       —       5,782,139  
Health Care
     112,362,779       —       —       112,362,779  
Industrials
     7,469,508       —       —       7,469,508  
Telecommunications
     7,031,440       —       —       7,031,440  
 
Total Hong Kong — “H” Shares
     171,334,219       —       —       171,334,219  
 
Singapore
                                
Consumer Staples
     30,800,167       —       —       30,800,167  
Information Technology
     3,205,319       —       —       3,205,319  
 
Total Singapore
     34,005,486       —       —       34,005,486  
 
Taiwan
                                
Consumer Discretionary
     57,246,254       —       —       57,246,254  
Consumer Staples
     17,206,319       —       —       17,206,319  
Financials
     65,523,245       —       7,141,683       72,664,928  
Materials
     12,275,863       —       —       12,275,863  
 
Total Taiwan
     152,251,681       —       7,141,683       159,393,364  
 
United States
                                
Consumer Staples
     8,287,699       —       —       8,287,699  
Energy
     4,262,134       —       —       4,262,134  
Health Care
     21,664,010       —       —       21,664,010  
Information Technology
     9,162,949       —       —       9,162,949  
 
Total United States
     43,376,792       —       —       43,376,792  
 
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS
     571,189,844       —       7,141,683       578,331,527  
 
EQUITY LINKED SECURITIES
                                
Consumer Discretionary
     —       8,197,093       —       8,197,093  
Consumer Staples
     —       13,772,861       —       13,772,861  
Financials
     —       36,798,302       —       36,798,302  
Health Care
     —       8,421,838       —       8,421,838  
Industrials
     —       25,548,669       —       25,548,669  
Materials
     —       9,569,217       —       9,569,217  
 
TOTAL EQUITY LINKED SECURITIES
     —       102,307,980       —       102,307,980  
 
DIRECT INVESTMENTS
                                
Consumer Staples
     —       —       15,000,034       15,000,034  
Health Care
     —       —       14,939,093       14,939,093  

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
JULY 31, 2011 (Unaudited)
                                 
Description   Level 1     Level 2     Level 3     Total  
 
Industrials
     —       —       8,561,509       8,561,509  
 
TOTAL DIRECT INVESTMENTS
     —       —       38,500,636       38,500,636  
 
COLLATERAL FOR SECURITIES ON LOAN
     —       90,739,588       —       90,739,588  
SHORT TERM INVESTMENTS
                                
United States
     —       46,896,000       —       46,896,000  
 
TOTAL INVESTMENTS
   $ 571,189,844     $ 239,943,568     $ 45,642,319     $ 856,775,731  
 
The Fund’s policy is to recognize transfers between levels at the end of the reporting period.
For the nine months ended July 31, 2011, there was no significant security transfer activity between Level 1 and Level 2.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the Fund during the nine months ended July 31, 2011:
                                                                 
                                                            Change in  
                                                            Unrealized  
                                                            Appreciation  
                            Change in                             (Depreciation)  
    Balance as of     Net             Unrealized     Transfers     Transfers             from  
Investments in   October 31,     Purchases     Realized Gain     Appreciation     in to     out of     Balance as of     Investments Held at  
Securities   2010     (Sales)     (Loss)     (Depreciation)     Level 3     Level 3*     July 31, 2011     July 31, 2011  
 
COMMON STOCK AND OTHER EQUITY INTERESTS
                                                                
Consumer Discretionary
   $ 44,491,832     $ —     $ —     $ (12,181,262 )   $ —     $ (32,310,570 )   $ —     $ —  
Financials
     7,936,254       —       —       (794,571 )     —       —       7,141,683       (794,571 )
     
 
     52,428,086       —       —       (12,975,833 )     —       (32,310,570 )     7,141,683       (794,571 )
     
