exv99

THE CHINA FUND, INC. (CHN)

The Martin Currie
Shanghai team

IN BRIEF


Net asset value per share	US$	34.09
Market price	US$	30.07
Premium/(discount)		(11.79	%)
Fund size	US$	618.9m

Source: State Street Bank and Trust Company


At 31 July 2008		US$ returns


	China Fund NAV			MSCI Golden Dragon*
	%			%
One month		(2.9	)		(1.3	)
Year to date		(23.8	)		(20.5	)
One year		(9.3	)		(9.6	)
Three years %pa		31.1			16.2

Past performance is not a guide to future returns.
Source: State Street Bank and Trust Company. NAV performance.
*Source for index data: MSCI.

MANAGER’S COMMENTARY

Martin Currie acts as portfolio manager of The China Fund, Inc. (“Fund”). This commentary is the opinion of Martin Currie Inc.

In Beijing, there were clear signs of a shift in focus from inflation to growth. The first direct flights since 1949 carried Chinese tourists across the Formosa Straits, and the Taiwanese cabinet opened its markets to Chinese capital. The oil price fell. Enough for a small bounce, one might think? But no. The MSCI Golden Dragon finished the month down 1.3%. This was largely due to the Taiwanese market, which has now fallen 25% since 20 May. All eyes focus on Wall Street, the gyrations of which are magnified here; in three days, the troubles of Fannie and Freddie wiped nearly 20% off the value of Taiwan’s two largest insurers. The region has succumbed to a gloom that is difficult to justify from a local point of view. Yes, exports are slowing, but China still recorded a US$21.4 billion trade surplus in June. Yes, growth is slowing, but the most bearish forecast I have seen for GDP growth in 2009 is 8% year on year. After the shock of the earthquake, retail sales growth has recovered to 22%.

By the time this note is published, the Olympics will be underway. While watching it from a safe distance (Beijing is unpleasant enough in August without the presence of several hundred thousand extra visitors and police), we will be keeping fingers crossed that the games proceed smoothly. Together with the Politburo and most of Beijing’s population, however, I will be glad when they are over. So much has been delayed until ‘after the Olympics’. Once this distraction is out of the way, priority should go to unwinding the dangerous price-control system, which in July spread to coking coal, and can only cause further distortions to China’s economy. In this, the government should be helped by a moderation in local food prices as well as by a decline in commodity prices caused by the global slowdown. As the implication of weakening Western consumption on China’s export industries becomes more evident, we expect renminbi appreciation to grind to a halt, VAT rebates on certain exports to be re-instituted and stimulus measures, such as additional public works and cuts in personal taxation, to be instituted. A halt in the one-way bet on renminbi, and all the hot money it attracted, has implications for China’s banks and asset markets; a real return of -4% on renminbi deposits is acceptable only as long as one is expecting currency appreciation of 10% p.a.

INVESTMENT STRATEGY

Your fund is 94.1% invested with holdings in 72 companies. Your fund’s weighting in Taiwan is 28.9%, in A-shares 11.6% and in direct investments 10.5%. For the reasons stated above, we sold our only financial holding in China, Bank of China, and the disappointing property owner Shanghai Lujiazui. We used the proceeds to add to existing holdings in China Fisheries, Anta (a sportswear chain), Weigao (medical consumables) and Honghua (oil rigs), all of which we expect to grow rapidly, despite the economic slowdown.

We have retained cash to invest in two further unlisted deals, which are in the final stages of negotiation.

Chris Ruffle, Martin Currie Inc*

31 JULY 2008

FUND DETAILS


Market cap	US$	545.88m
Shares outstanding		18,153,741
Exchange listed		NYSE
Listing date	July 10, 1992
Listed and direct investment manager	Martin Currie Inc

Source: State Street Bank and Trust Company.

