Exhibit 4.49


             THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
                                   ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to
be taken, you should consult your licensed securities dealer, bank manager,
solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Netcom Group
Corporation (Hong Kong) Limited, you should at once hand this circular together
with the accompanying form of proxy to the purchaser or the transferee or to the
bank, licensed securities dealer or other agent through whom the sale or
transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this circular.

This circular is for the sole purpose of the extraordinary general meeting of
the Company and does not constitute an invitation or offer to acquire, purchase
or subscribe for any securities.

--------------------------------------------------------------------------------

                              [CNC GRAPHIC OMITTED]
               CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
                          [CHINESE CHARACTERS OMITTED]
                    (Incorporated in Hong Kong with limited
                    liability under the Companies Ordinance)
                               (Stock Code: 906)

                              CONNECTED TRANSACTION

        Independent financial adviser to the Independent Board Committee
                        and the Independent Shareholders

                        [LEHMAN BROTHERS GRAPHIC OMITTED]
                          Lehman Brothers Asia Limited

--------------------------------------------------------------------------------

A notice convening an extraordinary general meeting of the Company to be held in
The Ballroom, Island Shangri-la, Hong Kong, on 14 February 2007 at 10:00 a.m.,
is set out on pages 31 to 32 of this circular. Whether or not you are able to
attend the extraordinary general meeting, you are requested to complete the
accompanying form of proxy in accordance with the instructions printed thereon
and return the same to the Company's registered office at Room 6701, The Center,
99 Queen's Road Central, Hong Kong, as soon as practicable and in any event at
least 48 hours before the time appointed for holding the extraordinary general
meeting or any adjournment thereof. Completion and return of the form of proxy
will not preclude you from attending and voting in person at the extraordinary
general meeting or at any adjourned meeting should you so wish.

A letter from the independent board committee of the Company containing its
recommendation to the independent shareholders of the Company is set out on
pages 11 to 12 of this circular. A letter from Lehman Brothers Asia Limited, the
independent financial adviser, containing its advice to the independent board
committee and the independent shareholders of the Company is set out on pages 13
to 24 of this circular.

                                                                 24 January 2007


<PAGE>


                                    CONTENTS
DEFINITIONS                                                                 1
LETTER FROM THE CHAIRMAN                                                    4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE                                11
LETTER FROM LEHMAN BROTHERS ASIA LIMITED                                   13
GENERAL INFORMATION                                                        25
NOTICE OF THE EXTRAORDINARY GENERAL MEETING                                31


<PAGE>

                                   DEFINITIONS

In this circular, unless the context otherwise requires, the following
expressions have the following meanings:


"ARPU"                                    the average revenue per user

"ADSs"                                    American depositary shares issued by
                                          Citibank, N.A., each representing
                                          ownership of 20 Shares, which are
                                          listed on the New York Stock Exchange,
                                          Inc.

"Asset Transfer Agreement"                the asset transfer agreement dated
                                          15 January 2007 entered into between
                                          China Netcom Group and CNC
                                          China in relation to the Disposal

"Associates"                              has the meaning ascribed in the
                                          Listing Rules

"Board" or "Board of Directors"           the board of Directors

"Business Day"                            a day (excluding Saturdays) on which
                                          banks are generally open in Hong Kong
                                          for the transaction of normal banking
                                          business

"China Netcom Group"                      China Network Communications Group
                                          Corporation (Replaces Chinese
                                          Characters), a company established
                                          under the laws of the PRC and the
                                          ultimate controlling shareholder of
                                          the Company

"China" or "PRC"                          the People's Republic of China
                                          (excluding, for the purpose of this
                                          circular, Hong Kong, Macau and Taiwan)

"CNC China"                               China Netcom (Group) Company Limited
                                          (Replaces Chinese Characters), a
                                          company established in the PRC with
                                          limited liability as a wholly foreign
                                          owned enterprise and a direct
                                          wholly-owned subsidiary of the Company

"Companies Ordinance"                     the Companies Ordinance (Chapter 32 of
                                          the Laws of Hong Kong)

"Company"                                 China Netcom Group Corporation (Hong
                                          Kong) Limited (Replaces Chinese
                                          Characters), a company incorporated in
                                          Hong Kong whose Shares are listed on
                                          the Hong Kong Stock Exchange and whose
                                          ADSs are listed on the New York Stock
                                          Exchange, Inc.

"Directors"                               the directors of the Company

"Disposal"                                the disposal by CNC China of the
                                          Group's telecommunications assets,
                                          liabilities and business operations in
                                          Guangdong Province and Shanghai
                                          Municipality of the PRC pursuant to
                                          the Asset Transfer Agreement

"Extraordinary General Meeting"           the extraordinary general meeting of
                                          the Company to be convened on 14
                                          February 2007, notice of which is set
                                          out at the end of this circular, or
                                          any adjournment thereof

"Group"                                   the Company and its subsidiaries

"HK$"                                     Hong Kong dollars, the lawful currency
                                          of Hong Kong

"HKFRS"                                   Hong Kong Financial Reporting
                                          Standards issued by the Hong Kong
                                          Institute of Certified Accountants

"Hong Kong"                               Hong Kong Special Administrative
                                          Region of the People's Republic of
                                          China

"Hong Kong Stock Exchange"                The Stock Exchange of Hong Kong
                                          Limited

