Edgar Filing: CHINA FUND INC

THE CHINA FUND, INC.

c/o State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

February 1, 2002

Dear Stockholders:

The Annual Meeting of Stockholders of The China Fund, Inc. (the "Fund") will
be held at 10:00 A.M. on Thursday, March 7, 2002, at the offices of Clifford
Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York, 10166. A Notice
and Proxy Statement regarding the meeting, proxy card for your vote at the
meeting, and postage prepaid envelope in which to return your proxy are
enclosed.

The only matter on which you, as a stockholder of the Fund, are being asked
to vote is the election of the Fund's directors. Stockholders present at the
Annual Meeting will hear a report on the Fund and will have an opportunity to
discuss matters of interest to them. The Board of Directors recommends that you
re-elect to the Board the four current Directors who are standing for
re-election.

Respectfully,
/s/ ANN M. CASEY
ANN M. CASEY
Secretary

STOCKHOLDERS ARE STRONGLY URGED TO SIGN AND MAIL THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE TO ENSURE A QUORUM AT THE MEETING.

THE CHINA FUND, INC.

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS

March 7, 2002

To the Stockholders of
The China Fund, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The China
Fund, Inc. (the "Fund") will be held at the offices of Clifford Chance Rogers &
Wells LLP, 200 Park Avenue, New York, New York, 10166, on Thursday, March 7,
2002, at 10:00 A.M., local time, for the following purposes:

1. To elect one Class II director to serve for a term expiring on the date
on which the annual meeting of stockholders is held in 2004 and three
Class III directors to serve for a term expiring on the date on which
the annual meeting of stockholders is held in 2005.

2. To transact such other business as may properly come before the meeting
or any adjournments thereof.

The Board of Directors has fixed the close of business on January 23, 2002
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any adjournments thereof.

You are cordially invited to attend the meeting. Stockholders who do not
expect to attend the meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. You may nevertheless vote in person at the meeting if you choose
to attend. The enclosed proxy is being solicited by the Board of Directors of
the Fund.

By order of the Board of Directors,

/s/ ANN M. CASEY
ANN M. CASEY
Secretary

February 1, 2002

THE CHINA FUND, INC.
c/o State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

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PROXY STATEMENT

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INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of THE CHINA FUND, INC. (the "Fund") for use
at the Annual Meeting of Stockholders, to be held at the offices of Clifford
Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166, on
Thursday, March 7, 2002, at 10:00 A.M., local time, and at any adjournments
thereof.

This Proxy Statement and the form of proxy are being mailed to stockholders
on or about February 1, 2002. Any stockholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary, The China Fund, Inc., c/o State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110), or in person at the meeting, by executing a superseding proxy or by
submitting a notice of revocation to the Fund. All properly executed proxies
received in time for the meeting will be voted as specified in the proxy or, if
no specification is made, for the proposal referred to in this Proxy Statement.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting at the meeting.

The Board of Directors has fixed the close of business on January 23, 2002
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting and at any adjournments thereof. Stockholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of the record date, the Fund had
outstanding 10,073,173 shares of common stock.

Management of the Fund knows of no business other than that mentioned in
Item 1 of the Notice of Meeting which will be presented for consideration at
the meeting. If any other matter is properly presented, it is the intention of
the persons named in the enclosed proxy to vote in accordance with their best
judgment.

The Fund will furnish, without charge, a copy of its annual report for its
fiscal year ended October 31, 2001 to any stockholder requesting such report.
Requests for the annual report should be made by writing to The China Fund,
Inc., c/o Georgeson Shareholder Communications Corp., 111 Commerce Road,
Carlstadt, New Jersey 07072, attention: Michael Starz, or by calling (888)
CHN-CALL.