ASSET ALLOCATION

Source: State Street Bank and Trust Company

SECTOR ALLOCATION


	The China			MSCI Golden
	Fund, Inc			Dragon
Consumer discretionary		22.4	%		4.7	%
Consumer staples		13.5	%		1.6	%
Financials		12.6	%		34.3	%
Industrials		11.0	%		9.2	%
Healthcare		11.0	%		—
Information technology		7.0	%		18.2	%
Energy		6.5	%		9.3	%
Materials		6.0	%		6.7	%
Utilities		2.5	%		4.2	%
Telecommunications		1.6	%		11.8	%
Other assets & liabilities		5.9	%		—
Total		100.0	%		100.0	%

Source: State Street Bank and Trust Company. Source for index data: MSCI


PERFORMANCE		(US$ RETURNS)


	NAV			Market price
	%			%
One month		(2.9	)		(1.5	)
Year to date		(23.8	)		(20.9	)
Three years %pa		31.1			22.1

Past performance is not a guide to future returns.
Three year returns are annualiosed.
Source: State Street Bank and Trust Company

DIRECT INVESTMENTS (10.5%)


Queenbury Investment (Huiyin)	Consumer discretionary	6.2	%
Qingdao Bright Moon	Industrials	1.1	%
China Silicon	Information technology	1.1	%
Highlight Tech	Industrials	1.0	%
Wuxi Paiho	Industrials	0.6	%
Sino-Twinwood	Information technology	0.5	%
teco Optronics	Information technology	—

15 LARGEST HOLDINGS (38.6%)


Queenbury Investment (Huiyin)	Consumer discretionary	6.2	%
Chaoda Modern Agriculture	Consumer staples	3.9	%
Far Eastern Department Stores	Consumer discretionary	2.6	%
Yuanta Financial	Financials	2.5	%
Xinao Gas	Utilities	2.5	%
Uni-President Enterprises	Consumer staples	2.5	%
Mindray Medical International	Healthcare	2.4	%
Wumart Stores	Consumer staples	2.3	%
Daqin Railway	Industrials	2.1	%
China Development Financial	Financials	2.0	%
Shandong Weigao Group	Healthcare	2.0	%
Cathay Financial	Financials	1.9	%
China Metal Products	Materials	1.9	%
Synnex Technology	Consumer discretionary	1.9	%
Qinghai Salt Lake Potash	Materials	1.9	%

Source: State Street Bank and Trust Company.



FUND PERFORMANCE (BASED ON NET ASSET VALUE)		(US$ RETURNS)


	One			Three			Calendar			One			Three		Five		Since
	month			months			year to date			year			years		years		launch
	%			%			%			%			% pa		% pa		% pa
The China Fund, Inc.		(2.9	)		(15.5	)		(23.8	)		(9.3	)		31.1		23.0		12.1
MSCI Golden Dragon		(1.3	)		(15.6	)		(20.5	)		(9.6	)		16.2		19.1		n/a
Hang Seng Chinese Enterprise		5.0			(12.2	)		(22.5	)		(6.1	)		33.3		32.7		n/a
Shanghai Stock Exchange 180		0.9			(27.4	)		(44.0	)		(29.2	)		52.8		21.7		n/a

Past performance is not a guide to future returns.
Source: State Street Bank and Trust Company. Launch date 10 July 1992. Three year, five year and since launch returns are all annualised.
Source for index data: MSCI for the MSCI Golden Dragon and Copyright 2008 Bloomberg LP for the Hang Seng Chinese Enterprise and the
Shanghai Stock Exchange 180. For a full description of each index please see the index descriptions section.

PERFORMANCE IN PERSPECTIVE

Past performance is not a guide to future returns.
Source: Martin Currie Inc as at 31 July 2008.

THE CHINA FUND INC. PREMIUM/DISCOUNT

Past performance is not a guide to future returns.
Source: Martin Currie Inc as at 31 July 2008.

10 YEAR DIVIDEND HISTORY CHART


Total	0.50	0.08	0.11	0.00	0.13	0.21	1.78	3.58	2.51	4.01	12.12
Income	0.50	0.08	0.11	0.00	0.13	0.06	0.07	0.20	0.22	0.30	0.28
Long-term capital	0.00	0.00	0.00	0.00	0.00	0.00	0.67	3.27	2.29	2.73	9.00
Short-term capital	0.00	0.00	0.00	0.00	0.00	0.15	1.04	0.11	0.00	0.98	2.84

Past performance is not a guide to future returns.
Source: State Street Bank and Trust Company.