"Independent Board Committee"             the committee of Directors, consisting
                                          of John Lawson Thornton, Victor Cha
                                          Mou Zing, Qian Yingyi, Hou Ziqiang and
                                          Timpson Chung Shui Ming, being all the
                                          independent non-executive Directors,
                                          formed to advise the Independent
                                          Shareholders in respect of the terms
                                          of the Disposal

                                       1

<PAGE>

"Independent Shareholders"                Shareholders other than China Netcom
                                          Group and its Associates

"Latest Practicable Date"                 17 January 2007, being the latest
                                          practicable date prior to the printing
                                          of this circular for ascertaining
                                          certain information contained herein

"Lehman"                                  Lehman Brothers Asia Limited, which is
                                          licensed for types 1 (dealing in
                                          securities), 2 (dealing in futures
                                          contracts), 4 (advising on securities)
                                          and 6 (advising on corporate finance)
                                          regulated activities under the
                                          Securities and Futures Ordinance,
                                          being the independent financial
                                          adviser to the Independent Board
                                          Committee and the Independent
                                          Shareholders in respect of the
                                          Disposal

"Listing Rules"                           the Rules Governing the Listing of
                                          Securities on The Stock Exchange of
                                          Hong Kong Limited

"Option(s)"                               option(s) which have been granted
                                          under the Company's share option
                                          scheme approved and adopted by a
                                          resolution of the Shareholders passed
                                          on 30 September 2004 and subsequently
                                          amended by a resolution of the
                                          Shareholders passed on 16 May 2006

"RMB"                                     Renminbi, the lawful currency of the
                                          PRC

"Securities and Futures Ordinance"        the Securities and Futures Ordinance
                                          (Chapter 571 of the laws of Hong Kong)

"Share(s)"                                ordinary shares in the Company's
                                          issued share capital with a par value
                                          of US$0.04 per share which are listed
                                          on the Hong Kong Stock Exchange

"Shareholders"                            holders of Shares

"US$"                                     United States dollars, the lawful
                                          currency of the United States of
                                          America


                                       2

<PAGE>

                            LETTER FROM THE CHAIRMAN

                                [GRAPHIC OMITTED]
               CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
                          [CHINESE CHARACTERS OMITTED]
                    (Incorporated in Hong Kong with limited
                    liability under the Companies Ordinance)

Executive Directors:                                  Registered Office:
 ZHANG Chunjiang (Chairman)                            Room 6701
 ZUO Xunsheng (Chief Executive Officer)                The Center
 ZHANG Xiaotie                                         99 Queen's Road Central
 LI Fushen (Chief Financial Officer)                   Hong Kong
 MIAO Jianhua
 Non-Executive Directors:
 TIAN Suning
 Jose Maria ALVAREZ-PALLETE
 YAN Yixun
 Mauricio SARTORIUS
 Independent Non-executive Directors:
 John Lawson THORNTON
 Victor CHA Mou Zing
 QIAN Yingyi
 HOU Ziqiang
 Timpson CHUNG Shui Ming
                                                               24 January 2007


To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION


On 15 January 2007, the Board announced that CNC China, a direct wholly-owned
subsidiary of the Company, had entered into the Asset Transfer Agreement,
pursuant to which CNC China agreed to dispose of the Group's telecommunications
assets, liabilities and business operations in Guangdong Province and Shanghai
Municipality of the PRC to China Netcom Group for a consideration of RMB3,500
million subject to certain conditions.

China Netcom Group is the ultimate holding company of the Company. As such,
China Netcom Group is a connected person of the Company and the Disposal
constitutes a connected transaction for the Company. Since the applicable
percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the
Disposal exceed 2.5% (but are below 5%), the Disposal is conditional upon, among
other things, the approval of the Disposal by the Independent Shareholders at an
extraordinary general meeting to be convened for this purpose.

An Independent Board Committee has been established to advise the Independent
Shareholders as to whether the terms of the Disposal are fair and reasonable
from a financial perspective so far as the Independent Shareholders are
concerned. Lehman has been appointed as the independent financial adviser to the
Independent Board Committee and the Independent Shareholders.

The purpose of this circular is to provide you with further information relating
to the Disposal and to seek your approval of the ordinary resolution set out in
the Notice of Extraordinary General Meeting at the end of this circular. The
recommendation from the Independent Board Committee to the Independent
Shareholders is set out on pages 11 to 12 of this circular and the letter from
Lehman is set out on pages 13 to 24 of this Circular.

                                       3

<PAGE>

ASSET TRANSFER AGREEMENT



Date:                                              15 January 2007
Parties:              (1) Vendor:                             CNC China
                      (2) Purchaser:                          China Netcom Group


Pursuant to the Asset Transfer Agreement, CNC China has agreed to dispose of the
Group's telecommunications assets, liabilities and business operations in
Guangdong Province and Shanghai Municipality of the PRC to China Netcom Group.
China Netcom Group has granted CNC China a preferential right to acquire such
assets, liabilities and business operations such that if China Netcom Group
intends to dispose of them in the future, CNC China will be entitled to a first
right to acquire them at terms equal to or no less favourable than those offered
by China Netcom Group to other parties.

