EX-99 February 2009 Monthly Insight Report

THE CHINA FUND, INC. (CHN)

The Martin Currie
Shanghai team

IN BRIEF


Net asset value per share	US$	16.15
Market price	US$	14.40
Premium/(discount)		(10.84	%)
Fund size	US$	368.0m


Source:		State Street Bank and Trust Company


At 28 February 2009				US$ returns
	China Fund NAV			MSCI Golden Dragon*
	%			%
One month		(1.4	)		(1.6	)
Year to date		(7.1	)		(8.3	)
One year		(46.5	)		(49.1	)
Three years %pa		8.2			(5.8	)


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

Perhaps February was when the Chinese markets started to de-couple from the West. This is clearly a dangerous thing to say, but the massive market turnover in the A-share market (US$40 billion on one busy day last month) is at least an indication that liquidity and leverage are not the main problems in China. Far from having to bail out its banks (the loan-to-deposit ratio was just 65% at the end of 2008), the Chinese government was able to lean on them, as they lifted total outstanding renminbi loans by 21% in January alone. The main problem has been, of course, the disappearance of Western demand. China’s exports fell by 17.5% year on year in January, while Taiwan’s fell by 44%. But even here there was some brief respite, as evidence emerged of foreign buyers being forced to re-stock. Despite Taiwan’s announcement of a record 8.6% fall in fourth-quarter gross domestic product, its market, which is driven largely by domestic liquidity, also finished up, outperforming Hong Kong, which is more reliant on the vicissitudes of global institutional cashflow.

The ‘stimulus highlights’ in February included the Taiwanese government passing its NT$500 billion infrastructure spending program – bids will start from the end of the second quarter. Taiwan’s central bank cut the discount rate by 25 basis points to 1.25% and allowed the NT dollar to depreciate through NT$35/US$, in the wake of the Korean devaluation and apparent inflection point in the Japanese yen. In mainland China, in contrast, one official at the central bank hinted that interest rates were on hold for a while and that there is little prospect of renminbi depreciation. Following the earlier initiatives in automotives and steel, the State Council announced revitalization plans for eight industries in succession. The lucky industries were textiles, machinery, shipbuilding, electronics, petrochemical, light industry and non-ferrous metals, with logistics snatching the final place, despite heated lobbying on behalf of real estate. According to the NDRC (National Development and Reform Commission), details of the action plan will be released by mid-March and may span three years.

The success of the visit to Beijing by US Secretary of State Hillary Clinton, along with her dovish comments, has eased fears of nascent US protectionism. The state-led acquisition of overseas resources, such as Chinalco’s US$19.5 billion injection into Rio Tinto, would seem to work counter to China’s best interests in this regard.

INVESTMENT STRATEGY

The Fund is 98.1% invested, with holdings in 69 companies. The Fund’s exposure to the A-share and Taiwanese markets, both of which we expect to be supported by excess domestic liquidity, is 15.1% and 19.6%, respectively. Our exposure to direct investments is 17.8%.

During February we only made minor adjustments to the Fund. In the A-share market, we took profit on Zhangzidao and Salt Lake, but added to the baijiu producer Wuliangye. In Taiwan, we switched from capital-short Cathay Insurance into smart-phone-maker HTC. In Hong Kong, we sold China Travel, switching the money into oversold coking-coal miner Fushan.

Chris Ruffle, Martin Currie Inc*


*		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 the range of China investment products managed by Martin Currie.

MCCL has appointed Martin Currie Investment Management Ltd (MCIM), or its affiliates, as investment manager of Martin Currie’s China investment products. HCML 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.

28 FEBRUARY 2009

FUND DETAILS


Market cap		US$328.06
Shares outstanding		22,781,762
Exchange listed	NYSE
Listing date	July 10, 1992
Listed and direct investment manager	Martin Currie Inc


Source:		State Street Bank and Trust Company.

SECTOR ALLOCATION


	The China			MSCI Golden
	Fund, Inc			Dragon
Consumer discretionary		24.7	%		4.4	%
Consumer staples		22.0	%		2.5	%
Industrials		12.4	%		8.2	%
Healthcare		11.3	%		—
Information technology		8.8	%		18.4	%
Financials		6.2	%		32.7	%
Materials		5.3	%		6.2	%
Energy		4.9	%		8.6	%
Utilities		1.5	%		6.4	%
Telecommunications		1.0	%		12.7	%
Other assets & liabilities		1.9	%		—


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

ASSET ALLOCATION


Source:		State Street Bank and Trust Company



PERFORMANCE		(US$ RETURNS)


	NAV			Market price
	%			%
One month		(1.4	)		(1.7	)
Year to date		(7.1	)		(12.9	)
Three years %pa		8.2			0.4


Past performance is not a guide to future returns. Three year returns are annualised.