ELECTION OF DIRECTORS

The terms of Ms. Kathleen Cuocolo, Mr. Joe O. Rogers, Mr. Alan Tremain and
Mr. Nigel Tulloch expire at the 2002 Annual Meeting of Stockholders. Ms.
Cuocolo was elected by the Fund's Board of Directors as a director on June 15,
2001. Persons named in the accompanying form of proxy intend in the absence of
contrary instructions to vote all proxies for the election of Kathleen Cuocolo
to serve for a term expiring on the date on which the Annual Meeting of
Stockholders is held in 2004, and Joe O. Rogers, Alan Tremain and Nigel
Tulloch, to serve for a term expiring on the date on which the Annual Meeting
of Stockholders is held in 2005, or until their successors are elected and
qualified. If any such nominee should be unable to serve, an event not now
anticipated, the proxies will be voted for such person, if any, as shall be
designated by the Board of Directors to replace any such nominee. The election
of each director will require the affirmative vote of a majority of the votes
cast at the meeting. For this purpose, abstentions and broker non-votes will
have no effect on the outcome of the elections.

Information Concerning Class II and Class III Nominees and Members of the Board
of Directors

The following table sets forth information concerning each of the nominees
as a director of the Fund.

Nominees

Aggregate Dollar
Range of Equity
Securities in All
Funds Overseen or
Principal Occupation or Dollar Range of to be Overseen in
Employment During Past Equity Family of
Name (Age) and Five Years and Directorships in Director Securities in Investment
Address of Director Publicly Held Companies Since the Fund(1) Companies(1)
------------------------- ------------------------------------------- -------- ---------------- -----------------

Class II Director
Kathleen Cuocolo (50)(2) Executive Vice President, State Street Bank 2001 None None
and Trust Company (2000 -present);
Senior Vice President, State Street Bank
and Trust Company (1995-2000);
President and Chairman of the Board of
Trustees for Select Sector SPDR Series
Trust (May 2001-present); President of
State Street Master Funds and State Street
Institutional Investment Trust (2000-
present); Treasurer of State Street
Navigator Securities Lending Trust
(February 2001-present) and the
streetTRACKS Series Trust (2000-
present).
Class III Directors
Joe O. Rogers (53) The Rogers Team LLC, organizing member 1992 $10,001-$50,000 $10,001-$50,000
2247 Foxwood Drive (July 2001-present); Executive Vice
Chapel Hill, NC 27514 President of Business Development,
PlanetPortal.com, Inc.(1999-May 2001);
President, Rogers International, Inc.
(1986-1998); Vice President of Business
Development, Thomson Consulting
(1998-1999); Director, The Taiwan Fund,
Inc. (1986-present); U.S. Ambassador to
the Asian Development Bank (1984-
1986).
Alan Tremain (66) Chairman of the Board of the Fund; 1992 $50,001-$100,000 $50,001-$100,000
380 South Country Road Chairman, Hotels of Distinction Ventures,
Suite 200 Inc. (1989-present); Chairman, Hotels of
Palm Beach, Florida 33480 Distinction (International), Inc. (1974-
present).
Nigel S. Tulloch (55) 1992 $10,001-$50,000 $10,001-$50,000
7, Circe Circle
Dalkeith Chief Executive, HSBC Asset Management
WA6009 Bahamas Limited (1986-1992); Director,
Australia The HSBC China Fund Limited.

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(1) The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and other current directors. The dollar value
of the shares is based upon the market price on January 23, 2002.
(2) Director is considered to be an "interested person" (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund or
of the Fund's investment adviser. Ms. Cuocolo is deemed to be an interested
person because of her affiliation with State Street Bank and Trust Company,
the parent company of Asian Direct Capital Management, the Fund's direct
investment manager. State Street Bank and Trust Company is the Fund's
administrator.