CONDITIONS OF THE COMPLETION OF THE DISPOSAL

Completion of the Disposal is conditional upon the fulfillment of the following
conditions:

(a)     the passing of an ordinary resolution by the Independent Shareholders
approving the Disposal; and

(b)     the receipt of relevant approvals or consent from the relevant PRC
authorities.

The above conditions cannot be waived.

CONSIDERATION

The consideration of the Disposal is RMB3,500 million. China Netcom Group will
pay an initial amount of RMB1,050 million (equivalent to 30% of the
consideration) in cash the next business day after completion of the Disposal
and will pay the remaining RMB2,450 million (equivalent to 70% of the
consideration) in cash within 30 days after completion of the Disposal. China
Netcom Group will assume an aggregate principal amount of RMB3,000 million of
debt which is due and owing from the Guangdong and Shanghai branches of the
Group to independent third parties upon completion of the Disposal.

The consideration was determined and agreed between the parties after arm's
length negotiations and was based on various factors, including the quality of
the assets being sold, their growth prospects, earnings potential, and
competitive advantages in their respective markets, as well as by reference to
other financial and operational indicators. When considering the growth
prospects and earnings potential of the assets and operations being sold, the
Company has considered the subscribers number growth, ARPU, EBITDA and future
cashflow projections of the assets and operations.

COMPLETION OF THE DISPOSAL

It is expected that completion of the Disposal will take place before end of
February 2007.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Group has extensive network resources, dominant market share and has
achieved better profitability in its northern service region in the past and
hence, the Company intends to concentrate its resources in its northern service
region. Since the telecommunications services in Guangdong Province and Shanghai
Municipality have not made significant contribution to the overall results of
the Group in the past in financial terms, the Company believes the Disposal will
enable the Group to better grasp the growth opportunities in the northern
service region and increase its concentration on the development of business and
services in the northern service region with a view to gaining better financial
results for the Group.

EXPECTED GAIN AND USE OF PROCEEDS

According to the Group's management accounts, the unaudited net asset value of
the Group's telecommunications assets and liabilities in Guangdong Province and
Shanghai Municipality as at 30 June 2006 as prepared under HKFRS



                                       4

<PAGE>

was RMB2,789 million which has already taken into account the aggregate
principal amount of RMB3,000 million of debt which is due and owing from the
Guangdong and Shanghai branches of the Group. The assumption of such debt by
China Netcom Group will only be effected after completion of the Disposal and
therefore such assumption of debt will not affect the financial position of the
Company. As the consideration is RMB3,500 million, the expected gain on the
Disposal to the Company is estimated to be approximately RMB711 million based on
the net asset value of RMB2,789 million as at 30 June 2006. The gain will be
finalised based on the net asset value of the Group's telecommunications assets
and liabilities in Guangdong Province and Shanghai Municipality as at the date
of the completion of the Disposal. Any gain on the Disposal will result in an
increase in equity in the Company's accounts. The proceeds from the Disposal
will be used as the Group's general working capital.

According to the Group's management accounts, the unaudited net loss before and
after taxation and extraordinary items attributable to the Group's
telecommunications assets and liabilities in Guangdong Province and Shanghai
Municipality for the financial years ended 31 December 2004 and 31 December 2005
and for the six months ended 30 June 2006 as prepared under HKFRS are set out
below:

<TABLE>
<CAPTION>

                                                         For the financial year ended     For the six months
                                                                   31 December                 ended 30 June
                                                              2004                 2005                 2006
                                                       RMB million          RMB million          RMB million
<S>                                                            <C>                  <C>                   <C>
Net loss before taxation and  extraordinary items              316                  259                   72
Net loss after taxation and  extraordinary items               240                  174                   49

</TABLE>


After completion of the Disposal, the financial results attributable to the
Guangdong and Shanghai branches of the Group will no longer be combined into the
Group's results.

The unaudited Adjusted EBITDA(1) attributable to the Group's telecommunications
assets and liabilities in Guangdong Province and Shanghai Municipality for the
year ended 31 December 2006 was RMB659 million.

(1)     EBITDA refers to the profit  before  finance  costs,  interest  income,
dividend income, deficit on revaluation of fixed assets, income tax,
depreciation and amortisation. The impact of fixed assets written-off is further
excluded to arrive at the Adjusted EBITDA. EBITDA and Adjusted EBITDA are not
measures of financial performance and liquidity under HKFRS because EBITDA and
Adjusted EBITDA are not uniformly defined. EBITDA or Adjusted EBITDA should not
be considered a substitute for or superior to the Company's results prepared
under HKFRS as it cannot be used to measure operating results or liquidity and
does not represent operating cash flows. In addition, it may not be comparable
to similarly titled indicators of other companies.


The financial information set out above (in particular, the financial
information in respect of the financial year ended 31 December 2006) have not
been audited or reviewed by the Company's external auditors. The audit of the
Group's financial information for the financial year ended 31 December 2006 has
not been completed, and the audited financial information of Guangdong and
Shanghai branches of the Group may be different from the financial information
as disclosed herein.

Based on the unaudited management accounts of the Group, the consolidated net
assets of the Group is expected to increase after the Disposal. The Company will
receive a cash consideration of RMB3,500 million. From the date of completion of
the Disposal, the revenue attributable to the Guangdong and Shanghai branches of
the Group will no longer be combined into the Group's results.

