Edgar Filing: CHINA FUND INC

THE CHINA FUND, INC.

SEMI-ANNUAL REPORT

APRIL 30, 2002
(UNAUDITED)

THE CHINA FUND, INC.
TABLE OF CONTENTS

PAGE
----

Key Highlights 1
Asset Allocation 2
Chairman's Statement 3
Investment Managers' Statements 5
About the Portfolio Managers
Schedule of Investments 9
Financial Statements 14
Notes to Financial Statements 18
Report of Independent Auditors
Other Information 23
Dividends and Distributions; 25
Dividend Reinvestment
and Cash Purchase Plan

THE CHINA FUND, INC.
KEY HIGHLIGHTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

------------------------------------------------------------------------------
FUND DATA
------------------------------------------------------------------------------

NYSE STOCK SYMBOL CHN
------------------------------------------------------------------------------
LISTING DATE JULY 10, 1992
------------------------------------------------------------------------------
SHARES OUTSTANDING 10,073,173
------------------------------------------------------------------------------
TOTAL NET ASSETS (04/30/02) US$169.1 MILLION
------------------------------------------------------------------------------
NET ASSET VALUE (04/30/02) $16.79
------------------------------------------------------------------------------
MARKET PRICE (04/30/02) $14.87
------------------------------------------------------------------------------

-------------------------------------------------------------------------------
TOTAL RETURN
-------------------------------------------------------------------------------

PERFORMANCE AS OF
04/30/02: NET ASSET VALUE(1) MARKET PRICE
-------------------------------------------------------------------------------
6 MONTHS 28.60% 39.89%
-------------------------------------------------------------------------------
3-YEAR CUMULATIVE 46.23% 60.83%
-------------------------------------------------------------------------------
3-YEAR ANNUALIZED 13.51% 17.16%
-------------------------------------------------------------------------------
5-YEAR CUMULATIVE -2.50% 6.90%
-------------------------------------------------------------------------------
5-YEAR ANNUALIZED -0.51% 1.34%
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
DIVIDEND HISTORY
-------------------------------------------------------------------------------

RECORD DATE INCOME CAPITAL GAINS
-------------------------------------------------------------------------------
12/31/01 $0.1321 --
-------------------------------------------------------------------------------
12/31/99 $0.1110 --
-------------------------------------------------------------------------------
12/31/98 $0.0780 --
-------------------------------------------------------------------------------
12/31/97 -- $0.5003
-------------------------------------------------------------------------------
12/31/96 $0.0834 --
-------------------------------------------------------------------------------
12/29/95 $0.0910 --
-------------------------------------------------------------------------------
12/30/94 $0.0093 $0.6006
-------------------------------------------------------------------------------
12/31/93 $0.0853 $0.8250
-------------------------------------------------------------------------------
12/31/92 $0.0434 $0.0116
-------------------------------------------------------------------------------

(1) Total investment returns reflect changes in net asset value per share during
each period and assumes that dividends and capital gains distributions, if any,
were reinvested. The net asset value percentages are not an indication of the
performance of a shareholder's investment in the Fund, which is based on market
price. Total investment returns are historical and do not guarantee future
results.

THE CHINA FUND, INC.
ASSET ALLOCATION AS OF APRIL 30, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

---------------------------------------------------------------------------------
TEN LARGEST LISTED EQUITY INVESTMENTS*
---------------------------------------------------------------------------------

1. TCL International Holdings, Ltd. 6.6%
---------------------------------------------------------------------------------
2. Yanzhou Coal Mining Co. 4.5%
---------------------------------------------------------------------------------
3. Chunghwa Telecom Co., Ltd. 4.3%
---------------------------------------------------------------------------------
4. Taipei Bank 4.2%
---------------------------------------------------------------------------------
5. Phoenixtec Power Co., Ltd. 4.0%
---------------------------------------------------------------------------------
6. Zhejiang Expressway Co., Ltd. 3.4%
---------------------------------------------------------------------------------
7. Ho Tung Chemical, Corp. 2.8%
---------------------------------------------------------------------------------
8. Pacific Construction Co., Ltd. 2.8%
---------------------------------------------------------------------------------
9. Chinadotcom, Corp. 2.6%
---------------------------------------------------------------------------------
10. Synnex Technologies International, Corp. 2.6%
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
DIRECT INVESTMENTS*
---------------------------------------------------------------------------------

1. Kowloon Development Co., Ltd. 2.3%
---------------------------------------------------------------------------------
2. A-S China Plumbing Products, Ltd. 1.9%
---------------------------------------------------------------------------------
3. Moulin International Holding, Ltd. 1.2%
---------------------------------------------------------------------------------
4. New World Sun City, Ltd. 0.3%
---------------------------------------------------------------------------------

* Percentages based on net assets at April 30, 2002.

THE CHINA FUND, INC.
CHAIRMAN'S STATEMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Dear Stockholders:

I am pleased to present the semi-annual report of The China Fund, Inc. (the
"Fund") for the six months ended April 30, 2002. During this period the Fund's
Net Asset Value ("NAV") per share increased 28.6% (which reflects an adjustment
for the US$0.13 per share distribution paid to shareholders in January 2002) to
US$16.79 from US$13.19 and its market value increased by 39.9% to US$14.87 per
share from US$10.74 per share.

Global markets rebounded as U.S. consumer spending proved more resilient than
had been expected to the shock of the events of September 11th and subsequent
military operations in Afghanistan. The People's Republic of China and Hong Kong
stock markets, which had proved defensive in 2001 on China's relatively high
economic growth, were laggards in this rebound as investors sought markets which
were perceived to be more sensitive to a rebound in North American demand. The
Fund managed to capture part of this performance by our high exposure relative
to our peers in Taiwan (over 32% of the Fund throughout the period). We continue
to believe that there is excellent value to be found in Taiwanese companies
which concentrate on the domestic economy ("domestic" here defined as Taiwan and
China) rather than companies focusing on exports to the U.S. We believe in the
remainder of 2002 that investors may have to pare back over-sanguine
expectations about U.S. growth. This should increase interest among U.S.
investors in emerging markets, where they can invest in faster growth at lower
valuations than is available in their domestic market. Those economies with
large domestic economies such as China, whose growth is less synchronized with
demand in the U.S., should be prime beneficiaries of this fund flow.