Source:		State Street Bank and Trust Company

15 LARGEST HOLDINGS (45.7%)


Queenbury Investment (Huiyan)	Consumer discretionary	10.5	%
China Huiyuan Juice	Consumer staples	4.4	%
Shandong Weigao Group	Healthcare	4.2	%
Chaoda Modern Agriculture	Consumer staples	3.4	%
Wumart Stores	Consumer staples	2.9	%
Daqin Railway	Industrials	2.7	%
Yuanta Financial	Financials	2.6	%
Shenzhen Agricultural Products	Consumer staples	2.3	%
Far Eastern Department Stores	Consumer discretionary	2.0	%
Qingdao Bright Moon	Industrials	1.9	%
China Silicon	Information technology	1.8	%
Uni-President Enterprises	Consumer staples	1.8	%
Synnex Technology International	Consumer discretionary	1.8	%
China Medical	Healthcare	1.7	%
Taiwan Secom	Information technology	1.7	%

DIRECT INVESTMENTS (17.8%)


Queenbury Investment (Huiyan)	Consumer discretionary	10.5	%
Qingdao Bright Moon	Industrials	1.9	%
China Silicon (Series A Preferred)	Information technology	1.8	%
Highlight Tech	Industrials	1.6	%
Wuxi Paiho	Industrials	1.0	%
HAND Enterprise Solutions	Information technology	0.8	%
China Silicon	Information technology	0.2	%
TECO Optronics	Information technology	0.0	%


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.		(1.4	)		1.7			(7.1	)		(46.5	)		8.2			7.4		8.7
MSCI Golden Dragon		(1.6	)		(1.6	)		(8.3	)		(49.1	)		(5.8	)		0.2		3.5
Hang Seng China Enterprise		(3.2	)		(4.3	)		(12.6	)		(50.3	)		2.0			6.3		15.4
Shanghai Stock Exchange 180		4.4			17.2			17.1			(52.0	)		31.7			12.9		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 2009 Bloomberg LP for the Hang Seng China 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 28 February 2009.

THE CHINA FUND INC. PREMIUM/DISCOUNT


Past performance is not a guide to future returns.

Source:		Martin Currie Inc as at 28 February 2009.

10 YEAR DIVIDEND HISTORY CHART


Past performance is not a guide to future returns.

Source:		State Street Bank and Trust Company.

28 FEBRUARY 2009


Sector	Company (BBG ticker)			Price			Holding		Value US$		% of portfolio
Hong Kong												25.8	%
China Huiyuan Juice		1886	HK		HK$	9.0		14,059,500		16,316,108		4.4	%
Chaoda Modern Agriculture		682	HK		HK$	4.5		21,459,357		12,451,837		3.4	%
China Shineway Pharmaceutical		2877	HK		HK$	4.4		11,184,000		6,316,485		1.7	%
Xinao Gas		2688	HK		HK$	8.3		5,084,000		5,441,114		1.5	%
Anta Sports		2020	HK		HK$	3.6		11,072,000		5,139,641		1.4	%
Shangri-La Asia		0069	HK		HK$	8.4		4,755,555		5,120,259		1.4	%
Natural Beauty Bio-Technology		157	HK		HK$	1.2		32,780,000		4,945,373		1.3	%
Ports Design		589	HK		HK$	8.0		3,933,500		4,057,638		1.1	%
Huabao International		336	HK		HK$	5.6		5,500,000		3,992,779		1.1	%
Golden Meditech		8180	HK		HK$	0.9		35,040,000		3,840,495		1.0	%
Sina Corp		SINA	US		US$	21.5		162,700		3,493,169		1.0	%
FU JI Food & Catering Services		1175	HK		HK$	3.0		8,689,000		3,350,003		0.9	%
TPV Technology		903	HK		HK$	2.0		12,728,000		3,331,658		0.9	%
Sinofert		297	HK		HK$	3.6		7,216,000		3,303,156		0.9	%
Intime Department Store Group		1833	HK		HK$	1.9		12,568,629		3,046,842		0.8	%
Fushan International Energy		639	HK		HK$	1.8		12,544,000		2,943,822		0.8	%
Honghua Group		196	HK		HK$	1.0		21,902,000		2,795,910		0.8	%
Yorkey Optical International		2788	HK		HK$	0.9		16,424,000		1,863,656		0.5	%
Chinasoft International		8216	HK		HK$	0.5		19,230,000		1,289,398		0.4	%
SPG Land		1688	HK		HK$	0.8		11,037,000		1,166,995		0.3	%
China Rare Earth		769	HK		HK$	0.7		9,144,000		860,723		0.2	%

Singapore												4.2	%
China Fishery Group		CFG	SP		SG$	0.6		12,050,000		4,635,364		1.3	%
Hsu Fu Chi International		HFCI	SP		SG$	0.9		9,484,000		4,598,675		1.2	%
China Milk Products Group		CMILK	SP		SG$	0.3		11,607,000		2,513,881		0.7	%
CDW		CDW	SP		SG$	0.1		59,708,000		1,737,100		0.5	%
Financial One Corp		FIN	SP		SG$	0.2		12,030,000		1,205,528		0.3	%
China Energy		CEGY	SP		SG$	0.1		12,199,000		946,423		0.2	%