31 JULY 2008


Sector	Company (BBG ticker)	Price		Holding		Value $ % of portfolio
Hong Kong								23.1	%
Chaoda Modern Agriculture	682 HK	HK $9.1			20,633,998		23,934,131	3.9	%
Xinao Gas	2688 HK	HK$13.1			9,286,000		15,591,420	2.5	%
Golden Meditech	8180 HK	HK $2.5			35,040,000		11,227,674	1.8	%
Shangri-La Asia	0069 HK	HK$16.8			4,141,555		8,907,198	1.4	%
China Shineway Pharmaceutical	2877 HK	HK $5.7			11,184,000		8,170,671	1.3	%
China Huiyuan Juice	1886HK	HK $4.6			13,000,500		7,731,500	1.2	%
Huabao International	336 HK	HK $6.3			9,135,000		7,352,819	1.2	%
Ports Design	589 HK	HK$21.1			2,678,500		7,243,689	1.2	%
Natural Beauty Bio-Technology	157 HK	HK $1.6			32,780,000		6,596,208	1.1	%
TPV Technology	903 HK	HK $4.0			12,728,000		6,541,694	1.1	%
Anta Sports	2020 HK	HK $6.1			6,734,000		5,282,144	0.9	%
Tianjin Development	0882 HK	HK $4.8			8,440,000		5,192,415	0.8	%
SPG Land	1688 HK	HK $3.5			11,037,000		4,951,135	0.8	%
Intime Department Store Group	1833 HK	HK $4.3			8,778,000		4,815,319	0.8	%
Honghua Group	196 HK	HK $2.9			11,172,000		4,152,548	0.7	%
Yorkey Optical International	2788 HK	HK $1.6			16,424,000		3,283,895	0.5	%
China Travel International	0308 HK	HK $2.1			10,982,000		2,969,953	0.5	%
China Rare Earth	769 HK	HK $1.5			15,254,000		2,893,551	0.5	%
Fushan International Energy	639 HK	HK $5.5			3,840,000		2,706,946	0.4	%
Chinasoft International	8216 HK	HK $1.1			19,230,000		2,661,882	0.4	%
Ocean Grand Chemicals	2882 HK	HK $0.3			17,379,000		690,514	0.1	%
Arcontech	8097 HK		—		18,386,000		—	—

China ‘B’ Shares								0.4	%
Shanghai Lujiazui Finance	900932 SHA	US $1.4			1,667,458		2,291,087	0.4	%

Singapore								2.8	%
China Fishery Group	CFG SP	SG $1.3			7,870,000		7,481,262	1.2	%
Hsu Fu Chi International	HFCI SP	SG $1.1			8,409,000		6,640,869	1.1	%
CDW	CDW SP	SG $0.1			60,000,000		3,290,556	0.5	%

Hong Kong ‘H’ shares								9.8	%
Wumart Stores	995 HK	HK $7.5			15,126,000		14,540,223	2.3	%
Shandong Weigao Group	8199 HK	HK$10.5			9,004,000		12,140,510	2.0	%
China Oilfield Services	2883 HK	HK$11.7			7,132,000		10,676,770	1.7	%
ZTE Corp	763 HK	HK$38.8			1,980,360		9,848,307	1.6	%
Zijin Mining	2899 HK	HK $6.2			10,408,000		8,270,746	1.3	%
China Shenhua Energy	1088 HK	HK$29.2			1,450,000		5,426,709	0.9	%
China Railway Group	390 HK	HK $6.4			504		413	0.0	%