The Fund continues to concentrate its efforts on entrepreneurial companies in
the private sector, rather than the state-owned enterprises ("SOEs") which
represent a declining part of the economy. While the risk in these individual
companies, which are often small and relatively young, is high, we believe that
a spread of such investments will provide superior returns to investment in
large cap SOEs, where management's goals often diverge from those of
shareholders. We think that a growing confidence on the part of Chinese
authorities born of mounting foreign exchange reserves, combined with a need to
attract foreign portfolio capital, could well lead to the introduction of "QDI"
and "QFI" systems later this year. "QDI" would allow a limited amount of capital
from "Qualified Domestic Investors" to invest in the Hong Kong market. "QFI"
would allow "Qualified Foreign Investors" access to the US$500 billion domestic
"A" share market. "QFI" would have the greater long-term significance in
boosting the range and scale of Chinese companies available for foreign
investment. However, "QDI" could have a short-term effect in boosting some of
the Hong Kong-listed companies with which domestic investors are most familiar.
Therefore our protestations of investing in the private sector notwithstanding,
investors may notice some tactical investment in some of the more attractive
SOEs to take advantage of the QDI announcement.

The managers of the unlisted portfolio of your Fund made their first investment
since taking over management, in a listed Hong Kong property developer which is
restructuring. The direct investment portfolio now represents 5.7% of the Fund's
assets. It is the Fund's intention to increase the weighting of direct
investments, as we believe that such investments will enhance the long-term
return for shareholders. This will be funded by reducing listed investments in
Hong Kong and Taiwan.

During the period, we established the web-site www.thechinafundinc.com. It is
part of your Board's commitment to keeping shareholders and advisers informed of
the progress of the Fund. It includes background information on the Fund,
performance data, managers' biographies, details of how to invest and contact
information. A document library includes copies of the listed investment
manager's monthly update and there are links to other websites holding
information on The China Fund, Inc. If you have any questions or comments about
the Fund, please contact us via the web-site or call (toll free) 1-888-CHN-CALL
(246-2255).

We thank you for your continued support.

Sincerely,

/s/ Alan Tremain
Alan Tremain
Chairman of the Board

THE CHINA FUND, INC.
INVESTMENT MANAGERS' STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REVIEW OF LISTED INVESTMENTS FOR THE SEMI-ANNUAL PERIOD ENDED
APRIL 30, 2002

MARKET REVIEW
Asian stock markets have seen a sea change in the six months ended April 30,
2002 as doubts grew about the pace of U.S. economic growth in the second half of
2001. This meant that stocks in the export-led economies of Taiwan and Korea
gave back some of their earlier gains, while money started to flow back to
China, a relative laggard this year in stock market performance terms. This
renewed interest is based on the resilience and size of China's domestic market,
as well as the potential pickup in international competitiveness that countries
with pegged currencies should enjoy as the U.S. dollar weakens. A weaker
currency against non-U.S. currencies may also be some slight help in alleviating
deflationary pressures in China. In the long-term, we still believe that the
renminbi will appreciate against the U.S. dollar, but no radical moves are
likely to be taken on the currency, or indeed any other sensitive matters, ahead
of the 16th party congress in October. Jiang Zemin's anointed successor as party
secretary, Hu Jin Tao, has now been introduced to his main counterparts in the
U.S. and Europe, but the leadership's summer deliberations by the seaside at
Beidaiho are still likely to be more fraught than normal.

China's economic growth accelerated to 7.6% in first quarter 2002 from 6.6% in
fourth quarter 2001 on good export growth and fixed asset investment. While a
skeptical approach to macro numbers from China is justified, the trend is clear
and the Q1 statistics for power generation (+9.4% year over year), a good proxy
for economic activity, tell the same story. Sustained trade surpluses and the
inflow of foreign direct investment have now boosted foreign exchange reserves
to US$223.5 billion and encouraged a more confident tone in official comments on
the economy.

Over the period, the Fund's net asset value increased 28.6%. This compares with
a 30.5% increase in the MSCI Golden Dragon Index over the same period. The best
performing markets were the Taiwan Weighted Index and the Hang Seng China
Enterprise Index, which rose during the period by 56% and 15.7%, respectively.
This strong performance in Taiwan was triggered by the prospects of a U.S.
economic recovery and a perception of Taiwan being more geared to U.S. demand.
Of the other Chinese markets, the small "B" share markets fell by 9.7% and the
large "A" share market, which is not yet open to foreign investors, declined by
3.6% due to uncertainty over plans for selling the state's holdings in the
listed companies.

INVESTMENT STRATEGY
The Fund was 98.4% invested based on net assets with holdings in 54 companies as
of April 30, 2002. Of the portfolio, 32.6% was invested in Taiwan, where
holdings are biased to "China plays" and companies focused on the domestic
market, rather than exporters. There was also 5.7% in direct investments on that
date.

We took advantage of a sell-down of "P" shares (private sector companies listed
in Hong Kong) to invest in WAH SANG GAS and EURO-ASIA, and add to the position
in CHINA RARE EARTH, a potential beneficiary of a recovery in the electronic
sector. We have increased the portfolio exposure to cyclical industries by
switching out of holdings

THE CHINA FUND, INC.
INVESTMENT MANAGERS' STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

REVIEW OF LISTED INVESTMENTS FOR THE SEMI-ANNUAL PERIOD ENDED
APRIL 30, 2002 (CONTINUED)

in Huaneng Power and Sinopec in favor of China's largest polyester company
SINOPEC YIZHENG CHEMICAL FIBRE. We have also added the new private-sector gas
and oil services company, GEOMAXIMA. In anticipation of QDI (the opening of the
Hong Kong market to qualified domestic Chinese investors), we have bought ANHUI
EXPRESSWAY, which is the type of small, cheap H-share which might appeal to
domestic investors. We have invested in entrepreneurial small cap stocks with
the purchase of MAINLAND HEADWEAR and the Shanghai-based cosmetics and spa chain
NATURAL BEAUTY. The main portfolio change in April of 2002 was a decision to buy
CHINA MOBILE. The listed manager has not invested in telecom stocks since taking
over management last year. However, we believe that pessimism on the sector has
now peaked and the stock of China's leader in mobile telephones has fallen to a
reasonable level; it will be a prime investment target as large institutional
funds increase their weightings in emerging markets. Among the small,
entrepreneurial companies, we have taken profits on Chaoda, Euro-Asia and Global
Biochem, shifting funds in the fast growing Singapore-listed pork processor,
PEOPLE'S FOOD, which should receive greater recognition when it lists on the
Hong Kong Stock Exchange. In Taiwan, we have switched out of notebook PC maker
Inventec in favor of the under-valued CHENG SHIN RUBBER, which is now the
leading company in China's tire market. We have added to our holdings in
Taiwan's leading logistics company SYNNEX, which is accelerating its expansion
on the mainland, and the autoparts maker TONG YANG, whose six plants on the
mainland have all now turned profitable. We closed out the New Taiwan dollar
hedge as the Yen has appeared to have stabilized against the U.S. dollar.