DIRECT INVESTMENTS
                                                                
Consumer Staples
     15,000,034       —       —       —       —       —       15,000,034       —  
Health Care
     15,021,769       —       —       (82,676 )     —       —       14,939,093       (82,676 )
Industrials
     9,293,534       (11,774,883 )     (11,070,045 )     22,112,903       —       —       8,561,509       (732,025 )
Information Technology
     14,192,162       (3,164,274 )     —       (11,027,888 )     —       —       —       —  
     
 
     53,507,499       (14,939,157 )     (11,070,045 )     11,002,339       —       —       38,500,636       (814,701 )
     
 
   $ 105,935,585     $ (14,939,157 )   $ (11,070,045 )   $ (1,973,494 )   $ —     $ (32,310,570 )   $ 45,642,319     $ (1,609,272 )
     
*   Transferred out of Level 3 into Level 1 because sufficient observable inputs were available.
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. Because of the absence of any public trading market for these investments, the Fund may take longer to liquidate these positions than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices on these sales could be less than those originally paid by the Fund. Issuers whose securities are not publicly traded may not be subject to public disclosure and other investor protections requirements applicable to publicly traded securities. The value of these securities at July 31, 2011 was $38,500,636 or 5.0% 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 Directors of the Fund. The Fund does not have the right to demand that such securities be registered.

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (continued)
JULY 31, 2011 (Unaudited)
                         
Security   Acquisition Date     Cost     Value  
China Bright
     08/27/2010     $ 14,969,436     $ 14,939,093  
China Silicon Corp., Series A Preferred
     11/30/2007       6,552,875       —  
China Silicon Corp. Common Stock
     01/08 - 09/10       1,458,811       —  
HAND Enterprise Solutions Pte, Ltd. Preferred *
     02/01/2007       —       —  
Qingdao Bright Moon Seaweed Group Co., Ltd.
     02/28/2008       7,121,479       8,561,509  
Zong Su Foods
     09/21/2010       15,000,034       15,000,034  
 
                    
 
           $ 45,102,635     $ 38,500,636  
 
                    
 
*   HAND Enterprise Solutions Co., Ltd., Common shares became a listed security as of February 1, 2011.
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   2010   Additions   Reductions   2011   2011
 
CDW Holding, Ltd.
     51,458,000       —       3,250,000       48,208,000     $ 3,205,319  
China Bright
     14,665,617       —       —       14,665,617       14,939,093  
China Medical System Holdings, Ltd.
     72,353,760       —       —       72,353,760       69,711,499  
China Silicon Corp. Common Stock
     2,301,863       —       —       2,301,863       —  
China Silicon Corp., Series A Preferred
     27,418       —       —       27,418       —  
China Silicon Corp. Warrants
     685,450       —       685,450       —       —  
Far East Energy Corp. (1)
     17,529,277       —       1,136,454       16,392,823       4,262,134  
HAND Enterprise Solutions, Ltd. Common Stock (2)
     8,027,241       11,238,137       8,027,241       11,238,137       30,956,121  
HAND Enterprise Solutions Pte., Ltd. Preferred
     500,000       —       —       500,000       —  
Huiyin Household Appliances Holdings Co., Ltd.
     160,413,750       —       —       160,413,750       32,310,570  
Qingdao Bright Moon Seaweed Group Co., Ltd.
     31,827,172       —       —       31,827,172       8,561,509  
Taiwan Life Insurance Co., Ltd.
     200,000,000       —       —       200,000,000       7,141,683  
Ugent Holdings, Ltd.
     177,000,000       —       177,000,000       —       —  
Zong Su Foods
     2,677       —       —       2,677       15,000,034  
 
*   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)   Not Affiliated as of July 31, 2011.
 
(2)   Additional shares acquired resulting from a corporate action.

 

 

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.

 

 

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:
  September 19, 2011    
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:
  September 19, 2011    
 
        
By:
  /s/ Laura F. Dell
 
    
 
  Laura F. Dell    
 
  Treasurer    
 
        
Date:
  September 19, 2011