exv99

THE CHINA FUND, INC. (CHN)

The Martin Currie
Shanghai team

IN BRIEF


Net asset value per share	US$	22.68
Market price	US$	20.98
Premium/(discount)		(7.50	%)
Fund size	US$	516.7	m

Source: State Street Bank and Trust Company


At 30 June 2009				US$ returns
	China Fund NAV			MSCI Golden Dragon*
	%			%
One month		2.5			(0.8	)
Year to date		30.4			36.4
One year		(11.9	)		(14.3	)
Three years %pa		16.1			6.7


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

The main Chinese markets headed in different directions in June. Taiwan was the first into a summer correction, falling 8.5% on worries about demand for technology products and some impatience at the pace of signing the cross-straits memorandum of understanding for the financial industry. After early strength, Hong Kong snaked sideways, gaining just 0.9%. With ugly interims ahead, it is better to travel hopefully than arrive. Only the A-shares maintained their majestic progress, with the Shanghai 180 rising by 15.6%, based on huge credit growth; new loans worth 5.8 trillion yuan were made in the first half, more than in the whole of 2008 and already ahead of the government’s budget for the whole of 2009. With no one keen to build new factories at present, it is little wonder that money continues to flow into asset markets. It’s a confidence trick on a huge scale, but it seems to be working.

Retail sales continue to grow steadily (passenger car sales, for instance, grew by 37% year on year in May, up from 33% in April). One of the portfolio companies, the upmarket retailer Ports Design, reported particularly strong sales of store vouchers, used widely, apparently, to ‘reward’ government officials — an indication that the government is now, even more than before, the fount of most good things. Retail cash is clearly flowing into the asset markets (41 new mutual funds raised US$14 billion between January and May). The property market is heating up, but buyers remain sensitive on price. The government is using the period of deflation (CPI -1.4% in May) to raise prices: gasoline and diesel prices were increased by 10% and jet fuel by 25%; Shanghai recently raised water by 25%, with the promise of a further 21.7% rise in November 2010. We expect electricity prices to be next. We also expect inflation to return towards the year-end.

In the A-share market IPOs were revived, though the government has started cautiously with small-cap stocks that will not soak up too much liquidity. In Hong Kong, the clamouring for new issues has reached a pitch not seen for more than a year. The Fund received a miniscule allocation for the herbal-shampoo-maker Bawang (420 times oversubscribed).

INVESTMENT STRATEGY

The Fund is now 98% invested with holdings in 68 companies. Of the portfolio, 17.5% is in direct investments. This will fall slightly after the month-end, as we put the investment in Wuxi Paiho back to the company, which has repaid our initial investment plus an 8% p.a. coupon.

Worried by the outlook for capital goods, we sold the long-term holding Zhenhua Port Machinery in June. We also exited less successful technology investments, TPV and Yorkey, into improved liquidity. In their place we bought China Pharmaceutical, the prospects for which have brightened after a change of ownership. Ahead of the revival of IPOs in the A-share market, we bought the leading domestic broker CITIC Securities, as well as Minsheng Bank. We added to existing holdings in Far East Energy (now producing coal-bed methane from a high-permeability field in Shanxi) and the convenience-store operator Taiwan Familymart, which is expanding its presence in China.

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.

30 June 2009

FUND DETAILS


Market cap	US$	478.0m
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		24.0	%		4.4	%
Consumer staples		18.4	%		2.1	%
Healthcare		13.7	%		—
Financials		12.8	%		37.4	%
Industrials		11.4	%		8.0	%
Information technology		7.4	%		19.1	%
Energy		5.0	%		8.9	%
Materials		2.6	%		6.2	%
Utilities		1.7	%		4.2	%
Telecommunications		1.0	%		9.6	%
Other assets & liabilities		2.0	%		—

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		2.5		(3.8	)
Year to date		30.4		26.8
Three years %pa		16.1		14.6

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

15 LARGEST HOLDINGS (44.5%)


Queenbury Investment (Huiyan)	Consumer discretionary	7.9	%
Ugent Holdings	Industrials	4.4	%
Shandong Weigao Group	Healthcare	3.9	%
CITIC Securities	Financials	3.8	%
Wumart Stores	Consumer staples	3.6	%
Far Eastern Department Stores	Consumer discretionary	3.5	%
Shenzhen Agricultural Products	Consumer staples	2.2	%
China Shineway Pharmaceutical	Healthcare	2.2	%
Ruentex Development	Financials	2.1	%
Ports Design	Information technology	2.0	%
China Huiyuan Juice	Consumer staples	1.9	%
China Medical System	Healthcare	1.8	%
China Fishery Group	Consumer staples	1.8	%
Uni-President Enterprises	Consumer staples	1.7	%
Fushan International Energy	Energy	1.7	%