REVIEW OF DIRECT INVESTMENTS
China's economy remains strong, especially relative to other Asian countries.
Its much anticipated entry into the World Trade Organization ("WTO") was
confirmed at the Doha meeting in late 2001. China's challenge is to meet the
requirements of being a WTO member without causing too much shock to its
economy. Fortunately, China is becoming a highly efficient manufacturer. Costs
are falling with abundant labor migrating from rural areas. Fierce domestic
competition ensures falling component prices. More and more private sector
enterprises are emerging as viable direct investment targets in line with the
growth of the Chinese economy.

Since our last report, the Fund has added one new investment to its Direct
Investments portfolio. Kowloon Development Company Limited is a Hong Kong real
estate developer. The new management and controlling shareholder intends to grow
the company into a major real estate company in Hong Kong. It is expected that
the Fund will make another investment of US$3 million in an unlisted leasing
company based in Hong Kong by the end of May.

REVIEW OF DIRECT INVESTMENTS (CONTINUED)

A description of the Fund's Direct Investment portfolio as of April 30, 2002 is
set out below:

NEW WORLD SUN CITY LIMITED ("NWSC")
NWSC was established to develop Dongguan New World Gardens (the "Project") in
Dongguan, Guangdong Province. The Project involves the development and sale of
detached houses, semi-detached houses, low-rise and high-rise apartments and
93,000 square meters of commercial and retail space on a 466,666 square meter
site near Dongguan. The Project has a total permissible floor area of
approximately 1.2 million square meters. NWSC is close to completing the sale of
the units of the Project and is planning new developments near the Project. The
Fund has received interest and repayments on its investment, totaling US$3.91
million or 107% of its original investment cost.

A-S CHINA PLUMBING PRODUCTS LIMITED ("ASPPL")
ASPPL was established in 1994 to produce and distribute a complete line of
sanitary ware products through the acquisition of seven joint ventures in China.
The company is a subsidiary of American Standard, Inc. ("ASI"), a U.S. based
international manufacturer of plumbing products, air conditioners, automobile
and medical systems products. ASI has granted to ASPPL the exclusive right to
license trademarks owned by ASI for plumbing products in China. The Fund has
made a provision of US$0.98 million against the carrying value of this
investment to better reflect its current value.

MOULIN INTERNATIONAL HOLDINGS LIMITED ("MIH")
MIH is engaged in the manufacture, distribution and retailing of optical frames.
The company is listed on the Hong Kong Stock Exchange. It is one of the largest
optical frame manufacturers and distributors in the world. Customers of MIH are
primarily authorized licensees of designer brands, leading distributors and
retail chains. In recent years, the company acquired a number of optical frame
distributors in Europe in order to increase and strengthen its distribution
business.

KOWLOON DEVELOPMENT COMPANY LIMITED ("KDCL")
KDCL engages principally in property development and management in Hong Kong.
The company is listed on the Hong Kong Stock Exchange. The Fund purchased its
stake directly from the new controlling shareholder. The new management has
considerable experience in property development in Hong Kong and Macau. It
intends to take advantage of the current depressed Hong Kong property market to
increase the size of its property holdings.

REVIEW OF DIRECT INVESTMENTS (CONTINUED)

SIU FUNG CERAMICS CONCEPT COMPANY LIMITED ("SIU FUNG")
In December 1996, the Fund made a full provision against the cost of its
investment in Siu Fung, which owns a group of joint ventures in China that
engaged in the manufacture and sale of ceramics products, including tiles and
sanitary ware. The company is currently under compulsory liquidation as a result
of winding-up orders granted by the High Court of Hong Kong Special
Administrative Region on May 9, 2000.

Sincerely,
Chris Ruffle, Listed Investment Manager, Martin Currie Inc.
KOH Kuek Chiang, Direct Investment Manager, Asian Direct Capital Management

LISTED INVESTMENT MANAGER
Mr. Chris Ruffle serves as the portfolio manager for the Fund's portfolio of
listed securities. Mr. Ruffle joined Martin Currie in 1994. He is a Chinese and
Taiwanese equity specialist with over 13 years investment experience in Asia.
Fluent in Mandarin and Japanese, Mr. Ruffle has worked in the Far East since
1983. He worked originally in Beijing and Shanghai and then in Australia for a
metal trading company. He then moved to Warburg Securities in 1987 as an analyst
in Tokyo, before establishing Warburg's office in Taiwan. Mr. Ruffle also
manages The Taiwan Opportunities Fund and The China Heartland Fund.

DIRECT INVESTMENT MANAGER
Mr. KOH Kuek Chiang is the Executive Director of Asian Direct Capital Management
and is the portfolio manager of the Fund's portfolio of direct securities. Mr.
Koh joined ADCM in 1998. Mr. Koh has over ten years of private equity investment
experience in the U.S., Europe and Asia working for the Government of Singapore
Investment Corporation, Union Bank of Switzerland and private interests. His
investment experience covers a wide range of industries, including
telecommunications equipment, biotechnology, media, financial services and basic
materials. Mr. Koh graduated with an engineering degree from the University of
Western Australia and has a post-graduate Diploma in Business Administration
from the National University of Singapore. He is a Chartered Financial Analyst
and is fluent in English and Mandarin.

