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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, 6TH FLOOR
P.O. BOX 5049
BOSTON, MA 02206-5049
 
(Address of principal executive offices)(Zip code)
     
(Name and Address of Agent for Service)   Copy to:
     
Mary Moran Zeven
Secretary
The China Fund, Inc.
2 Avenue de Lafayette
Boston, MA 02111 		  Leonard B. Mackey, Jr., Esq.
Clifford Chance U.S. LLP
31 West 52nd Street
New York, New York 10019
Registrant’s telephone number, including area code: (888) 246-2255
Date of fiscal year end: October 31
Date of reporting period: July 31, 2007
 
 

 

 

Item 1. Schedule of Investments.

THE CHINA FUND, INC.

SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
COMMON STOCK AND OTHER EQUITY INTERESTS                
CHINA
                        
 
Financials — (1.9%)
                        
   
Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. 
     5,804,366             $ 14,336,784  
                     
 
     
TOTAL CHINA — (Cost $4,881,621)
            1.9 %     14,336,784  
             
     
 
HONG KONG
                        
 
Consumer Discretionary — (6.9%)
                        
   
China Travel International Investment Hong Kong, Ltd. 
     18,148,000               12,242,970  
   
Huabao International Holdings, Ltd. 
     12,790,000               12,190,835  
   
Parkson Retail Group, Ltd. 
     1,111,500               8,378,872  
   
Ports Design, Ltd. 
     2,678,500               6,447,579  
   
Shangri-La Asia, Ltd. 
     2,678,000               6,364,255  
   
Yorkey Optical International Cayman, Ltd. #
    13,858,000               5,099,377  
                     
 
                      50,723,888  
                     
 
 
Consumer Staples — (2.7%)
                        
   
Chaoda Modern Agriculture (Holdings), Ltd. 
     26,407,900               19,907,190  
                     
 
 
Energy — (0.6%)
                        
   
China Rare Earth Holdings, Ltd. 
     15,254,000               4,697,047  
                     
 
 
Financials — (1.4%)
                        
   
Tianjin Development Holdings, Ltd. 
     8,440,000               10,007,245  
                     
 
 
Health Care — (4.5%)
                        
   
China Shineway Pharmaceutical Group, Ltd. #
    11,184,000               8,073,646  
   
Golden Meditech Co., Ltd. * #
    35,040,000               17,818,505  
   
Natural Beauty Bio-Technology, Ltd. #
    32,780,000               7,371,327  
                     
 
                      33,263,478  
                     
 
 
Industrials — (1.3%)
                        
   
TPV Technology, Ltd. 
     12,728,000               9,838,743  
                     
 
 

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)                
HONG KONG (continued)                
 
Information Technology — (0.1%)
                        
   
Arcontech Corp. * # (1)
    18,386,000             $ —  
   
Chinasoft International, Ltd. #
     4,000,000               971,041  
                     
 
                      971,041  
                     
 
 
Materials — (0.8%)
                        
   
Fountain Set (Holdings), Ltd. #
     13,026,000               5,492,235  
   
Ocean Grand Chemicals Holdings, Ltd. * # (1)
    17,379,000               688,352  
                     
 
                      6,180,587  
                     
 
 
Utilities — (1.8%)
                        
   
Xinao Gas Holdings, Ltd. #
     9,286,000               13,169,696  
                     
 
     
TOTAL HONG KONG — (Cost $63,472,035)
            20.1 %     148,758,915  
             
     
 
HONG KONG — “H” SHARES
                        
 
Energy — (6.1%)
                        
   
China Oilfield Services, Ltd. 
     12,650,000               18,587,135  
   
China Petroleum & Chemical Corp. 
     11,696,000               12,343,590  
   
China Shenhua Energy Co., Ltd. 
     3,435,000               13,824,880  
                     
 
                      44,755,605  
                     
 
 
Industrials — (2.9%)
                        
   
BYD Co., Ltd. 
     1,368,500               9,931,555  
   
Zhejiang Expressway Co., Ltd. 
     10,304,000               11,835,582  
                     
 
                      21,767,137  
                     
 
 

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)                
HONG KONG — “H” SHARES (continued)                
Utilities — (0.8%)
                        
   
Anhui Expressway Co., Ltd. 
     6,780,000             $ 6,098,548  
                     
 
     
TOTAL HONG KONG — “H” SHARES —
(Cost $29,994,296)
            9.8 %     72,621,290  
             
     
 
     
TOTAL HONG KONG (INCLUDING “H” SHARES) — (Cost $93,466,331)
            29.9 %     221,380,205  
             
     
 
SINGAPORE
                        
 
Consumer Staples — (0.9%)
                        
   
Hsu Fu Chi International, Ltd. * #
    8,409,000               6,490,437  
                     
 
 
