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 Copy to:
Service)
Mary Moran Zeven Leonard B. Mackey, Jr., Esq.
Secretary Clifford Chance U.S. LLP
The China Fund, Inc. 31 West 52nd Street
2 Avenue de Lafayette New York, New York 10019
Boston, MA 02111
Registrant's telephone number, including area code: (888) 246-2255
Date of fiscal year end: October 31
Date of reporting period: January 31, 2008
ITEM 1. SCHEDULE OF INVESTMENTS.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
COMMON STOCK AND OTHER EQUITY INTERESTS
CHINA
FINANCIALS -- (1.4%)
Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. 5,130,689 $ 9,753,440
-------------
TOTAL CHINA -- (Cost $6,938,100) 1.4% 9,753,440
----- -------------
HONG KONG
CONSUMER DISCRETIONARY -- (7.0%)
China Travel International Investment Hong Kong, Ltd. (1) 10,982,000 5,873,669
Huabao International Holdings, Ltd. 12,790,000 11,614,373
Intime Department Store Group Co., Ltd. * 8,778,000 7,712,197
Ports Design, Ltd. 2,678,500 7,729,762
Shangri-La Asia, Ltd. (1) 4,141,555 12,217,525
Yorkey Optical International Cayman, Ltd. # 16,374,000 3,402,215
-------------
48,549,741
-------------
CONSUMER STAPLES -- (3.9%)
Chaoda Modern Agriculture (Holdings), Ltd. (1) 26,737,998 27,161,017
-------------
ENERGY -- (0.4%)
China Rare Earth Holdings, Ltd. 15,254,000 2,895,592
-------------
FINANCIALS -- (2.0%)
SPG Land (Holdings), Ltd. (1) * # 9,868,000 6,049,911
Tianjin Development Holdings, Ltd. 8,440,000 7,534,313
-------------
13,584,224
-------------
HEALTH CARE -- (4.6%)
China Shineway Pharmaceutical Group, Ltd. # 11,184,000 7,660,028
Golden Meditech Co., Ltd. (1) # 35,040,000 14,201,792
Natural Beauty Bio-Technology, Ltd. # 32,780,000 9,754,138
-------------
31,615,958
-------------
INDUSTRIALS -- (1.2%)
TPV Technology, Ltd. 12,728,000 8,097,180
-------------
INFORMATION TECHNOLOGY -- (0.5%)
Arcontech Corp. (2) * # 18,386,000 --
Chinasoft International, Ltd. # 19,230,000 3,280,371
-------------
3,280,371
-------------
MATERIALS -- (0.4%)
Fountain Set (Holdings), Ltd. 11,210,000 2,228,585
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
HONG KONG (CONTINUED)
MATERIALS (CONTINUED)
Ocean Grand Chemicals Holdings, Ltd. (2) * # 17,379,000 $ 691,001
-------------
2,919,586
-------------
UTILITIES -- (2.6%)
Xinao Gas Holdings, Ltd. (1) # 9,286,000 17,865,365
-------------
TOTAL HONG KONG -- (Cost $83,403,740) 22.6% 155,969,034
----- -------------
HONG KONG - "H" SHARES
CONSUMER STAPLES -- (1.5%)
Wumart Stores, Inc. # 15,126,000 10,262,939
-------------
ENERGY -- (6.6%)
China Oilfield Services, Ltd. (1) 7,132,000 13,026,066
China Petroleum & Chemical Corp. (1) 14,120,000 14,868,591
China Shenhua Energy Co., Ltd. (1) 3,435,000 17,622,954
-------------
45,517,611
-------------
HEALTH CARE -- (1.2%)
Shandong Weigao Group Medical Polymer Co., Ltd. # 4,960,000 8,372,006
-------------
INDUSTRIALS -- (2.4%)
China Railway Group, Ltd. (1) * 7,302,000 7,932,630
Zhejiang Expressway Co., Ltd. (1) 8,664,000 9,045,546
-------------
16,978,176
-------------
MATERIALS -- (1.8%)
Zijin Mining Group Co., Ltd. (1) 10,408,000 12,321,425
-------------
TELECOMMUNICATIONS -- (1.3%)
ZTE Corp. (1) 1,597,400 8,809,963
-------------
TOTAL HONG KONG - "H" SHARES -- (Cost $68,074,164) 14.8% 102,262,120
----- -------------
TOTAL HONG KONG (INCLUDING "H" SHARES) -- (Cost $151,477,904) 37.4% 258,231,154
----- -------------
SINGAPORE
CONSUMER DISCRETIONARY -- (1.1%)
China Hongxing Sports, Ltd. (1) 16,493,000 7,159,987
-------------
CONSUMER STAPLES -- (2.0%)
China Fishery Group, Ltd. 6,068,000 7,367,352
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
SINGAPORE (CONTINUED)
CONSUMER STAPLES (CONTINUED)
Hsu Fu Chi International, Ltd. # 8,409,000 $ 6,173,268
-------------
13,540,620
-------------
INDUSTRIALS -- (1.2%)
Yangzijiang Shipbuilding Holdings, Ltd. (1) * 9,546,000 8,490,425
-------------
INFORMATION TECHNOLOGY -- (0.5%)
CDW Holding, Ltd. # + 60,000,000 3,600,042
-------------
TOTAL SINGAPORE -- (Cost $36,472,269) 4.8% 32,791,074
----- -------------
TAIWAN
CONSUMER DISCRETIONARY -- (8.8%)
FamilyMart Co., Ltd. # 3,557,652 5,541,376