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
APRIL 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ------ --------------

COMMON STOCK AND OTHER EQUITY INTERESTS
CHINA -- SHANGHAI "B" SHARES
CONSUMER STAPLES -- (2.2%)
Shanghai Friendship Group Co., Inc. ................... 3,530,000 $ 3,717,090
------------
INDUSTRIALS -- (0.9%)
Shanghai Matsuoka, Co. ................................ 981,850 1,561,142
------------
TOTAL CHINA -- SHANGHAI "B" SHARES -- (Cost
$5,045,343) 3.1% 5,278,232
--- ------------
CHINA -- SHENZHEN "B" SHARES
INDUSTRIALS -- (2.0%)
Luthai Textile Co., Ltd. .............................. 1,999,869 2,289,873
Weifu High-Technology Co., Ltd. ....................... 1,397,550 1,039,330
------------
3,329,203
------------
TOTAL CHINA -- SHENZHEN "B" SHARES -- (Cost
$3,116,314) 2.0% 3,329,203
--- ------------
TOTAL CHINA -- (Cost $8,161,657) 5.1% 8,607,435
--- ------------
HONG KONG
CONSUMER DISCRETIONARY -- (5.4%)
Brilliance China Automotive Holdings, Ltd. ............ 24,300,000 4,175,124
China Travel International Investment Hong Kong,
Ltd. ................................................ 7,218,000 1,443,776
Shangri-La Asia, Ltd. ................................. 3,600,000 3,461,960
------------
9,080,860
------------
CONSUMER STAPLES -- (3.7%)
Chaoda Modern Agriculture (Holdings), Ltd. ............ 8,500,000 3,078,901
Euro-Asia Agricultural (Holdings) Co., Ltd.*........... 4,900,000 1,664,946
Mainland Headwear Holding, Ltd. ....................... 5,000,000 1,554,677
------------
6,298,524
------------

See notes to financial statements.
9

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ------ --------------

COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
HONG KONG (CONTINUED)
FINANCIALS -- (1.0%)
China Overseas Land & Investment, Ltd. ................ 14,200,000 $ 1,711,491
------------
HEALTH CARE -- (2.9%)
Global Bio-chem Technology Group Co., Ltd. ............ 4,700,000 1,657,253
LifeTec Group, Ltd.*................................... 65,346,000 1,499,790
Natural Beauty Bio-Technology, Ltd. ................... 13,200,000 1,827,915
------------
4,984,958
------------
INDUSTRIALS -- (0.7%)
Chen Hsong Holding, Ltd. .............................. 6,630,000 1,181,644
------------
INFORMATION TECHNOLOGY -- (12.7%)
Arcontech, Corp. ...................................... 9,000,000 1,396,324
Automated Systems Holdings, Ltd. ...................... 368,000 103,807
Chinadotcom, Corp.*.................................... 1,655,600 4,387,340
Jackin International, Ltd.*............................ 5,000,000 179,509
Sunway International Holdings, Ltd.*................... 12,664,000 617,039
TCL International Holdings, Ltd. ...................... 37,318,000 11,244,613
TPV Technology, Ltd. .................................. 8,764,000 3,511,646
------------
21,440,278
------------
MATERIALS -- (4.1%)
China Rare Earth Holdings, Ltd. ....................... 12,600,000 3,352,331
Fountain Set (Holdings), Ltd. ......................... 15,250,000 3,656,535
------------
7,008,866
------------
TELECOMMUNICATIONS -- (2.5%)
Asia Satellite Telecommunications Holdings, Ltd. ...... 1,693,000 2,615,787
China Mobile (Hong Kong), Ltd.*........................ 480,000 1,572,499
------------
4,188,286
------------
UTILITIES -- (2.5%)
Geomaxima Holdings, Ltd. .............................. 12,400,000 1,939,723
Wah Sang Gas Holdings, Ltd.*........................... 16,998,000 2,288,471
------------
4,228,194
------------
TOTAL HONG KONG -- (Cost $51,574,366) 35.5% 60,123,101
---- ------------

See notes to financial statements.
10

NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ------ --------------

COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
HONG KONG -- "H" SHARES
ENERGY -- (4.5%)
Yanzhou Coal Mining Co. ............................... 19,000,000 $ 7,613,107
------------
INDUSTRIALS -- (1.5%)
Sinopec Yizheng Chemical Fibre Co., Ltd. .............. 14,694,000 2,505,820
------------
UTILITIES -- (5.8%)
Anhui Expressway Co., Ltd. ............................ 6,950,000 1,612,953
Beijing Capital International Airport Co., Ltd. ....... 10,384,000 2,476,486
Zhejiang Expressway Co., Ltd. ......................... 19,814,000 5,716,273
------------
9,805,712
------------
TOTAL HONG KONG -- "H" SHARES -- (Cost
$15,561,170) 11.8% 19,924,639
---- ------------
TOTAL HONG KONG (INCLUDING "H" SHARES) -- (Cost $67,135,536)
47.3% 80,047,740
---- ------------
SINGAPORE
CONSUMER STAPLES -- (2.2%)
Want Want Holdings, Ltd. .............................. 1,900,000 3,667,000
------------
DIVERSIFIED -- (0.3%)
Asia Dekor Holdings, Ltd. ............................. 7,374,000 589,920
------------
FOODS -- (1.5%)
People's Food Holdings, Ltd. .......................... 4,400,000 2,476,206
------------
TOTAL SINGAPORE -- (Cost 5,959,483) 4.0% 6,733,126
--- ------------
TAIWAN
CONSUMER DISCRETIONARY -- (6.1%)
Pacific Construction Co., Ltd. ........................ 32,841,000 4,717,283
Synnex Technologies International, Corp. .............. 3,084,000 4,296,429
Tainan Enterprises Co., Ltd. .......................... 1,000,000 1,246,034
------------
10,259,746
------------

See notes to financial statements.
11

NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ------ --------------

COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
TAIWAN (CONTINUED)
CONSUMER STAPLES -- (0.9%)
Lian Hwa Foods, Corp. ................................. 3,392,000 $ 1,624,090
------------
FINANCIALS -- (8.6%)
Polaris Securities Co., Ltd. .......................... 8,042,000 4,012,882
Sinopac Holdings Co.*.................................. 7,186,991 3,432,362
Taipei Bank............................................ 10,115,400 7,060,648
------------
14,505,892
------------
INDUSTRIALS -- (6.4%)
Cheng Shin Rubber Industry Co., Ltd. .................. 2,000,000 1,517,162
China Synthetic Rubber, Corp. ......................... 9,919,440 3,604,988
Choice Lithograph, Inc. ............................... 6,273,000 3,546,316
Tong Yang Industry Co., Ltd.*.......................... 3,532,000 2,129,184
------------
10,797,650
------------
INFORMATION TECHNOLOGY -- (7.2%)
Ability Enterprise Co., Ltd. .......................... 1,700,000 1,632,824
Advantech Co., Ltd. ................................... 959,100 2,434,404
Elan Microelectronics, Corp. .......................... 1,000,000 1,263,340
Phoenixtec Power Co., Ltd. ............................ 7,595,000 6,834,843
------------
12,165,411
------------
MATERIALS -- (2.8%)
Ho Tung Chemical, Corp. ............................... 7,732,950 4,728,542
------------
TELECOMMUNICATIONS -- (4.3%)
Chunghwa Telecom Co., Ltd. ............................ 4,908,000 7,290,510
------------
TOTAL TAIWAN -- (Cost $48,232,087) 36.3% 61,371,841
---- ------------
TOTAL COMMON STOCK AND OTHER
EQUITY INTERESTS -- (Cost $129,488,763) 92.7% 156,760,142
---- ------------