Taiwan								28.9	%
Far Eastern Department Stores	2903 TT	NT$27.0			18,511,584		16,317,220	2.6	%
Yuanta Financial	2885 TT	NT$18.0			26,635,545		15,652,111	2.5	%
Uni-President Enterprises	1216 TT	NT$41.0			11,447,220		15,303,570	2.5	%
China Development Financial	2883 TT	NT$10.3			36,871,940		12,398,582	2.0	%
Cathay Financial	2882 TT	NT$59.6			5,993,788		11,662,360	1.9	%
China Metal Products	1532 TT	NT$42.5			8,392,675		11,644,696	1.9	%
Synnex Technology	2347 TT	NT$67.7			5,211,855		11,519,134	1.9	%
Powertech Technology	6239 TT	NT$87.8			3,939,210		11,291,262	1.8	%
Fubon Financial	2881 TT	NT$27.4			12,603,000		11,253,046	1.8	%
Tripod Technology	3044 TT	NT$77.4			3,352,867		8,472,198	1.4	%
Taiwan Secom	9917 TT	NT$54.0			4,738,000		8,352,715	1.3	%
Lien Hwa Industrial	1229 TT	NT$16.6			15,161,855		8,216,735	1.3	%
Ruentex Development	9945 TT	NT$26.0			9,477,000		8,044,204	1.3	%
Wah Lee Industrial	3010 TT	NT$51.3			3,998,856		6,697,180	1.1	%
FamilyMart	5903 TT	NT$51.8			3,777,652		6,388,377	1.0	%
Merry Electronics	2439 TT	NT$47.6			3,584,340		5,569,997	0.9	%
HannStar Display	6116 TT	NT $9.3			17,900,000		5,411,315	0.9	%
Yieh United Steel	9957 TT	NT$13.0			11,379,600		4,829,578	0.8	%

United Kingdom								1.5	%
China Medical System Holdings	CMSH LN	£	1.3		3,623,188		9,077,974	1.5	%

United States								5.5	%
Mindray Medical International	MR US	US $40.0			367,000		14,661,650	2.4	%
The9	CMED US	HK$22.4			356,200		7,964,632	1.3	%
WuXi PharmaTech Cayman	WX US	HK$18.1			341,141		6,181,475	1.0	%
Far East Energy	FEEC US	US $0.5			10,974,134		5,487,067	0.8	%


Sector	Company (BBG ticker)	Price		Holding		Value $ % of portfolio
Equity linked securities (‘A’ shares)								11.6	%
Daqin Railway		US $1.9			6,907,000		13,164,742	2.1	%
Qinghai Salt Lake Potash		US $12.9			887,909		11,454,026	1.9	%
China Yangtze Power		US $2.1			4,169,077		8,942,670	1.4	%
Shanghai Zhenhua Port Machinery		US $1.9			4,462,752		8,327,495	1.4	%
Finance Street		US $1.2			5,743,906		7,019,053	1.1	%
Wuliangye Yibin		US $3.0			2,200,000		6,692,400	1.1	%
Shanghai Tunnel Engineering		US $1.3			4,439,247		5,855,367	0.9	%
China Vanke		US $1.2			4,533,840		5,635,563	0.9	%
Shanghai International Airport		US $2.6			1,816,700		4,781,555	0.8	%

Direct								10.5	%
Queenbury Investment (Huiyin)		US $85466.7			450		38,459,700	6.2	%
Qingdao Bright Moon		US $0.2			31,827,172		7,001,978	1.1	%
China Silicon		US $238.0			27,418		6,525,484	1.1	%
Highlight Tech		US $1.8			3,366,893		5,993,070	1.0	%
Wuxi Paiho		US $0.3			11,734,701		3,679,990	0.6	%
Sino-Twinwood		US $6.1			500,000		3,050,000	0.5	%
teco Optronics			—		1,861,710		—	—

Other assets & liabilities							36,452,217	5.9	%

INDEX DESCRIPTIONS

MSCI Golden Dragon Index

The MSCI Golden Dragon is a free float-adjusted market capitalisation index that is designed to measure equity market performance in the China region. As of May 2005 the MSCI Golden Dragon Index consisted of the following country indices: China, Hong Kong and Taiwan.

Hang Seng China Enterprise Index

The Hang Seng China Enterprise Index is a capitalisation-weighted index comprised of state-owned Chinese companies (H-shares) listed on the Hong Kong Stock Exchange and included in HSMLCI index.