Other Current Directors

Aggregate Dollar
Range of Equity
Securities in All
Principal Occupation or Funds Overseen or
Employment During Past Dollar Range of to be Overseen in
Five Years and Equity Family of
Name (Age) and Directorships in Director Securities in Investment
Address of Director Publicly Held Companies Since the Fund(1) Companies(1)
------------------------- --------------------------------- -------- --------------- -----------------

Class I Directors
James J. Lightburn (58) Attorney, member of Hughes 1992 $10,001-$50,000 $10,001-$50,000
47, Avenue Georges Mandel Hubbard & Reed (1993-
Paris, France 75116 present).
Sir Alan Donald (70) British Ambassador to the 1992 $1-$10,000 $1-$10,000
Applebys People's Republic of China
Chiddingstone Causeway (1988-1991); Director, HSBC
Kent, TN11 8JH China Fund Limited; Director,
United Kingdom Fleming Asian Investment
Trust (1997-2001); Director,
Fleming Far Eastern Investment
Trust (1991-1997); Adviser,
Rolls Royce plc. (1991-2000).
Class II Directors
Michael F. Holland (57) Chairman, Holland & Company 1992 $10,001-$50,000 $10,001-$50,000
375 Park Avenue L.L.C. (1995-present); Director,
New York, New York 10152 The Holland Balanced Fund,
Inc.
Burton Levin (71) Visiting Professor Carleton 1992 $1-$10,000 $1-$10,000
18 Page Farm Road College (1995-present); Co-
Sherborn, MA 01770 Chairman, Hopkins-Nanjing
Center (1999-present); Director,
Noble Ltd. (1997-present); U.S.
Ambassador to Burma (1987-
1990).

The Fund's Board of Directors has an Audit Committee which is responsible
for reviewing financial and accounting matters. The Fund's Audit Committee is
comprised of directors who are not interested persons of the Fund and its
actions are governed by the Fund's Audit Committee Charter. The current members
of the Audit Committee are Sir Alan Donald, Mr. Michael Holland, Mr. Burton
Levin, Mr. James Lightburn, Mr. Joe Rogers, Mr. Alan Tremain and Mr. Nigel
Tulloch. The Audit Committee met four times during the fiscal year ended
October 31, 2001.

The Fund's Board has a Nominating Committee, comprised of the current
members of the Audit Committee, which is responsible for nominating candidates
to fill any vacancies on the Board. The Nominating Committee does not consider
nominees recommended by security holders. The Nominating Committee met once
during the fiscal year ended October 31, 2001.

The Fund's Board of Directors held four regular meetings and two special
meetings during the fiscal year ended October 31, 2001. Each director attended
at least seventy-five percent of the aggregate number of meetings of the Board
and any committee on which he served.

Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
officers and directors, and persons who own more than ten percent of a
registered class of the Fund's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the
New York Stock Exchange, Inc. The Fund believes that its officers and directors
have complied with all applicable filing requirements for the fiscal year ended
October 31, 2001. Section 30(h) of the Investment Company Act of 1940 (the
"1940 Act") extends the reporting requirements under Section 16(a) of the
Securities Exchange Act of 1934 to the investment advisers of the Fund and the
officers and directors of such investment advisers. The Fund believes that its
investment advisers and the officers and directors of such investment advisers
have complied with all applicable filing requirements for the fiscal year ended
October 31, 2001.

Officers of the Fund

Ms. Kathleen Cuocolo (age 50), a director of the Fund, President of the Fund
since June 15, 2001, also serves as an Executive Vice President of State Street
Bank and Trust Company.

Mr. Glenn N. Francis, Jr. (age 43), Vice President and Treasurer of the Fund
since June 15, 2001, also serves as a Senior Vice President of State Street
Bank and Trust Company.

Ms. Ann M. Casey (age 35), Secretary of the Fund since June 15, 2001, also
serves as a Vice President of State Street Bank and Trust Company.

Mr. Leonard B. Mackey, Jr. (age 51), Assistant Secretary of the Fund since
July 1992, is a partner at Clifford Chance Rogers & Wells LLP.

Fund Management and Administration

Martin Currie, Inc. ("Martin Currie") acts as investment manager for the
portion of the Fund's assets allocated for investment in listed securities
pursuant to an investment advisory and management agreement between Martin
Currie and the Fund. The principal business address of Martin Currie is Saltire
Court, 20 Castle Terrace, Edinburgh.