See notes to financial statements.
12

NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ------ --------------

DIRECT INVESTMENTS
MANUFACTURING, DISTRIBUTION AND RETAIL -- (1.2%)
Moulin International Holding, Ltd. (acquired
8/17/99)(1).......................................... 2,000,000 $ 2,003,922
------------
REAL ESTATE -- (2.6%)
Kowloon Development Co., Ltd. (acquired 3/1/02)........ 6,520,000 3,908,296
New World Sun City, Ltd. (acquired 12/12/92)(1)........ 83 449,421
------------
4,357,717
------------
SANITARY WARE -- (1.9%)
A-S China Plumbing Products, Ltd. (acquired
4/14/94)(1).......................................... 450 3,200,000
------------
TOTAL DIRECT INVESTMENTS -- (Cost $17,635,055) 5.7% 9,561,639
------------
TOTAL INVESTMENTS -- (Cost $147,123,818) (Note E) 98.4% 166,321,781
------------
OTHER ASSETS AND LIABILITIES 1.6% 2,812,887
------------
NET ASSETS 100.0% $169,134,668
===== ============

Notes to Schedule of Investments

* Denotes non-income producing security

(1) 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 initially valued at acquisition cost. These
direct investments are valued at fair value as determined by the Board of
Directors as discussed in Note A and B to the Financial Statements.
FORWARD FOREIGN CURRENCY CONTRACTS

CONTRACT TO SELL

UNDERLYING FACE UNREALIZED
AMOUNT OF APPRECIATION
CONTRACT DATE CURRENCY UNITS VALUE (DEPRECIATION)*
------------- -------- ----- --------------- ---------------

6/17/02 New Taiwan Dollar 964,748,270 $27,431,000 $(386,174)
=========
CONTRACT TO BUY

6/17/02 New Taiwan Dollar 964,748,270 $27,923,249 $(106,076)
=========

* Does not include foreign currency spot contracts sold with unrealized
appreciation of $1,738 or foreign currency spot contracts purchased with
unrealized depreciation of $3,692.

See notes to financial statements.
13

THE CHINA FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

ASSETS
Investments in listed investments, at value (cost
$129,488,763) (Note A)................................. $156,760,142
Investments in direct investments, at value (cost
$17,635,055) (Note A and B)............................ 9,561,639
Cash...................................................... 244,257
Foreign currency, at value (cost $1,917,342).............. 1,918,237
Receivable for investments sold........................... 1,853,175
Dividends and interest receivable......................... 269,894
Receivable for currency sold.............................. 1,738
------------
TOTAL ASSETS................................................ 170,609,082
------------
LIABILITIES
Payable for investments purchased......................... 774,476
Payable for currency purchased............................ 495,942
Investment management fee payable (Note C)................ 135,108
Administration, custodian and transfer agent fees
payable................................................ 13,061
Accrued expenses and other liabilities.................... 55,827
------------
TOTAL LIABILITIES........................................... 1,474,414
------------
TOTAL NET ASSETS............................................ $169,134,668
============
COMPOSITION OF NET ASSETS:
Common stock, at par value (Note D)....................... $ 100,732
Capital paid in excess of par (Note D).................... 147,069,022
Distributions in excess of net investment income.......... (863,101)
Accumulated net realized gain on investments and foreign
currency transactions.................................. 4,119,635
Net unrealized appreciation on investments, options and
foreign currency transactions.......................... 18,708,380
------------
TOTAL NET ASSETS............................................ $169,134,668
============
NET ASSET VALUE PER SHARE................................... $16.79
======
($169,134,668/10,073,173 shares of common stock
outstanding)

See notes to financial statements.
14

THE CHINA FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividend income -- listed investments (net of foreign tax
withholding $181)...................................... $ 461,568
Interest income -- listed and short-term investments...... 25,320
Interest income -- direct investments..................... 67,585
-----------
TOTAL INVESTMENT INCOME................................ 554,473
-----------
EXPENSES:
Investment Management fees (Note C)....................... 670,025
Custody fees and expenses................................. 178,252
Directors' fees and expenses (Note C)..................... 156,850
Legal fees................................................ 128,638
Administration fees and expenses.......................... 114,938
Insurance expense......................................... 42,118
Printing and postage expense.............................. 38,861
Audit and tax service fees................................ 36,378
Stock Exchange Listing Fee................................ 17,649
Transfer Agent fees and expenses.......................... 12,384
Shareholder services fees................................. 4,841
Miscellaneous expenses.................................... 16,640
-----------
TOTAL EXPENSES......................................... 1,417,574
-----------
NET INVESTMENT LOSS......................................... (863,101)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gain on listed investment transactions....... 5,377,773
Net realized loss on foreign currency transactions........ (2,838)
-----------
5,374,935
-----------
Net change in unrealized appreciation (depreciation) on
listed investments and foreign currency transactions... 33,102,030
Net change in unrealized appreciation (depreciation) on
direct investments and options......................... (60,600)
-----------
33,041,430
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS..................................... 38,416,365
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $37,553,264
===========

See notes to financial statements.
15

THE CHINA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 2002 OCTOBER 31, 2001
---------------- ----------------
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).............................. $ (863,101) $ 1,409,470
Net realized gain on investments and foreign currency
transactions........................................... 5,374,935 5,115,719
Net change in unrealized appreciation on investments and
foreign currency translations.......................... 33,041,430 1,766,976
------------ ------------
Net increase in net assets from operations................ 37,553,264 8,292,165
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (1,330,135) --
------------ ------------
Total dividends and distributions to shareholders......... (1,330,135) --
------------ ------------
NET INCREASE IN NET ASSETS.................................. 36,223,129 8,292,165
------------ ------------
NET ASSETS:
Beginning of period......................................... 132,911,539 124,619,374
------------ ------------
End of period, including undistributed net investment income
(loss) of $(863,101) and $1,330,135, respectively......... $169,134,668 $132,911,539
============ ============