Industrials — (0.9%)
                        
   
Yangzijiang Shipbuilding Holdings, Ltd. *
    5,347,000               6,878,418  
                     
 
 
Information Technology — (0.9%)
                        
   
CDW Holding, Ltd. † #
    60,000,000               6,728,898  
                     
 
 
Utilities — (0.9%)
                        
   
Bio-Treat Technology, Ltd. 
     10,615,000               6,722,565  
                     
 
     
TOTAL SINGAPORE — (Cost $18,872,084)
            3.6 %     26,820,318  
             
     
 
TAIWAN
                        
 
Consumer Discretionary — (7.1%)
                        
   
Far Eastern Department Stores, Ltd. 
     16,952,000               16,120,650  
   
Merry Electronics Co., Ltd. 
     3,584,340               12,672,847  
   
Synnex Technologies International, Corp. * 
     8,481,000               17,965,482  
   
Taiwan FamilyMart Co., Ltd. #
    3,487,895               5,772,584  
                     
 
     
 
                     52,531,563  
 
Consumer Staples — (2.8%)
                        
   
Lien Hwa Industrial Corp. 
     10,732,616               6,542,483  
   
Uni-President Enterprises Corp. 
     13,337,000               14,410,578  
                     
 
                      20,953,061  
                     
 
 

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)                
TAIWAN (continued)                
 
Energy — (1.9%)
                        
   
Formosa Petrochemical Corp. 
     5,085,000             $ 14,134,902  
                     
 
 
Financials — (5.7%)
                        
   
Cathay Financial Holding Co., Ltd. 
     5,708,370               14,997,759  
   
Fubon Financial Holdings Co., Ltd. 
     10,387,000               9,655,994  
   
Fuhwa Financial Holdings Co., Ltd. *
    26,413,545               17,349,261  
                     
 
                      42,003,014  
                     
 
 
Industrials — (3.1%)
                        
   
Asia Optical Co., Inc. 
     1,936,153               8,527,359  
   
China Synthetic Rubber Corp. 
     5,294,000               7,833,939  
   
Wah Lee Industrial Corp. 
     2,838,856               6,108,788  
                     
 
                      22,470,086  
                     
 
 
Information Technology — (5.4%)
                        
   
Data Systems Consulting Co., Ltd. #
    4,566,813               6,354,202  
   
Powertech Technology Inc. *
    3,114,000               14,711,512  
   
Taiwan Secom Co., Ltd. #
    3,837,000               6,034,600  
   
Tripod Technology Corp. 
     2,974,083               13,098,692  
                     
 
                      40,199,006  
                     
 
 
Materials — (2.1%)
                        
   
China Metal Products Co., Ltd. 
     5,243,123               10,067,870  
   
Yieh United Steel Corp. * #
    9,483,000               5,535,050  
                     
 
                      15,602,920  
                     
 
     
TOTAL TAIWAN — (Cost $131,666,701)
            28.1 %     207,894,552  
             
     
 
 

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
COMMON STOCK AND OTHER EQUITY INTERESTS (continued)                
UNITED KINGDOM
                        
 
Health Care (1.5%)
                        
   
China Medical System Holdings Ltd. * #
     3,623,188             $ 10,808,351  
                     
 
     
TOTAL UNITED KINGDOM — (Cost $9,940,990)
            1.5 %     10,808,351  
             
     
 
UNITED STATES
                        
 
Consumer Discretionary — (0.2%)
                        
   
Chindex International, Inc. *
    69,987               1,513,119  
                     
 
 
Energy — (2.2%)
                        
   
Far East Energy Corp. * #
    11,111,111               16,444,444  
                     
 
 
Health Care — (2.8%)
                        
   
China Medical Technologies Inc., ADR
    271,500               8,883,480  
   
Mindray Medical International Ltd., ADR
    367,000               11,377,000  
                     
 
                      20,260,480  
                     
 
     
TOTAL UNITED STATES — (Cost $24,293,333)
            5.2 %     38,218,043  
             
     
 
     
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS — (Cost $283,121,061)
            70.2 %     519,458,253  
             
     
 
EQUITY LINKED SECURITIES
                        
 
Energy — (2.1%)
                        
   
China Yangtze Power Co., Ltd. Access Product
(expiration 1/20/10) 144A, (1) (2)
    6,441,077               15,194,501  
                     
 
 
Financials — (7.8%)
                        
   
China Merchants Bank Co., Ltd. Access Product
(expiration 10/26/10) 144A, (1) (2)
    8,254,855               32,482,854  
   
Finance Street Holding Co., Ltd. Access Product
(expiration 2/13/2012) 144A, (1) (2)
    5,439,953               24,914,985  
                     