INFORMATION ON THE GROUP'S TELECOMMUNICATIONS ASSETS AND LIABILITIES IN
GUANGDONG PROVINCE AND SHANGHAI MUNICIPALITY

The telecommunications assets and liabilities in Guangdong Province and Shanghai
Municipality to be sold by the Group pursuant to the Asset Transfer Agreement
are telecommunications assets that are necessary for the provision of the
following telecommunications services in Guangdong Province and Shanghai
Municipality by the Group at present and relating liabilities:

(a)     fixed-line telephone services (including personal handyphone system
("PHS") service), including:

o       local, domestic long distance and international long distance services;

                                       5

<PAGE>

o       value-added  services,  including  caller  identification,  PHS  short
messaging service, telephone information service and "Personalised Ring"
service; and

o       interconnection services provided to other domestic telecommunications
operators;

(b)     broadband and other Internet-related  services,  including broadband
access such as digital subscriber line and local area network, and dial-up
Internet access and other services; and

(c)     business and data communications services,  including digital data
network, frame relay, asynchronous transfer mode, internet protocol based
virtual private network and leased line services.

The telecommunications assets to be sold are primarily the Group's network in
Guangdong Province and Shanghai Municipality, which consists of transport
networks, service networks and support and information systems.

COMPLIANCE WITH THE LISTING RULES

China Netcom Group is the ultimate holding company of the Company. As such,
China Netcom Group is a connected person of the Company and the Disposal
constitutes a connected transaction for the Company.

Since the applicable percentage ratios set out in Rule 14.07 of the Listing
Rules in respect of the Disposal exceed 2.5% (but are below 5%), the Disposal is
conditional upon, among other things, the approval of the Disposal by the
Independent Shareholders at an extraordinary general meeting to be convened for
this purpose. The vote of the Independent Shareholders at the Extraordinary
General Meeting shall be taken by poll.

The Board is of the view that the Asset Transfer Agreement was entered into
after arm's length negotiation between CNC China and China Netcom Group and
reflect normal commercial terms. The Board is also of the view that the terms of
the Asset Transfer Agreement are fair and reasonable and in the interests of the
Company and its investors as a whole and recommends the Independent Shareholders
to vote in favour of the ordinary resolution to approve the Disposal at the
Extraordinary General Meeting.

GENERAL INFORMATION

The Company is a leading fixed-line telecommunications services provider in
China. Its service regions covers the area of Beijing Municipality, Tianjin
Municipality, Hebei Province, Henan Province, Shandong Province, Liaoning
Province, Heilongjiang Province, Jilin Province, Neimenggu Autonomous Region,
Shanxi Province and, prior to the completion of the Disposal, Guangdong Province
and Shanghai Municipality.

China Netcom Group is a state-owned enterprise established under the laws of the
PRC and is the ultimate holding company of the Company. China Netcom Group is
the second largest fixed-line telecommunications operator in China. China Netcom
Group owns and operates its fixed-line telecommunications networks, and provides
telecommunications services including fixed-line telephone, broadband and other
Internet-related services in all provinces, municipalities and autonomous
regions in China that are outside the Company's existing service regions and,
after the completion of the Disposal, Guangdong Province and Shanghai
Municipality. China International Capital Corporation (Hong Kong) Limited is the
financial adviser to China Netcom Group in respect of the Disposal.

EXTRAORDINARY GENERAL MEETING

A notice of the Extraordinary General Meeting to be held in The Ballroom, Island
Shangri-la, Hong Kong on 14 February 2007 at 10:00 a.m., is set out on pages 31
to 32 of this circular. At the Extraordinary General Meeting, an ordinary
resolution will be proposed to approve the Disposal. The vote of the Independent
Shareholders at the Extraordinary General Meeting on the resolution approving
the Disposal shall be taken by poll.

In accordance with the Listing Rules, China Netcom Group, the ultimate holding
company of the Company which was beneficially interested in approximately 69.88%
of the issued share capital of the Company as at the Latest Practicable Date,
and its Associates, will abstain from voting on the resolution to approve the
Disposal at the Extraordinary General Meeting.

A form of proxy for use at the Extraordinary General Meeting is enclosed with
this circular. Whether or not you are able to attend the Extraordinary General
Meeting, you are requested to complete the accompanying form of proxy in
accordance with the instructions printed thereon and return the same to the
Company's registered office at Room 6701, The Center, 99 Queen's Road Central,
Hong Kong, as soon as practicable and in any event at least 48 hours before the



                                       6

<PAGE>

time appointed for holding the Extraordinary General Meeting or any adjournment
thereof. Completion and return of the form of proxy will not preclude a
Shareholder from attending and voting in person at the Extraordinary General
Meeting or any adjournment thereof should he so wishes.

RECOMMENDATION

Lehman has been retained as the independent financial adviser to advise the
Independent Board Committee and the Independent Shareholders in respect of the
terms of the Disposal. Lehman considers that the terms of the Asset Transfer
Agreement are on normal commercial terms and the Asset Transfer Agreement is
entered into in the ordinary and usual course of business of the Group.
Furthermore, Lehman considers that the terms of the Asset Transfer Agreement are
fair and reasonable in so far as the interests of the Independent Shareholders
are concerned, and in the interests of the Company and its Shareholders as a
whole. Accordingly, Lehman advises the Independent Shareholders, as well as the
Independent Board Committee to recommend the Independent Shareholders, to vote
in favour of the relevant resolution to be proposed at the Extraordinary General
Meeting. The text of the letter from Lehman containing its advice and the
principal factors and reasons it has taken into consideration in arriving at its
advice is set out on pages 13 to 24 of this circular.