See notes to financial statements.
16

THE CHINA FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING FOR PERIOD(S) INDICATED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -----------------------------------------------------
2002 2001 2000 1999 1998 1997
----------- -------- -------- -------- -------- --------
(UNAUDITED)

PER SHARE OPERATION PERFORMANCE(1)
Net asset value, beginning of
period........................... $ 13.19 $ 12.37 $ 12.74 $ 10.84 $ 16.97 $ 13.24
Net investment income (loss)..... (0.35) 0.14 (0.03) 0.12 0.08(2) (0.02)(2)
Net realized and unrealized gain
(loss) on investment and
foreign currency
transactions................... 4.08 0.68 (0.23) 1.86 (5.71) 3.83
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations....................... 3.73 0.82 (0.26) 1.98 (5.63) 3.81
-------- -------- -------- -------- -------- --------
Less distributions:
Dividend from net investment
income......................... (0.13) 0.00 (0.11) (0.08) 0.00 (0.08)
Distributions from net realized
capital gains.................. 0.00 0.00 0.00 0.00 (0.50) 0.00
-------- -------- -------- -------- -------- --------
Total distributions................ (0.13) 0.00 (0.11) (0.08) (0.50) (0.08)
-------- -------- -------- -------- -------- --------
Net asset value, end of period..... $ 16.79 $ 13.19 $ 12.37 $ 12.74 $ 10.84 $ 16.97
======== ======== ======== ======== ======== ========
Per share market value, end of
period........................... $ 14.87 $ 10.74 $ 8.94 $ 9.94 $ 8.75 $ 13.31
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN (BASED ON
MARKET VALUE).................... 39.89% 20.13% (9.14)% 14.65% (31.98)% 13.88%
======== ======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(000's).......................... $169,135 $132,912 $124,619 $128,303 $116,891 $184,035
Ratio of expenses to average net
assets........................... 1.85% 2.39% 2.12% 2.28% 2.22%(2) 2.15%(2)
Ratio of net investment income
(loss) to average net assets..... (1.13)% 1.09% (0.21)% 0.95% 0.68% (0.11)%
Portfolio turnover rate............ 36% 115% 108% 75% 24% 39%

(1) Based on average shares outstanding during the period.
(2) The ratios of expenses to average net assets and the net investment income
(loss) per share is after the waiver of a portion of the fee by HSBC
Management (Note C). Had HSBC Management not waived these fees, the ratio of
expenses to average net assets and the net investment income (loss) per
share would have been as follows: For the year ended October 31, 1998, 2.33%
and $0.07, respectively and for the year ended October 31, 1997, 2.25% and
$(0.04), respectively.

See notes to financial statements.
17

THE CHINA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The China Fund, Inc. (the "Fund") was incorporated under the laws of the State
of Maryland on April 28, 1992 and is a non-diversified, closed-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is long-term capital appreciation
through investments in the equity securities of companies engaged in a
substantial amount of business in the People's Republic of China. The following
is a summary of significant accounting policies followed by the Fund in the
preparation of its financial statements.

USE OF ESTIMATES: The preparation of financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses for the period. Actual results could differ from these
estimates. The significant estimates made as of, and for six months ended, April
30, 2002 relate to the valuation of the Fund's Direct Investments, as further
discussed below and in Note B.

SECURITY VALUATION: 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. 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 in
good faith at fair value using methods determined by the Fund's Board of
Directors. Direct Investments are valued at fair value as determined by the
Fund's Board of Directors based on advice from the Direct Investment Manager.
The Direct Investment's original cost is considered to be fair value unless the
Fund's Board of Directors, based on such advice, concludes there has been a
material change of a long-term nature and sufficient reliable information is
available to revalue these investments.

FOREIGN CURRENCY TRANSLATIONS: The records of the Fund are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the current exchange rates. Purchases and sales
of investment securities and income and expenses are translated on the
respective dates of such transactions. Net realized gains and losses on foreign
currency transactions represent net gains and losses from the disposition of
foreign currencies, currency gains and losses realized between the trade dates
and settlement dates of security transactions, and the difference between the
amount of net investment income accrued and the U.S. dollar amount actually
received. The effects of changes in foreign currency exchange rates on
investments in securities are not segregated in the Statement of Operations from
the effects of changes in market prices of those securities, but are included in
realized and unrealized gain or loss on investments.

OPTIONS CONTRACTS: The Fund may purchase and write (sell) call options and put
options provided the transactions are for hedging purposes and the initial
margin and premiums do not exceed 5% of total assets.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Option contracts are valued daily and unrealized gains or losses are recorded
based upon the last sales price on the principal exchange on which the options
are traded. The Fund will realize a gain or loss upon the expiration or closing
of the option contract. When an option is exercised, the proceeds on sales of
the underlying security for a written call option, the purchase cost of the
security for a written put option, or the cost of the security for a purchased
put or call option is adjusted by the amount of premium received or paid.

The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. Risks may also arise from an illiquid secondary market or from the
inability of counterparties to meet the terms of the contract.

SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded
as of the trade date. Realized gains and losses from securities sold are
recorded on the identified cost basis. Dividend income is recorded on the
ex-dividend date, or, in the case of dividend income on foreign securities, on
the ex-dividend date or when the Fund becomes aware of its declaration. Interest
income is recorded on the accrual basis. All premiums and discounts are
amortized/accreted for both financial reporting and federal income tax purposes.

DIVIDENDS AND DISTRIBUTIONS: The Fund intends to distribute to its
stockholders, at least annually, all of its net investment income and any net
realized capital gains. Income and capital gains distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of foreign currency transactions, losses deferred due to wash sales
and holdings in passive foreign investment companies.

FEDERAL INCOME TAXES: The Fund has qualified and intends to qualify in the
future as a regulated investment company by complying with the provisions of the
Internal Revenue Code available to certain investment companies, including
making distributions of taxable income and capital gains sufficient to relieve
it from all, or substantially all, federal income and excise taxes.