Shanghai Stock Exchange 180 Index

The Shanghai Stock Exchange 180 ‘A’ Share Index is a capitalisation-weighted index. The index tracks the daily price performance of the 180 most representative ‘A’ share stocks listed on the Shanghai Stock Exchange.

OBJECTIVE

The investment objective of the Fund is to achieve long term capital appreciation. The Fund seeks to achieve its objective through investment in the equity securities of companies and other entities with significant assets, investments, production activities, trading or other business interests in China or which derive a significant part of their revenue from China.

The Board of Directors of the Fund has adopted an operating policy of the Fund, effective 30 June 2001, that the Fund will invest at least 80% of its assets in China companies. For this purpose, “China companies” are (i) companies for which the principal securities trading market is in China; (ii) companies for which the principal securities trading market is outside of China or in companies organised outside of China, that in both cases derive at least 50% of their revenues from goods or services sold or produced, or have a least 50% of their assets in China; or (iii) companies organised in China. Under the policy, China will mean the People’s Republic of China, including Hong Kong, and Taiwan. The Fund will provide its stockholders with at least 60 days’ prior notice of any change to the policy described above.

The Fund is subject to the Investment Company Act of 1940 which limits the means in which it can access the ‘A’ share market. The Fund will continue to seek the most efficient way in which to increase its ‘A’ share exposure ensuring ongoing compliance with its legal and regulatory obligations.

CONTACTS

The China Fund, Inc.
c/o State Street Bank and Trust Company
2 Avenue de Lafayette
PO Box 5049
Boston, MA 02206-5049
Tel: (1) 888 CHN-CALL (246 2255)
www.chinafundinc.com

Important information: This document is issued and approved by Martin Currie Inc (MC Inc), as investment adviser of the China Fund Inc (the Fund). MC Inc is authorised and regulated by the Financial Services Authority (FSA) and incorporated under limited liability in New York, USA. Registered in Scotland (No BR2575), registered address Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES. Information herein is believed to be reliable but has not been verified by MC Inc. MC Inc makes no representation or warranty and does not accept any responsibility in relation to such information or for opinion or conclusion which the reader may draw from the newsletter.

Martin Currie Ltd and Heartland Capital Management Ltd (HCML) have established MC China Ltd (MCCL), as a joint venture company, to provide investment management or investment advisory services to our China product. MCCL has appointed Martin Currie Investment Management Ltd (MCIM), or its affiliates, as investment manager of our China funds. HMCL has seconded both Chris Ruffle and Shifeng Ke to MCIM or its affiliates on a full time basis with the same roles and responsibilities as if they were full time employees.

The Fund is classified as a ‘non-diversified’ investment company under the US Investment Company Act of 1940 as amended. It meets the criteria of a closed ended US mutual fund and its shares are listed on the New York Stock Exchange. MC Inc has been appointed investment adviser to the Fund.

Investors are advised that they will not generally benefit from the rules and regulations of the United Kingdom Financial Services and Markets Act 2000 and the FSA for the protection of investors, nor benefit from the United Kingdom Financial Services Compensation Scheme, nor have access to the Financial Services Ombudsman in the event of a dispute. Investors will also have no rights of cancellation under the FSA’s Conduct of Business Sourcebook of the United Kingdom.

This newsletter does not constitute an offer of shares. MC Inc, its ultimate and intermediate holding companies, subsidiaries, affiliates, clients, directors or staff may, at any time, have a position in the market referred to herein, and may buy or sell securities, currencies, or any other financial instruments in such markets. The information or opinion expressed in this newsletter should not be construed to be a recommendation to buy or sell the securities, commodities, currencies or financial instruments referred to herein.

The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased.

It should not be assumed that any of the securities transactions or holdings discussed here were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.