The Independent Board Committee, having taken into account the advice of Lehman,
considers that the terms of the Disposal are fair and reasonable so far as the
Independent Shareholders are concerned, and in the interests of the Company and
its Shareholders as a whole. Accordingly, the Independent Board Committee
recommends that Independent Shareholders vote in favour of the ordinary
resolution to be proposed at the Extraordinary General Meeting to approve the
Disposal, as detailed in the notice of the Extraordinary General Meeting set out
on pages 31 to 32 of this circular. The text of the letter from the Independent
Board Committee is set out on pages 11 to 12 of this circular.

ADDITIONAL INFORMATION

Your attention is also drawn to the letter from the Independent Board Committee
which sets out its recommendation to the Independent Shareholders, the letter
from Lehman which contains its advice to the Independent Board Committee and the
Independent Shareholders, and the additional information set out in the appendix
to this circular.


                            By Order of the Board
                             China Netcom Group Corporation (Hong Kong) Limited
                             Zhang Chunjiang
                             Chairman


                                       7

<PAGE>

                               [GRAPHIC OMITTED]
               CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
                          [CHINESE CHARACTERS OMITTED]
                    (Incorporated in Hong Kong with limited
                    liability under the Companies Ordinance)

                                                                 24 January 2007

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONWe refer to the circular (the "Circular") dated 24 January
2007 issued by the Company to its Shareholders of which this letter forms part.
The terms defined in the Circular shall have the same meanings when used in this
letter, unless the context otherwise requires.

On 15 January 2007, the Board announced that CNC China, a direct wholly-owned
subsidiary of the Company, had entered into the Asset Transfer Agreement,
pursuant to which CNC China agreed to sell and China Netcom Group agreed to
acquire the Group's telecommunications assets, liabilities and business
operations in Guangdong Province and Shanghai Municipality of the PRC, subject
to certain conditions.

The Independent Board Committee was formed on 21 November 2006 to make a
recommendation to the Independent Shareholders as to whether or not the terms of
the Disposal, from a financial perspective, are fair and reasonable so far as
the Independent Shareholders are concerned, and whether or not the Disposal is
in the interests of the Company and the Shareholders as a whole. Lehman has been
retained as independent financial adviser to advise the Independent Board
Committee and the Independent Shareholders on the fairness and reasonableness of
the terms of the Disposal from a financial perspective.

The terms and the reasons for the Disposal are summarised in the Letter from the
Chairman set out on pages 4 to 10 of the Circular.

As your Independent Board Committee, we have discussed with the management of
the Company the reasons for the Disposal and the basis upon which their terms
have been determined. We have also considered the principal factors and reasons
taken into account by Lehman in arriving at its opinion regarding the terms of
the Disposal as set out in the letter from Lehman on pages 13 to 24 of the
Circular, which we urge you to read carefully.

The Independent Board Committee, after taking advice from Lehman, concurs with
the views of Lehman and considers, from a financial perspective, that the terms
of the Asset Transfer Agreement are fair and reasonable so far as the
Independent Shareholders are concerned, and in the interests of the Company and
its Shareholders as a whole. Accordingly, the Independent Board Committee
recommends that Independent Shareholders vote in favour of the ordinary
resolution to approve the Disposal, as detailed in the notice of the
Extraordinary General Meeting set out on pages 31 to 32 of the Circular.


                                                    Yours faithfully
                                                     John Lawson Thornton
                                                     Victor Cha Mou Zing
                                                     Qian Yingyi
                                                     Hou Ziqiang
                                                     Timpson Chung Shui Ming
                                                     Independent Board Committee

                                       1

<PAGE>

                    LETTER FROM LEHMAN BROTHERS ASIA LIMITED

The following is the text of a letter, prepared for the purpose of inclusion in
this circular, received from Lehman in connection with the Disposal.LETTER FROM
LEHMAN BROTHERS ASIA LIMITED

                        [LEHMAN BROTHERS GRAPHIC OMITTED]


                                                    Lehman Brothers Asia Limited
                                          26/F, Two International Finance Center
                                            8 Finance Street, Central, Hong Kong
                                                                 24 January 2007

To the Independent Board Committee and Independent Shareholders of
 China Netcom Group Corporation (Hong Kong) Limited

Dear Sir or Madam,

                              CONNECTED TRANSACTION

   Disposal of Telecommunications Assets, Liabilities, and Business Operations
                 in Guangdong Province and Shanghai Municipality
                              to China Netcom Group


INTRODUCTION

We refer to the circular dated 24 January 2007 (the "Circular") issued by the
Company, of which this letter forms a part. Terms defined in the Circular shall
have the same meanings herein, unless otherwise defined herein.