Asian Direct Capital Management ("ADCM") acts as direct investment manager
for the portion of the Fund's assets allocated for investment in direct
investments pursuant to a direct investment management agreement between ADCM
and the Fund. The principal business address of ADCM is 32/F, Exchange Square
II, 8 Connaught Place, Hong Kong.

State Street Bank and Trust Company acts as Administrator to the Fund
pursuant to an Administration Agreement between the Administrator and the Fund.
The principal business address of the Administrator is 225 Franklin Street,
Boston, Massachusetts 02110.

Independent Auditors of the Fund

The Board of Directors of the Fund, including a majority of the directors
who are not "interested persons" of the Fund (as defined in the Investment
Company Act of 1940, as amended), selected KPMG LLP ("KPMG") to act as
independent auditors for the Fund for the fiscal year ending October 31, 2002.
KPMG acted as the independent auditors for the fiscal year ended October 31,
2001. The Fund knows of no direct financial or material indirect financial
interest of KPMG in the Fund. One or more representatives of KPMG are expected
to be present at the meeting and will have an opportunity to make a statement
if they so desire. Such representatives are expected to be available to respond
to appropriate questions from stockholders.

Audit Fees. For the fiscal year ended October 31, 2001, the Fund paid to
KPMG US$51,000 for aggregate fees billed for professional services rendered for
the audit of the Fund's annual financial statements.

Financial Information Systems Design and Implementation Fees. There were no
financial information systems design and implementation services rendered by
KPMG to the Fund, Martin Currie or Martin Currie's affiliates, or ADCM or
ADCM's affiliates that provide services to the Fund for the last fiscal year.

All Other Fees. Other than the fees discussed under "Audit Fees" above, the
Fund also paid to KPMG US$8,000 for services rendered for the fiscal year ended
October 31, 2001 in connection with the preparation of the Fund's tax returns
and reports for complying with Section 17(f) of the 1940 Act.

Audit Committee Report

The Audit Committee has reviewed and discussed the Fund's audited financial
statements for the fiscal year ended October 31, 2001 with management of the
Fund and with KPMG, and has discussed with KPMG the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees). The Audit Committee has received written disclosures on auditor
independence from KPMG required by the Securities and Exchange Commission and
the American Institute of Certified Public Accountants and has discussed with
KPMG its independence. Based on the Audit Committee review and discussions
referred to in the two preceding sentences, the Audit Committee recommended to
the Board of Directors that the audited financial statements of the Fund for
the fiscal year ended October 31, 2001 be included in its annual report to
stockholders and the Fund's annual report filed with the Securities and
Exchange Commission.

Transactions with and Remuneration of Officers and Directors

The aggregate remuneration for directors not affiliated with Martin Currie
and ADCM was US$255,708 during the year ended October 31, 2001 and, for that
period, the aggregate amount of expenses reimbursed by the Fund for directors'
attendance at directors' meetings, including affiliated directors, was
US$89,154. Each non-affiliated director currently receives fees, paid by the
Fund, of US$2,000 for each directors' meeting and committee meeting attended
and an annual fee of US$10,000. The Chairman of the Fund receives an annual fee
of US$27,500. Currently, no director is affiliated with Martin Currie.

The following table sets forth the aggregate compensation from the Fund paid
to each director during the fiscal year ended October 31, 2001. Neither Martin
Currie, ADCM nor any of their affiliates advise any other U.S. registered
investment companies of which any of the directors of the Fund are directors or
trustees.