Investing in the Fund involves certain considerations in addition to the risks normally associated with making investments in securities. The value of the shares issued by the Fund, and the income from them, may go down as well as up and there can be no assurance that upon sale, or otherwise, investors will receive back the amount originally invested. There can be no assurance that you will receive comparable performance returns, or that investments will reflect the performance of the stock examples contained in this document. Movements in foreign exchange rates may have a separate effect, unfavorable as well as favorable, on the gain or loss otherwise experienced on an investment. Past performance is not a guide to future returns. Accordingly, the Fund is only suitable for investment by investors who are able and willing to withstand the total loss of their investment. In particular, prospective investors should consider the following risks:

→		The companies quoted on Greater Chinese stock exchanges are exposed to the risks of political, social and religious instability, expropriation of assets or nationalisation, rapid rates of inflation, high interest rates, currency depreciation and fluctuations and changes in taxation, which may affect income and the value of investments.

→		At present, the securities market and the regulatory framework for the securities industry in China is at an early stage of development. The China Securities Regulatory Commission (CSRC) is responsible for supervising the national securities markets and producing relevant regulations. The Investment Regulations, under which the Fund invests in the People’s Republic of China (‘PRC’) and which regulate repatriation and currency conversion, are new. The Investment Regulations give CSRC and State Administration of Foreign Exchange (SAFE) wide discretions and there is no precedent or certainty as to how these discretions might be exercised, either now or in the future. The Fund may, from time to time, obtain access to the securities markets in China via Access Products. Such products carry additional risk and may be less liquid than the underlying securities which they represent.

→		During the past 15 years, the PRC government has been reforming the economic and political systems of the PRC, and these reforms are expected to continue, as evidenced by the recently announced changes. The Fund’s operations and financial results could be adversely affected by adjustments in the PRC’s state plans, political, economic and social conditions, changes in the policies of the PRC government such as changes in laws and regulations (or the interpretation thereof), measures which may be introduced to control inflation, changes in the rate or method of taxation, imposition of additional restrictions on currency conversion and the imposition of additional import restrictions.

→		PRC’s disclosure and regulatory standards are in many respects less stringent than standards in certain Organisation for Economic Co-operation and Development (OECD) countries, and there may be less publicly available or less reliable information about PRC companies than is regularly published by or about companies from OECD countries.

→		The Shanghai Stock Exchange and Shenzhen Stock Exchange have lower trading volumes than most OECD exchanges and the market capitalisations of listed companies are small compared to those on more developed exchanges in developed markets. The listed equity securities of many companies in the PRC are accordingly materially less liquid, subject to greater dealing spreads and experience materially greater volatility than those of OECD countries. These factors could negatively affect the Fund’s NAV.

→		The Fund invests primarily in securities denominated in other currencies but its NAV will be quoted in US dollars. Accordingly, a change in the value of such securities against US dollars will result in a corresponding change in the US dollar NAV.

→		The marketability of quoted shares may be limited due to foreign investment restrictions, wide dealing spreads, exchange controls, foreign ownership restrictions, the restricted opening of stock exchanges and a narrow range of investors. Trading volume may be lower than on more developed stockmarkets, and equities are less liquid. Volatility of prices can also be greater than in more developed stockmarkets. The infrastructure for clearing, settlement and registration on the primary and secondary markets may be underdeveloped. Under certain circumstances, there may be delays in settling transactions in some of the markets.

→		The value of the Fund’s investment in any Quota will be affected by taxation levied against the relevant Qualified Foreign Institutional Investors (QFIIs) or in respect of investments held in the relevant Quotas. The PRC taxation regime that will apply to QFIIs and investments made in or through QFII quotas is not clear. The Investment Regulations are new and do not currently expressly contemplate the treatment of QFIIs and investment made through QFII Quotas.

Fund returns used in this document are calculated on the net asset value and therefore fall outside the scope of the GIPS standards.

Martin Currie Inc, registered in Scotland (no BR2575)

Registered office: Saltire Court, 20 Castle Terrace, Edinburgh EH11 2ES Tel: (44) 131 229 5252 Fax: (44) 131 228 5959 www.martincurrie.com/china

North American office: 1350 Avenue of the Americas, Suite 3010, New York, NY 10019, USA Tel: (1) 212 258 1900 Fax: (1) 212 258 1919

Authorised and registered by the Financial Services Authority and incorporated with limited liability in New York, USA.

Please note: calls to the above numbers may be recorded.