Pursuant to the Listing Rules, the Disposal constitutes a connected transaction
for the Company. Since the applicable percentage ratios set out in Rule 14.07 of
the Listing Rules in respect of the Disposal exceed 2.5% but are below 5%, the
Disposal is conditional upon, among other things, the approval by the
Independent Shareholders at the Extraordinary General Meeting to be convened for
this purpose. We have been appointed to act as the independent financial advisor
to the Independent Board Committee and the Independent Shareholders to consider
whether the terms of the Disposal are fair and reasonable in so far as the
Independent Shareholders are concerned. We have not been requested to opine as
to, and our opinion does not in any manner address, the Company's underlying
business decision to undertake the Disposal. This letter has been prepared and
delivered in accordance with the requirements of the Listing Rules for the
purpose of assisting the Independent Board Committee in their duties to evaluate
the above mentioned aspects and for no other reasons.

In formulating our opinion with regards to the Disposal, we have reviewed, among
other things, the Circular, the Asset Transfer Agreement, and the information
and financial projections prepared by the Company relating to its
telecommunications assets, liabilities and business operations in Guangdong
Province and Shanghai Municipality of the PRC (the "Target Assets"). We have
considered information, given in writing and orally, by the Directors (including
the independent non-executive Directors) and the management of the Company (the
"Management"). We have also reviewed such research studies and publicly
available information as we deemed necessary. We have relied, without assuming
any responsibility for independent verification, on the information and the
facts about the Disposal, the Company and the Target Assets as supplied by the
Company and the Management and the Board, as well as publicly available
information. We have assumed that such information and facts, and any
representations made to us, or made or referred to in the Circular, are true,
accurate, and complete in all material respects as of the date hereof and that
they may be relied upon. We have also assumed that all statements of intention
of the Management or the Directors, as set forth in the Circular, will be
implemented. With respect to any historical costs and financial statements,
financial forecasts, estimates, and projections relating to the Disposal, we
have assumed that each was prepared on bases reflecting the best currently
available information, views, and judgements of the historical and future
financial revenues and expenses relating to the Disposal, the operations of the
Target Assets and the Company and may be relied upon by us in formulating our
opinion. We have also assumed that the Asset Transfer Agreement is enforceable
against each of the parties thereto in accordance with its terms and that each
of the parties will perform, and will be able to perform, its obligations
thereunder, and as otherwise described in the Circular, in full when due.

We have not carried out any independent verification of the information provided
to us nor have we conducted any


                                       1

<PAGE>

form of investigation into the commercial viability or the future prospects of
the Disposal or the financial condition or future prospects of any of the
parties to the Asset Transfer Agreement, the Target Assets, or the Company. We
have further assumed that all material governmental, regulatory, or other
consent and approvals necessary for the effectiveness and implementation of the
Disposal have been or will be obtained without any adverse effect on the Target
Assets, the Company or the contemplated benefits to the Company.

Our opinion is necessarily based upon the financial, economic, market,
regulatory, and other conditions as they exist on, and the facts, information,
and opinions made available to us as of the date of this letter. We disclaim any
undertaking or obligation to advise any person of any change in any fact or
matter affecting the opinion expressed herein which may come or be brought to
our attention after the date hereof. It should be understood that subsequent
developments (including any material deviations from the financial analysis and
forecasts provided to us) may affect and/or change this opinion and that we do
not have an obligation to update, revise, or reaffirm this opinion.

Our opinion is also subject to the following qualifications:

(a)     We express no opinion or view as to whether any similar terms or
transaction equivalent to the terms proposed for the Disposal are or might be
available from any Independent Third Parties, nor as to whether any Independent
Third Parties might offer similar or better terms for similar transactions;

(b)     We have considered the Disposal from the perspective of Independent
Shareholders as a whole, and not from the perspective of each individual
Independent Shareholder. As such, each Independent Shareholder should consider
his/her/its vote on the merits or otherwise of the Disposal in his/her/its own
circumstances and from his/her/its own point of view having regard to all the
circumstances as well as his/her/its own investment objectives;

(c)     We have only  reviewed the Disposal in isolation and not in  connection
with any other business plan or strategy, past or present with regard to the
Company or the Group as a whole, nor have we viewed these as part of a series of
other transactions or arrangements;

(d)     We express no opinion as to whether the obligations under the Asset
Transfer Agreement will be performed;

(e)     Nothing  contained in this letter  should be  construed as an opinion
or view as to the trading price or market trends of any securities of the
Company at any particular time;

(f)     Nothing  contained in this letter  should be construed as a
recommendation to hold, sell or buy any securities of the Company; and

(g)     We were not  requested  to and did not  provide  any advice  concerning
the structure, the timing, pricing, size, feasibility or any other aspect of the
Asset Transfer Agreement nor any services other than the delivery of this letter
relating to the Asset Transfer Agreement. We did not participate in negotiations
with respect to the terms of the Asset Transfer Agreement.

We are a deemed licensed corporation under the Securities and Futures Ordinance
for Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type
4 (advising on securities) and Type 6 (advising on corporate finance)
activities. We will receive a fee from the Company for the delivery of this
letter. The Company has also agreed to indemnify Lehman and related persons
against certain liabilities and expenses in connection with this engagement.

BACKGROUND

The Company, China Netcom Group Corporation (Hong Kong) Limited, is a limited
liability company incorporated under the Hong Kong Companies Ordinance on 22
October 1999, and its principal business includes the provision of fixed line
telephone services, broadband, other Internet-related services and business and
data communications services in ten northern provinces, municipalities and
autonomous region in the PRC. The Group also provides telecommunications
services to selected business and residential customers in Guangdong Province
and Shanghai Municipality in the PRC.