Total Compensation
Aggregate Pension or Retirement Benefits Estimated From Fund and
Compensation Accrued As Part of Fund Annual Benefits Fund Complex Paid
Name of Director From Fund(1) Expenses Upon Retirement To Directors
---------------- ------------ ------------------------------ --------------- ------------------

Kathleen Cuocolo(2) $ -- -- -- $ --
Sir Alan Donald.... 34,000 -- -- 34,000
Michael F. Holland. 32,000 -- -- 32,000
Burton Levin....... 32,000 -- -- 32,000
James J. Lightburn. 34,000 -- -- 34,000
Joe O. Rogers...... 34,000 -- -- 34,000
Alan Tremain....... 36,708 -- -- 36,708
Nigel S. Tulloch... 34,000 -- -- 34,000
John W. English(3). 19,000 -- -- 19,000

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(1) Includes compensation paid to directors by the Fund. The Fund's directors
did not receive any pension or retirement benefits as compensation for
their service as directors of the Fund.
(2) Ms. Cuocolo, who is an "interested person" of the Fund because of her
affiliation with State Street Bank and Trust Company, the parent company of
ADCM, the Fund's direct investment manager, did not receive any
compensation from the Fund for her services as a director during the fiscal
year ended October 31, 2001.
(3) The compensation listed for Mr. English is for his services as a director
from November 2000 until his death in March 2001.

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Set forth below is information with respect to persons who, to the knowledge
of the management of the Fund, owned beneficially more than 5% of the Fund's
outstanding shares as of January 23, 2002. The information is based on publicly
available Schedule 13D, 13G and 13F disclosures, that management is aware of,
filed with the Securities and Exchange Commission.

Name and Address Amount and Nature of Percent
Title or Class of Beneficial Owner Beneficial Ownership of Class
-------------- ---------------------------------------- ---------------------------- --------

Common Stock President and Fellows of Harvard College Has sole power to vote and 16.4%
c/o Harvard Management Company, Inc. dispose of 1,655,000 shares.
600 Atlantic Avenue
Boston, MA 02210
Common Stock City of London Investment Management Has sole power to vote and 9.1%
Company Limited dispose of 920,000 shares.
10 Eastcheap
London, England
United Kingdom, EC3M1LX

MISCELLANEOUS

Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph, by officers of the Fund or personnel of the
Administrator. The Fund has retained Georgeson Shareholder Communications Corp.
to assist in the proxy solicitation. The cost of their services is estimated at
US$5,000. The expenses connected with the solicitation of proxies including
proxies solicited by the Fund's officers or agents in person, by telephone or
by telegraph will be borne by the Fund. The Fund will reimburse banks, brokers,
and other persons holding the Fund's shares registered in their names or in the
names of their nominees for their expenses incurred in sending proxy material
to and obtaining proxies from the beneficial owners of such shares.

In the event that sufficient votes in favor of any proposal set forth in the
Notice of this meeting are not received by March 7, 2002, the persons named as
attorneys in the enclosed proxy may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of the holders of a majority of the shares present
in person or by proxy at the session of the meeting to be adjourned. The
persons named as proxies in the enclosed proxy will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
proposal for which further solicitation of proxies is to be made. They will
vote against any such adjournment those proxies required to be voted against
such proposal. The costs of any such additional solicitation and of any
adjourned session will be borne by the Fund.

STOCKHOLDER PROPOSALS

In order to submit a stockholder proposal to be considered for inclusion in
the Fund's proxy statement for the Fund's 2003 Annual Meeting of Stockholders,
stockholder proposals must be received by the Fund (addressed to The China
Fund, Inc., 225 Franklin Street, Boston, Massachusetts 02110) not later than
October 3, 2002. Any stockholder who desires to bring a proposal at the Fund's
2003 Annual Meeting of Stockholders without including such proposal in the
Fund's proxy statement, must deliver written notice thereof to the Secretary of
the Fund (addressed to The China Fund, Inc., 225 Franklin Street, Boston,
Massachusetts 02110), not before December 7, 2002 and not later than January 7,
2003.

By order of the Board of Directors,

/s/ ANN M. CASEY
ANN M. CASEY
Secretary

225 Franklin Street
Boston, Massachusetts
February 1, 2002