NOTE B -- VALUATION OF DIRECT INVESTMENTS
At April 30, 2002, Direct Investments amounting to $5,653,344 (3.3% of net
assets) have been valued at fair value as determined by the Fund's Board of
Directors in the absence of readily ascertainable market values. The remaining
Direct Investments are being valued at readily available market prices (See Note
A -- Security Valuation). The procedures applied by the Fund's Board of
Directors in arriving at its estimate of value of securities without readily
available market values comply with the Fund's policies for valuing Direct
Investments at original cost unless the Fund's Board of Directors, based on
advice from the Direct Investment Manager, concludes that there has been a
material change of a long-term nature and sufficient reliable information is
available to revalue these investments. Determination of fair values involves
subjective judgment and, because of the inherent uncertainty of valuation, the
Fund's Board of Directors' estimated values may differ significantly from the
values that would have been used had a ready market for the securities existed,
and the differences could be material.

NOTE C -- ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Martin Currie Inc. ("Martin Currie") is the manager of the Fund's Listed Assets,
and is paid a fee, computed weekly and payable monthly, at the following annual
rates: 1.00% of the first US$25 million of the Fund's average weekly net assets
invested in Listed Assets; 0.90% of the next US$25 million of the Fund's average
weekly net assets invested in Listed Assets; 0.70% of the next US$25 million of
the Fund's average weekly net assets invested in Listed Assets; and 0.50% of the
Fund's average weekly net assets invested in Listed Assets in excess of US$75
million.

Asian Direct Capital Management ("ADCM") is the manager of the Fund's direct
investments and is entitled to a fee, computed weekly and payable monthly at an
annual rate equal to the greater of $300,000 or 2.2% of the average weekly value
of the net assets of the Fund invested in direct investments.

No director, officer or employee of Martin Currie or ADCM or any affiliates of
those entities will receive any compensation from the Fund for serving as an
officer or director of the Fund. The Fund pays the Chairman of the Board and
each of the directors (who is not a director, officer or employee of Martin
Currie or ADCM or any affiliate thereof) an annual fee of $27,500 and $10,000,
respectively, plus $2,000 for each Board of Directors' meeting or Audit
Committee meeting attended. In addition, the Fund will reimburse each of the
directors for travel and out-of-pocket expenses incurred in connection with
attending Board of Directors' meetings.

State Street Bank and Trust Company ("State Street") provides, or arranges for
the provision of certain administrative and accounting services for the Fund,
including maintaining the books and records of the Fund, and preparing certain
reports and other documents required by federal and/or state laws and
regulations. Prior to April 1, 2002 the Fund paid State Street a fee at the
annual rate of 0.14% of the Fund's average daily net assets up to $150 million,
0.12% of the next $150 million, and 0.07% of those assets in excess of $300
million, subject to certain minimum requirements. Effective April 1, 2002 the
Fund approved an increase in the administration fees to an annual rate of 0.18%
of the Fund's average daily net assets up to $150 million, 0.16% of the next
$150 million, and 0.11% of those assets in excess of $300 million, subject to
certain minimum requirements.

State Street also serves as the Fund's custodian. Fees are paid by the Fund
monthly for custody services rendered by State Street are based upon assets of
the Fund and on transactions entered into by the Fund during the period and are
included in the Statement of Operations.

NOTE D -- CAPITAL STOCK
The Board of Directors of the Fund has approved a share repurchase plan. Under
the program, the Fund will repurchase shares at management's discretion at times
when it considers the repurchase to be consistent with the objectives of the
program. For the six months ended April 30, 2002, the Fund did not participate
in this program.

NOTE E -- INVESTMENT TRANSACTIONS
For the six months ended April 30, 2002, the Fund's cost of purchases and
proceeds from sales of investment securities, other than short-term securities,
were $53,755,032 and $51,824,019, respectively. At April 30, 2002, the cost of
investments for federal income tax purposes was $147,123,818. Gross unrealized
appreciation of investments was $32,521,506, while gross unrealized depreciation
of investments was $13,323,542, resulting in

net unrealized appreciation of investments of $19,197,964. In addition, as of
October 31, 2001, the Fund had a capital loss carryforward of $1,255,301 for
Federal income tax purposes, which may be utilized to offset future capital
gains through October 31, 2008.

NOTE F -- INVESTMENTS IN CHINA
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.

NOTE G -- OPTIONS
For the six months ended April 30, 2002, the following reflects the written
option activity:

CALL OPTIONS WRITTEN
------------------------------
NUMBER OF CONTRACTS PREMIUM
------------------- -------

Balance as of October 31, 2001............................. 80 $ --
Written.................................................... -- --
Closed..................................................... -- --
-- ------
Outstanding as of April 30, 2002........................... 80 $
== ======

NOTE H -- RESULTS OF ANNUAL STOCKHOLDER MEETING

1.)ELECTION OF CLASS II DIRECTOR -- The stockholders of the Fund elected
Kathleen Cuocolo to the Board of Directors to hold office until the Annual
Meeting of Stockholders held in 2004.

FOR WITHHELD AUTHORITY
------------- ------------------

Kathleen Cuocolo............................... 6,429,999.073 1,608,516.958

ELECTION OF CLASS III DIRECTORS -- The stockholders of the Fund elected Joe
O. Rogers, Alan Tremain and Nigel S. Tulloch to the Board of Directors to
hold office until the Annual Meeting of Stockholders held in 2005.

FOR WITHHELD AUTHORITY
------------- ------------------

Joe O. Rogers.................................. 5,682,462.803 2,356,053.228
Alan Tremain................................... 5,681,171.697 2,357,344.334
Nigel S. Tulloch............................... 5,682,462.803 2,256,053.228

THE CHINA FUND, INC.
OTHER INFORMATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

DIRECT INVESTMENT MANAGER

At the Stockholders Meeting, held June 15, 2001, the stockholders approved the
appointment of ADCM as the new manager of the Fund's direct investments. ADCM
has the responsibility for management of the Fund's existing direct investments
and for making new direct investments on behalf of the Fund. ADCM was
established in 1997 as part of State Street Global Advisers, the investment
management division of State Street Corporation.

LISTED INVESTMENT MANAGEMENT

At the Stockholders Meeting held June 15, 2001, the stockholders approved the
appointment of Martin Currie Inc. as the new manager of the Fund's listed
investments. Martin Currie Inc. was established in 1978 and is a wholly owned
subsidiary of Martin Currie Ltd.