China Netcom Group is a state-owned enterprise established under the laws of the
PRC and is the ultimate holding company of the Company. China Netcom Group is
the second largest fixed-line telecommunications operator in China. China Netcom
Group owns and operates its fixed-line telecommunications networks, and provides
telecommunications services including fixed-line telephone, broadband and other
Internet-related services in all provinces, municipalities and autonomous
regions in China that are outside the Company's existing service regions and,
after the completion of

                                       2

<PAGE>

the Disposal, Guangdong Province and Shanghai Municipality.

China Netcom Group is the controlling shareholder of the Company, holding
approximately 69.88% of the issued share capital of the Company through China
Netcom Group Corporation (BVI) Limited ("CNC BVI"). As such, China Netcom Group
is a connected person of the Company and transactions between China Netcom Group
and the Group constitute connected transactions of the Company for the purpose
of the Listing Rules.

The Target Assets currently provide fixed-line telephone services, broadband and
other Internet-related services, as well as business and data communications
services to enterprises and high usage residential customers in Guangdong
Province and Shanghai Municipality.

On 15 January 2007, the Board announced that CNC China, a direct wholly-owned
subsidiary of the Company, had entered into the Asset Transfer Agreement,
pursuant to which CNC China agreed to dispose of the Target Assets to China
Netcom Group for a consideration of RMB3,500 million, subject to certain
conditions. China Netcom Group will also assume an amount of RMB3,000 million of
net indebtedness upon completion of the Disposal. Thus, the implied enterprise
value of the Target Assets amounts to RMB6,500 million. As mentioned in the
"Letter from the Chairman", since the consideration is RMB3,500 million, the
expected gain on the Disposal to the Company is estimated to be approximately
RMB711 million based on the net asset value of RMB2,789 million as at 30 June
2006. Completion of the Disposal is conditional upon the fulfilment of the
conditions referred to in the "Letter from the Chairman". It is expected that
completion of the Disposal will take place before end of February 2007. The
Company has given warranties, representation and undertaking in respect of the
business operations and assets and liabilities of the Target Assets.

Below is the existing corporate structure of the Group before Completion of the
Disposal:

Corporate Structure of the Group Before Completion of the Disposal

<TABLE>
<S><C>

 ____________________________________
|    China Network Commmunications   |
|        Group Corporation           |
|   ("China Netcom Group")(PRC)(3)   |
|____________________________________|
                  |
                  |  100%
 _________________|___________________        _________________________________      ____________________________
| China Netcom Group Corporation(BVI) |      |                                 |    |                            |
|        Limited ("CNC BVI")          |      |      Five PRC Shareholders(1)   |    |    Public Shareholders     |
|     (British Virgin Islands)(3)     |      |                                 |    |                            |
|_____________________________________|      |_________________________________|    |____________________________|
                  |                                            |                                    |
                  | 69.88%                                     |  4.48%(2)                          | 25.64%
                  |____________________________________________|____________________________________|
                                                               |
                                                               |  100%
                                              _________________|___________________
                                             |         China Netcom Group          |
                                             |  Corporation (Hong Kong) Limited    |
                                             |    ("Company") (Hong Kong)(5)       |
                                             |_____________________________________|
                                                               |
                                                               | 100%
            ___________________________________________________|___________________________________________________
           |                                                                                                       |
           |                                    China Netcom (Group) Company                                       |
           |                                   Limited ("CNC China") (PRC)(3)                                      |
           |_______________________________________________________________________________________________________|
                  |                           |
                  |                           |
                  |  Operating in (4)         |   _____________________
                  |                           |__|                     |
                  |__Beijing Municipality     |  |Shanghai Municipality|
                  |                           |  |Guandong Province    |
                  |__Tianjin Municipality     |  |_____________________|
                  |                           |
                  |__Hebei Province           |__Heilongjiang Province
                  |                           |
                  |__Henan Province           |__Jilin Province
                  |                           |
                  |__Shandong Province        |__Neimenggu Autonomous Region
                  |                           |
                  |__Liaoning Province        |__Shanxi Province


</TABLE>

We understand that the corporate structure of the Group immediately after the
Disposal will be as follows:

                                       3


<PAGE>

Corporate Structure of the Group After Completion of the Disposal

<TABLE>
<S><C>


 ____________________________________        ______________________
|    China Network Commmunications   |      |                      |
|        Group Corporation           |______| Shanghai Municipality|
|   ("China Netcom Group")(PRC)(3)   |      |  Guandong Province   |
|____________________________________|      |______________________|
                  |
                  |  100%
 _________________|___________________        _________________________________      ____________________________
| China Netcom Group Corporation(BVI) |      |                                 |    |                            |
|        Limited ("CNC BVI")          |      |      Five PRC Shareholders(1)   |    |    Public Shareholders     |
|     (British Virgin Islands)(3)     |      |                                 |    |                            |
|_____________________________________|      |_________________________________|    |____________________________|
                  |                                            |                                    |
                  | 69.88%                                     |  4.48%(2)                          | 25.64%
                  |____________________________________________|____________________________________|
                                                               |
                                                               |  100%
                                              _________________|___________________
                                             |         China Netcom Group          |
                                             |  Corporation (Hong Kong) Limited    |
                                             |    ("Company") (Hong Kong)(5)       |
                                             |_____________________________________|
                                                               |
                                                               | 100%
            ___________________________________________________|___________________________________________________
           |                                                                                                       |
           |                                    China Netcom (Group) Company                                       |
           |                                   Limited ("CNC China") (PRC)(3)                                      |
           |_______________________________________________________________________________________________________|
                  |                           |
                  |                           |
                  |  Operating in (4)         |
                  |                           |
                  |__Beijing Municipality     |
                  |                           |
                  |__Tianjin Municipality     |
                  |                           |
                  |__Hebei Province           |__Heilongjiang Province
                  |                           |
                  |__Henan Province           |__Jilin Province
                  |                           |
                  |__Shandong Province        |__Neimenggu Autonomous Region
                  |                           |
                  |__Liaoning Province        |__Shanxi Province