 
                      57,397,839  
                     
 
 

 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)
                               
Name of Issuer and Title of Issue Shares Value (Note A)
EQUITY LINKED SECURITIES (continued)                
 
Industrials — (15.3%)
                        
   
Baoding Tianwei Baobian Electric Co., Ltd. Access Product (expiration 01/20/10) 144A, (1) (3)
    1,947,486             $ 9,072,811  
   
Daqin Railway Co., Ltd. Access Product
(expiration 11/02/11) 144A, (1) (2)
    9,710,000               20,556,070  
   
Shanghai International Airport Co., Ltd. Access Product (expiration 1/20/10) 144A, (1) (3)
    5,662,300               29,024,950  
   
Shanghai Tunnel Engineering Co., Ltd. Access Product
(expiration 1/17/12) 144A, * (1) (3)
    3,441,747               5,369,125  
   
Shanghai Zhenhua Port Machinery Co., Ltd. Access Product (expiration 10/26/10) 144A, (1) (2)
    7,454,352               21,744,345  
   
Xinjiang Tebian Electric Apparatus Stock Co., Ltd. Access Product (expiration 10/26/10) 144A, (1) (2)
    4,676,642               27,737,164  
                     
 
                      113,504,465  
                     
 
 
Materials — (1.2%)
                        
   
Qinghai Salt Lake Potash Co., Ltd. Access Product
(expiration 10/26/10) 144A, (1) (2)
    1,725,209               9,217,792  
                     
 
     
TOTAL EQUITY LINKED SECURITIES —
(Cost $58,275,625)
            26.4 %     195,314,597  
             
     
 
DIRECT INVESTMENTS
                        
 
Information Technology — (0.4%)
                        
   
Sino Twinwood Pte Ltd. (acquired 5/2/07) * (1) (4)
    500,000               3,050,000  
   
teco Optronics Corp., (acquired 4/26/04) * (1) (4)
    1,861,710               —  
                     
 
     
TOTAL DIRECT INVESTMENTS — (Cost $3,722,519)
            0.4 %     3,050,000  
             
     
 
TOTAL INVESTMENTS — (Cost $345,119,205)
            97.0 %     717,822,850  
             
     
 
OTHER ASSETS AND LIABILITIES
             3.0 %     22,379,743  
             
     
 
NET ASSETS
             100.0 %   $ 740,202,593  
             
     
 

 

THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
July 31, 2007 (Unaudited)

Notes to Schedule of Investments

(A) Portfolio securities listed on recognized United States or foreign securities exchanges are valued at the last quoted sales price in the principal market where they are traded. Listed securities with no such sales price and unlisted securities are valued at the mean between the current bid and asked prices, if any, of two brokers. Short-term investments having maturities of sixty days or less are valued at amortized cost (original purchase cost as adjusted for amortization of premium or accretion of discount) which when combined with accrued interest approximates market value. 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 Board of Directors. Direct Investments not traded on an exchange are valued at fair value as determined by the Board of Directors based on advice from the Direct Investment Manager, Martin Currie. The Direct Investment’s original cost is considered to be fair value unless the 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.
 
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.
 
† Affiliated issuer, as defined in the Investment Company Act of 1940, as amended, includes issuers in which the Fund held 5% or more of the outstanding voting securities.

ADR American Depositary Receipt.
 
144A Securities restricted for resale to Qualified Institutional Buyers.
 
# Illiquid security
 
(1) Security valued at fair value using methods determined in good faith by or at the direction of the Board of Directors.
 
(2) Equity Linked Securities issued by Credit Lyonnais (CLSA).
 
(3) Equity Linked Securities issued by Citigroup Global Markets Holdings.
 
(4) 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. The procedures applied by the Board of Directors in arriving at its estimate of value of securities without readily available market values comply with the China Fund, Inc.’s (the “Fund”) policies for valuing Direct Investments at original cost unless the 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 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.

** At July 31, 2007, aggregate gross unrealized appreciation for all securities for which there was an excess of value over financial reporting cost was $379,241,097 and aggregate gross unrealized depreciation for all securities for which there was an excess of financial reporting cost over value was $6,537,452 and net appreciation for financial reporting purposes was $372,703,645. At July 31, 2007, aggregate cost for financial reporting purposes was $345,119,205.

 

 

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 of the 1940 Act 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/ Gary L. French   
    Gary L. French   
    President and Chief Executive Officer   
 
Date: 9/12/2007
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/ Gary L. French   
    Gary L. French   
    President and Chief Executive Officer   
 
Date: 9/12/2007
         
     
  By:   /s/ William C. Cox   
    William C. Cox
Treasurer and Chief Financial Officer 		  
 
Date: 9/12/2007