BYLAW AMENDMENTS

On September 26, 2001, the Board of Directors approved an amendment to the
Fund's Bylaws to set forth provisions requiring a majority of stockholders to
request in writing a special meeting of the stockholders. On this date, the
Board of Directors also approved an amendment to the Fund's Bylaws to set forth
provisions allowing for the Board of Directors to elect a successor to fill a
vacancy on the Board for the remainder of the full term of the class of Director
in which the vacancy occurred.

The Fund's special meeting Bylaw provisions provide that, special meetings of
stockholders shall also be called by the Secretary or the Board of Directors
upon receipt of the request in writing signed by stockholders holding not less
than a majority of the votes entitled to be cast thereat. Such request shall
state the purpose or purposes of the proposed meeting and the matters proposed
to be acted on at such proposed meeting. The Fund's Directors' vacancy Bylaw
provisions provide that, in case of any vacancy in the Board of Directors
through death, resignation or other cause, other than an increase in the number
of Directors, subject to the provisions of law, a majority of the remaining
Directors, although a majority is less than a quorum, by an affirmative vote,
may elect a successor to hold office for the remainder of the full term of the
class of Directors in which the vacancy occurred or until his successor is
chosen and qualified.

THE CHINA FUND, INC.
OTHER INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
PRIVACY NOTICE

The China Fund, Inc. collects nonpublic personal information about its
shareholders from the following sources:

[ ] Information it receives from shareholders on applications or other
forms; and

[ ] Information about shareholder transactions with the Fund.

THE FUND'S POLICY IS TO NOT DISCLOSE NONPUBLIC PERSONAL INFORMATION ABOUT ITS
SHAREHOLDERS TO NONAFFILIATED THIRD PARTIES (other than disclosures permitted by
law).

The Fund restricts access to nonpublic personal information about its
shareholders to those agents of the Fund who needs to know that information to
provide products or services to shareholders. The Fund maintains physical,
electronic and procedural safeguards that comply with federal standards to guard
its shareholders' nonpublic personal information.
--------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS;
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

The Fund will distribute to stockholders, at least annually, substantially all
of its net investment income from dividends and interest earnings and expects to
distribute any net realized capital gains annually. Pursuant to the Dividend
Reinvestment and Cash Purchase Plan (the "Plan"), adopted by the Fund, each
stockholder will be deemed to have elected, unless State Street Bank and Trust
Company, the Plan Agent, is otherwise instructed by the stockholder in writing,
to have all distributions automatically reinvested by the Plan Agent in Fund
shares pursuant to the Plan. Stockholders who do not participate in the Plan
will receive all distributions in cash paid by check in U.S. dollars mailed
directly to the stockholder by State Street Bank and Trust Company, as paying
agent. Stockholders who do not wish to have distributions automatically
reinvested should notify the Fund, c/o Plan Agent for The China Fund, Inc. at
P.O. Box 8200, Boston, Massachusetts 02266-8200.

The Plan Agent will serve as agent for the stockholders in administering the
Plan. If the Directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash, as
stockholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive Common Stock, to be issued by the
Fund. If the market price per share on the valuation date equals or exceeds net
asset value per share on that date, the Fund will issue new shares to
participants at net asset value or, if the net asset value is less than 95% of
the market price on the valuation date, then at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a trading day on the exchange on which the Fund's shares are then
listed, the next preceding trading day. If net asset value exceeds the market
price of Fund shares at such time, participants in the Plan will be deemed to
have elected to receive shares of stock from the Fund, valued at market price on
the valuation date. If the Fund should declare a dividend or capital gains
distribution payable only in cash, the Plan Agent will, as agent for the
participants, buy Fund shares in the open market, on the New York Stock Exchange
or elsewhere, with the cash in respect of such dividend or distribution, for the
participant's account on, or shortly after, the payment date.

Participants in the Plan have the option of making additional payments to the
Plan Agent, annually, in any amount from $100 to $3,000 for investment in the
Fund's Common Stock. The Plan Agent will use all funds received from
participants (as well as any dividends and capital gains distributions received
in cash) to purchase Fund shares in the open market on or about January 15 of
each year. Any voluntary cash payments received more than thirty days prior to
such date will be returned by the Plan Agent, and interest will not be paid on
any uninvested cash payments. To avoid unnecessary cash accumulations, and also
to allow ample time for receipt and processing by the Plan Agent, it is
suggested that participants send in voluntary cash payments to be received by
the Plan Agent approximately ten days before January 15. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.

The Plan Agent maintains all stockholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by stockholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each stockholder's proxy will include those
shares purchased pursuant to the Plan.

DIVIDENDS AND DISTRIBUTIONS;
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

In the case of stockholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
stockholder as representing the total amount registered in the stockholder's
name and held for the account of beneficial owners who are participating in the
Plan.

There is no charge to participants for reinvesting dividends or capital gains
distributions. The Plan Agent's fees for the handling of the reinvestment of
dividends and distributions will be paid by the Fund. However, each
participant's account will be charged a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions. A participant
will also pay brokerage commissions incurred in purchases from voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.

The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable on such dividends and
distributions.

Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payment made and any dividend or distribution paid subsequent to
notice of the change sent to all shareholders at least 90 days before the record
date for such dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days' written notice to all
shareholders. All correspondence concerning the Plan should be directed to the
Plan Agent for The China Fund, Inc. at P.O. Box 8200, Boston, Massachusetts
02266-8200.

THE CHINA FUND, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

UNITED STATES ADDRESS
The China Fund, Inc.
225 Franklin Street
Boston, MA 02111
1-888-CHN-CALL (246-2255)

DIRECTORS AND OFFICERS
Alan Tremain, O.B.E., Director and Chairman of the Board
Kathleen C. Cuocolo, Director and President
Sir Alan Donald KCMG, Director
Michael F. Holland, Director
Burton Levin, Director
James J. Lightburn, Director
Joe O. Rogers, Director
Nigel S. Tulloch, Director
Glenn N. Francis, Jr., Treasurer
Ann M. Casey, Secretary
Leonard B. Mackey, Jr., Assistant Secretary

INVESTMENT MANAGER
Martin Currie Inc.

DIRECT INVESTMENT MANAGER
Asian Direct Capital Management

SHAREHOLDER SERVICING AGENT
Georgeson Shareholder

ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
State Street Bank and Trust Company

INDEPENDENT AUDITORS
KPMG LLP

LEGAL COUNSEL
Clifford Chance Rogers & Wells LLP