DIRECT INVESTMENTS (17.5%)

Queenbury Investment (Huiyan)	Consumer discretionary	7.9	%
Ugent Holdings	Industrials	4.4	%
Qingdao Bright Moon	Industrials	1.6	%
HAND Enterprise Solutions	Information technology	1.6	%
Highlight Tech	Industrials	1.3	%
China Silicon (Series A Preferred)	Information technology	0.7	%
China Silicon (Common Stock)	Information technology	0.0	%
China Silicon (Warrants)	Information technology	0.0	%
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.		2.5			32.2		30.4		(11.9	)		16.1		18.8		10.8
MSCI Golden Dragon		(0.8	)		32.4		36.4		(14.3	)		6.7		11.5		8.6
Hang Seng China Enterprise		5.2			35.8		38.9		(7.4	)		17.4		20.8		21.6
Shanghai Stock Exchange 180		15.6			27.1		74.6		13.3			37.6		27.7		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 annualized.

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 30 June 2009.

THE CHINA FUND INC. PREMIUM/DISCOUNT

Past performance is not a guide to future returns.

Source: Martin Currie Inc as at 30 June 2009.

10 YEAR DIVIDEND HISTORY CHART


Total	0.11	0.00	0.13	0.21	1.78	3.58	2.51	4.01	12.12	5.82
Income	0.11	0.00	0.13	0.06	0.07	0.20	0.22	0.30	0.28	0.48
Long-term capital	0.00	0.00	0.00	0.00	0.67	3.27	2.29	2.73	9.00	5.34
Short-term capital	0.00	0.00	0.00	0.15	1.04	0.11	0.00	0.98	2.84	0.00

Past performance is not a guide to future returns.

Source: State Street Bank and Trust Company.

30 JUNE 2009


Sector	Company (BBG ticker)		Price		Holding		Value US$		% of portfolio
Hong Kong										21.5	%
China Shineway Pharmaceutical	2877	HK	HK$	7.8		11,184,000		11,328,237		2.2	%
Ports Design	589	HK	HK$	18.2		4,549,500		10,589,994		2.0	%
China Huiyuan Juice	1886	HK	HK$	5.5		14,055,000		9,956,316		1.9	%
Fushan International Energy	639	HK	HK$	4.3		16,044,000		8,860,371		1.7	%
Chaoda Modern Agriculture	682	HK	HK$	4.6		14,885,357		8,777,502		1.7	%
Xinao Gas	2688	HK	HK$	13.2		5,084,000		8,737,863		1.7	%
Natural Beauty Bio-Technology	157	HK	HK$	1.3		48,680,000		8,102,812		1.6	%
FU JI Food & Catering Services	1175	HK	HK$	6.5		8,689,000		7,242,655		1.4	%
Shangri-La Asia	0069	HK	HK$	11.5		4,755,555		6,995,223		1.4	%
Golden Meditech	8180	HK	HK$	1.3		35,040,000		6,148,915		1.2	%
Intime Department Store Group	1833	HK	HK$	3.4		12,568,629		5,513,944		1.1	%
Anta Sports	2020	HK	HK$	9.7		3,883,000		4,809,879		0.9	%
Huabao International	336	HK	HK$	7.5		4,255,000		4,117,715		0.8	%
TPV Technology	903	HK	HK$	3.5		8,854,000		3,941,433		0.8	%
Yorkey Optical International	2788	HK	HK$	1.4		10,694,926		1,918,174		0.4	%
Bawang International	1338	HK	HK$	2.4		858,600		263,672		0.0	%

Singapore										4.5	%
China Fishery Group	CFG	SP	SG$	1.0		13,255,000		9,336,441		1.8	%
Hsu Fu Chi International	HFCI	SP	SG$	1.2		9,484,000		8,055,604		1.6	%
Financial One Corp	FIN	SP	SG$	0.3		12,030,000		2,284,545		0.4	%
CDW	CDW	SP	SG$	0.1		59,708,000		2,267,758		0.4	%
China Milk Products Group	CMILK	SP	SG$	0.4		4,923,000		1,359,851		0.3	%

Hong Kong ‘H’ shares										10.4	%
Shandong Weigao Group	8199	HK	HK$	19.9		7,808,000		20,048,800		3.9	%
Wumart Stores	995	HK	HK$	9.7		14,888,000		18,537,842		3.6	%
Zijin Mining	2899	HK	HK$	7.0		7,214,000		6,534,445		1.3	%
ZTE Corp	763	HK	HK$	26.9		1,461,926		5,074,265		1.0	%
China Pharmaceutical Group	1093	HK	HK$	4.0		6,854,000		3,519,838		0.6	%