Far Eastern Department Stores, Ltd. 17,630,080 24,391,064
HannStar Display Corp. * 17,900,000 6,538,940
Merry Electronics Co., Ltd. 3,584,340 8,212,836
Synnex Technology International Corp. 6,536,050 13,248,887
Wintek Corp. 3,148,000 2,608,245
-------------
60,541,348
-------------
CONSUMER STAPLES -- (3.7%)
Lien Hwa Industrial Corp. 15,161,855 8,673,345
Uni-President Enterprises Corp. 14,137,220 17,163,328
-------------
25,836,673
-------------
ENERGY -- (0.9%)
Formosa Petrochemical Corp. 2,658,000 6,156,412
-------------
FINANCIALS -- (9.9%)
Cathay Financial Holding Co., Ltd. 5,708,370 13,416,844
China Development Financial Holding Corp. 36,871,940 14,042,632
Fubon Financial Holdings Co., Ltd. 12,603,000 12,538,349
Ruentex Development Co., Ltd. 9,477,000 8,573,938
Yuanta Financial Holdings Co., Ltd. * 26,413,545 19,872,774
-------------
68,444,537
-------------
INDUSTRIALS -- (2.3%)
China Synthetic Rubber Corp. 5,294,000 5,036,419
Efun Technology Co., Ltd. 1,303,100 3,889,246
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
COMMON STOCK AND OTHER EQUITY INTERESTS (CONTINUED)
TAIWAN (CONTINUED)
INDUSTRIALS (CONTINUED)
Wah Lee Industrial Corp. # 3,998,856 $ 6,713,453
-------------
15,639,118
-------------
INFORMATION TECHNOLOGY -- (3.9%)
Powertech Technology Inc. 3,581,100 10,354,183
Taiwan Secom Co., Ltd. # 4,738,000 7,512,451
Tripod Technology Corp. 3,163,083 9,322,564
-------------
27,189,198
-------------
MATERIALS -- (2.3%)
China Metal Products Co., Ltd. 8,392,675 11,963,443
Yieh United Steel Corp. # 11,379,600 3,927,050
-------------
15,890,493
-------------
TOTAL TAIWAN -- (Cost $167,366,378) 31.8% 219,697,779
----- -------------
UNITED KINGDOM
HEALTH CARE -- (1.3%)
China Medical System Holdings, Ltd. * # + 3,623,188 9,190,402
-------------
TOTAL UNITED KINGDOM -- (Cost $9,940,990) 1.3% 9,190,402
----- -------------
UNITED STATES
CONSUMER DISCRETIONARY -- (0.9%)
The9, Ltd., ADR (1) * 356,200 6,465,030
-------------
ENERGY -- (1.1%)
Far East Energy Corp. * # 11,111,111 7,444,444
-------------
HEALTH CARE -- (2.7%)
Mindray Medical International, Ltd., ADR (1) 367,000 12,514,700
WuXi PharmaTech Cayman Inc., ADR (1) * 230,689 5,811,056
-------------
18,325,756
-------------
TOTAL UNITED STATES -- (Cost $33,300,117) 4.7% 32,235,230
----- -------------
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS --
(Cost $405,495,758) 81.4% 561,899,079
----- -------------
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
EQUITY LINKED SECURITIES
ENERGY -- (1.4%)
China Yangtze Power Co., Ltd. Access Product (expiration 1/20/10) 144A,
(2) (3) 4,169,077 $ 9,834,853
-------------
FINANCIALS -- (1.2%)
Finance Street Holding Co., Ltd. Access Product (expiration 2/13/12)
144A, (2) (3) 2,382,259 8,459,402
-------------
INDUSTRIALS -- (8.1%)
Daqin Railway Co., Ltd. Access Product (expiration 11/02/11) 144A, (2)
(3) 6,907,000 20,002,672
Shanghai International Airport Co., Ltd. Access Product (expiration
1/20/10) 144A, (2) (4) 1,816,700 8,407,688
Shanghai International Port (Group) Co., Ltd. Access Product
(expiration 8/28/12) 144A, (2) (3) 5,499,923 5,714,420
Shanghai Tunnel Engineering Co., Ltd. Access Product (expiration
1/17/12) 144A, (2) (4) 4,439,247 9,113,774
Shanghai Zhenhua Port Machinery Co., Ltd. Access Product (expiration
10/26/10) 144A, (2) (3) 4,462,752 12,379,674
-------------
55,618,228
-------------
MATERIALS -- (1.6%)
Qinghai Salt Lake Potash Co., Ltd. Access Product (expiration 10/26/10)
144A, (2) (3) 887,909 11,127,275
-------------
TOTAL EQUITY LINKED SECURITIES -- (Cost $37,747,766) 12.3% 85,039,758
----- -------------
DIRECT INVESTMENTS
INDUSTRIALS -- (1.4%)
Highlight Tech Corp., (acquired 9/11/07) (2) (5) * # 3,366,893 5,999,998
Wuxi PAIHO, (acquired 9/17/07) (2) (5) * # 876,190 3,679,998
-------------
9,679,996
-------------
INFORMATION TECHNOLOGY -- (1.4%)
China Silicon Corp., Series A Preferred (acquired 11/30/07) (2) (5) *
# + 27,418 6,525,484
China Silicon Corp. Warrants (expiration 11/30/10) (2) (5) * # 27,418 --
Sino Twinwood Pte Ltd., (acquired 5/2/07) (2) (5) * # 500,000 3,050,000