Hong Kong ‘H’ shares												10.9	%
Shandong Weigao Group		8199	HK		HK$	13.1		9,004,000		15,325,463		4.2	%
Wumart Stores		995	HK		HK$	5.5		15,126,000		10,629,793		2.9	%
Zijin Mining		2899	HK		HK$	4.2		10,408,000		5,596,384		1.5	%
China Oilfield Services		2883	HK		HK$	5.5		6,388,000		4,546,824		1.3	%
ZTE Corp		763	HK		HK$	25.8		1,124,559		3,733,909		1.0	%
Sichuan Expressway		107	HK		HK$	1.3		742,000		125,337		0.0	%

Taiwan												19.6	%
Yuanta Financial		2885	TT		NT$	12.8		26,635,545		9,721,976		2.6	%
Far Eastern Department Stores		2903	TT		NT$	13.8		18,511,584		7,286,669		2.0	%
Uni-President Enterprises		1216	TT		NT$	26.1		8,728,581		6,521,792		1.8	%
Synnex Technology		2347	TT		NT$	40.2		5,631,855		6,481,273		1.8	%
Taiwan Secom		9917	TT		NT$	47.0		4,738,000		6,374,934		1.7	%
Ruentex Development		9945	TT		NT$	17.5		12,694,000		6,359,446		1.7	%
FamilyMart		5903	TT		NT$	49.0		3,777,652		5,299,084		1.5	%
Lien Hwa Industrial		1229	TT		NT$	11.5		15,919,692		5,241,013		1.4	%
HTC Corp		2498	TT		NT$	385.0		438,000		4,827,448		1.3	%
China Metal Products		1532	TT		NT$	17.5		9,019,881		4,518,784		1.2	%
Cyberlink		5203	TT		NT$	119.0		1,183,000		4,030,087		1.1	%
Merry Electronics		2439	TT		NT$	27.2		3,584,340		2,785,876		0.8	%
Wah Lee Industrial		3010	TT		NT$	22.3		4,118,821		2,629,424		0.7	%

United Kingdom												1.7	%
China Medical System Holdings		CMSH	LN		£	1.2		3,623,188		6,385,534		1.7	%

United States												3.0	%
The9		CMED	US		US$	11.7		356,200		4,156,854		1.1	%
Mindray Medical International		MR	US		US$	18.3		191,700		3,498,525		1.0	%
Far East Energy		FEEC	US		US$	0.2		10,478,634		1,886,154		0.5	%
WuXi PharmaTech Cayman		WX	US		US$	4.4		310,190		1,371,040		0.4	%

Equity linked securities (‘A’ shares)												15.2	%
Daqin Railway					US$	1.2		8,307,000		10,019,704		2.7	%
Shenzhen Agricultural					US$	2.2		4,000,000		8,625,984		2.3	%
Shanghai Zhenhua Port Machinery					US$	1.4		4,462,752		6,028,807		1.7	%
Qinghai Salt Lake Potash					US$	7.2		768,509		5,503,315		1.5	%
Dalian Zhangzidao Fishery					US$	2.7		1,779,700		4,776,715		1.3	%
China Yangtze Power					US$	1.2		4,169,077		4,900,637		1.3	%
Wuliangye Yibin					US$	2.2		2,146,007		4,704,047		1.3	%
Zhejiang Guyuelongshan					US$	1.2		3,582,000		4,257,676		1.2	%
Suning Appliance					US$	2.4		1,599,909		3,767,786		1.0	%
Shanghai International Airport					US$	1.8		1,816,700		3,337,278		0.9	%


Sector	Company (BBG ticker)	Price			Holding		Value US$		% of portfolio
Direct										17.7	%
Queenbury Investment (Huiyan)			US$	85,466.7		450		38,459,700		10.5	%
Qingdao Bright Moon			US$	0.2		31,827,172		7,001,978		1.9	%
China Silicon (Series A Preferred)			US$	238.0		27,418		6,525,484		1.8	%
Highlight Tech			US$	1.8		3,366,893		5,993,070		1.6	%
Wuxi Paiho			US$	0.3		11,734,701		3,679,990		1.0	%
HAND Enterprise Solutions			US$	6.1		500,000		3,050,000		0.8	%
China Silicon			US$	2.4		238,232		566,992		0.1	%
teco Optronics				—		1,861,710		—		—

Other assets & liabilities								6,779,001		1.9	%

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 Hans Seng Mainland China 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.

Martin Currie Inc, registered in Scotland (no BR2575)

Registered office: Saltire Court, 20 Castle Terrace, Edinburgh EH11 2ES Tel: 44 (0) 131 229 5252 Fax: 44 (0) 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.