Taiwan										18.8	%
Far Eastern Department Stores	2903	TT	NT$	32.3		18,511,584		18,195,629		3.5	%
Ruentex Development	9945	TT	NT$	27.6		12,694,000		10,678,281		2.1	%
Uni-President Enterprises	1216	TT	NT$	33.8		8,728,581		8,991,955		1.7	%
Taiwan Secom	9917	TT	NT$	50.7		4,738,000		7,321,444		1.4	%
Yuanta Financial	2885	TT	NT$	22.1		10,520,593		7,086,410		1.4	%
FamilyMart	5903	TT	NT$	54.3		4,257,652		7,046,343		1.4	%
Lien Hwa Industrial	1229	TT	NT$	14.4		15,919,692		6,962,742		1.3	%
China Metal Products	1532	TT	NT$	25.0		9,019,881		6,872,814		1.3	%
WPG Holdings	3702	TT	NT$	32.6		6,320,000		6,269,918		1.2	%
HTC Corp	2498	TT	NT$	464.0		438,000		6,194,209		1.2	%
Synnex Technology	2347	TT	NT$	53.5		2,553,855		4,164,317		0.8	%
KGI Securities	6008	TT	NT$	15.0		8,800,000		4,023,164		0.8	%
Merry Electronics	2439	TT	NT$	31.7		3,584,340		3,463,077		0.7	%

United Kingdom										1.8	%
China Medical System Holdings	CMSH	LN	£	1.61		3,623,188		9,565,445		1.8	%

United States										6.1	%
WuXi PharmaTech Cayman	WX	US	US$	9.4		800,790		7,559,457		1.5	%
Far East Energy	FEEC	US	US$	0.4		13,957,259		5,373,545		1.0	%
Mindray Medical International	MR	US	US$	27.9		191,700		5,352,264		1.0	%
New Oriental Education	EDU	US	US$	67.4		73,400		4,944,224		1.0	%
Sina Corp	SINA	US	US$	29.5		162,700		4,796,396		0.9	%
The9	CMED	US	US$	10.2		352,300		3,575,845		0.7	%

Equity linked securities (‘A’ shares)										17.4	%
CITIC Securities			US$	4.1		4,720,200		19,528,430		3.8	%
Shenzhen Agricultural			US$	1.7		6,800,000		11,328,855		2.2	%
China Yangtze Power			US$	2.0		4,169,077		8,410,542		1.6	%
Wuliangye Yibin			US$	2.9		2,857,007		8,251,036		1.6	%
Suning Appliance			US$	2.4		2,874,013		6,759,678		1.3	%
Zhejiang Guyuelongshan			US$	1.1		6,124,000		6,589,571		1.3	%
Shanghai Yuyuan Tourist Board			US$	2.5		238,502,000		6,033,516		1.2	%
Daqin Railway			US$	1.6		3,807,000		5,902,198		1.1	%
China Minsheng Banking			US$	1.2		4,758,300		5,517,111		1.1	%
Ping An Insurance			HK	52.5		614,500		4,158,751		0.8	%
Shanghai International Airport			US$	2.2		1,816,700		4,083,942		0.8	%
Dalian Zhangzidao Fishery			US$	3.0		1,100,565		3,327,008		0.6	%


Sector	Company (BBG ticker)	Price		Holding		Value US$		% of portfolio
Direct									17.5	%
Queenbury Investment (Huiyan)		US$	90345.0		450		40,655,250		7.9	%
Ugent Holdings		HK$	100.0		177,000,000		22,838,562		4.4	%
Qingdao Bright Moon		US$	0.3		31,827,172		8,275,065		1.6	%
HAND Enterprise Solutions		US$	16.4		500,000		8,200,000		1.6	%
Highlight Tech		US$	2.1		3,366,893		6,902,131		1.3	%
China Silicon (Series A Preferred)		US$	133.0		27,418		3,646,594		0.7	%
China Silicon			—		293,068		—		—
China Silicon (Warrants)			—		685,450		—		—
teco Optronics			—		1,861,710		—		—

Other assets & liabilities							10,067,523		2.0	%

INDEX DESCRIPTIONS

MSCI Golden Dragon Index

The MSCI Golden Dragon is a free float-adjusted market capitalization 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 capitalization-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 capitalization-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 organized 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 organized 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.