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE (NOTE A)
--------------------------------- ----------- --------------
DIRECT INVESTMENTS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
teco Optronics Corp., (acquired 4/26/04) (2) (5) * # 1,861,710 $ --
-------------
9,575,484
-------------
TOTAL DIRECT INVESTMENTS -- (Cost $19,937,078) 2.8% 19,255,480
----- -------------
SHORT TERM INVESTMENTS
UNITED STATES
Repurchase Agreement with State Street Bank and Trust, 2.40%, 2/1/07 @ 13,896,000 13,896,000
-------------
TOTAL UNITED STATES -- (Cost $13,896,000) 2.0% 13,896,000
----- -------------
COLLATERAL FOR SECURITIES ON LOAN -- (15.4%)
GOVERNMENT -- (0.1%)
Federal National Mortgage Association, 6.11%, due 8/24/27 518,990 553,425
-------------
553,425
-------------
SHORT TERM -- (15.3%)
Securities Lending Quality Trust 105,603,271 105,603,271
-------------
105,603,271
-------------
TOTAL COLLATERAL FOR SECURITIES ON LOAN -- (Cost $106,122,261) 15.4% 106,156,696
----- -------------
TOTAL INVESTMENTS -- (Cost $583,198,863) ** 113.9% 786,247,013
----- -------------
OTHER ASSETS AND LIABILITIES (13.9%) (95,926,498)
----- -------------
NET ASSETS 100.0% $ 690,320,515
===== =============
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
Notes to Schedule of Investments
(A) Portfolio securities listed on recognized United States or foreign
securities exchanges are valued at the last quoted sales price in the principal
market where they are traded. Listed securities with no such sales price and
unlisted securities are valued at the mean between the current bid and asked
prices, if any, of two brokers. Short-term investments having maturities of
sixty days or less are valued at amortized cost (original purchase cost as
adjusted for amortization of premium or accretion of discount) which when
combined with accrued interest approximates market value. Open end investment
companies are valued at net asset value per share. Securities for which market
quotations are readily available are valued at current market value. Securities
for which market quotations are not readily available are valued 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. 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.
# Illiquid 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.
(1) A portion or all of the security was held on loan. As of January 31, 2008,
the market value of the securities loaned was $99,599,701.
(2) Security valued at fair value using methods determined in good faith by or
at the direction of the Board of Directors.
(3) Equity Linked Securities issued by Credit Lyonnais (CLSA).
(4) Equity Linked Securities issued by Citigroup Global Markets Holdings.
(5) Direct investments are generally restricted as to resale and do not have a
readily available resale market. On the date of acquisition of each direct
investment, there were no market quotations on similar securities, and such
investments were therefore valued in good faith by the Board of Directors
at fair market value. The 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. 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. The Fund does not have the
right to demand that such securities be registered.
@ Repurchase agreement, dated 1/31/2008, due 2/1/08 with repurchase proceeds
of $13,896,926 is collateralized by US Treasury Bond 3.875% due 9/15/10
with a market value of $14,175,776.
THE CHINA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2008 (UNAUDITED)
** At January 31, 2008, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over financial reporting
cost was $242,992,115 and aggregate gross unrealized depreciation for all
securities for which there was an excess of financial reporting cost over
value was $39,943,965 and net appreciation for financial reporting purposes
was $203,048,150. At January 31, 2008, aggregate cost for financial
reporting purposes was $583,198,863.
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: 3/25/08
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: 3/25/08
By: /s/ William C. Cox
William C. Cox
Treasurer and Chief Financial Officer
Date: 3/25/08