</TABLE>

Source: Company data as of 15 January 2007

Applicable to both charts above:

1.      The five PRC  Shareholders,  all of which are  established  in the PRC,
are the Chinese Academy of Science, Information and Network Center of the State
Administration of Radio, Film and Television, China Railways Telecommunications
Center, Shanghai Alliance Investment Limited, and Shandong Provincial
State-owned Assets Supervision and Administration Commission.

2.      All of the ordinary  shares owned by the five PRC  Shareholders  are
registered in the name of China Netcom Group Corporation (BVI) Limited, or CNC
BVI, which holds such ordinary shares in trust for each of the five PRC
Shareholders. Consequently, the ownership percentage of the five PRC
Shareholders in the charts above reflects the aggregate beneficial interests of
these Shareholders as held through CNC BVI. The ownership percentage of CNC BVI
as indicated in the charts above reflects CNC BVI's own beneficial ownership.

3.      Indicates jurisdiction of incorporation.

4.      The provincial businesses are operated under local branch offices of
CNC China and these local branch offices are not legal entities.


According to the Group's management accounts, the unaudited net loss before and
after taxation and extraordinary items attributable to the Group's
telecommunications assets and liabilities in Guangdong Province and Shanghai
Municipality for the financial years ended 31 December 2004 and 31 December 2005
and for the six months ended 30 June 2006 as prepared under HKFRS are set out
below:


<TABLE>
<CAPTION>

                                                       For the financial year ended     For the six months
                                                                31 December                  ended 30 June
                                                            2004                 2005                 2006
                                                     RMB million          RMB million          RMB million
<S>                                                          <C>                  <C>                   <C>
Net loss before taxation and  extraordinary items            316                  259                   72
Net loss after taxation and  extraordinary items             240                  174                   49

</TABLE>


As stated in the "Letter from the Chairman" in the Circular, the unaudited
adjusted EBITDA (as defined in the "Letter from the Chairman") attributable to
the Group's telecommunications assets and liabilities in Guangdong Province and
Shanghai Municipality for the year ended 31 December 2006 was RMB659 million.
From the date of completion of the Disposal, the revenue attributable to the
Guangdong and Shanghai branches of the Group will no longer be combined into the
Group's results.

                                       4

<PAGE>

ASSET TRANSFER AGREEMENT

We set out below a summary of the Asset Transfer Agreement. We will not be
setting out in this letter the commercial background of, and reasons for such an
agreement, which are detailed in the "Letter from the Chairman" in the Circular.

As stated in the "Letter from the Chairman" in the Circular, pursuant to the
Asset Transfer Agreement, CNC China has agreed to dispose of the Target Assets
to China Netcom Group. China Netcom Group has granted CNC China a preferential
right to acquire such assets, liabilities and business operations such that if
China Netcom Group intends to dispose of them in the future, CNC China will be
entitled to a first right to acquire them at terms equal to or no less
favourable than those offered by China Netcom Group to other parties.

Completion of the Disposal is conditional upon the fulfillment of the following
conditions: (a) the passing of an ordinary resolution by the Independent
Shareholders approving the Disposal; and (b) the receipt of relevant approvals
or consent from the relevant PRC authorities. Both of these conditions cannot be
waived.

PRINCIPAL FACTORS AND REASONS

In arriving at our opinion, we have taken into consideration the principal
factors and reasons set out below.

(a)     Reasons for the Disposal

As stated in the "Letter from the Chairman" in the Circular, the Group's
strategy is to focus on northern service region, in which the Group has
extensive network resources, dominant market share and has achieved better
profitability in the past. Since the telecommunications services in Guangdong
Province and Shanghai Municipality have not made significant contributions to
the overall results of the Group in the past in financial terms, we note that
the Company believes the Disposal will enable the Group to better grasp the
growth opportunities in the northern service region and increase its
concentration on the development of business and services in the northern
service region with a view to gaining better financial results for the Group.

(b)     Basis of the Consideration for the Disposal

As noted in the "Letter from the Chairman" in the Circular, the terms of the
Disposal were negotiated on normal commercial terms. We understand that the
consideration for the Disposal was determined based on various factors,
including the quality of the assets being sold, their growth prospects, earnings
potential, and competitive advantages in their respective markets, as well as by
reference to other financial and operational indicators. When considering the
growth prospects and earnings potential of the assets and operations being sold,
the Company has considered the subscribers number growth, ARPU, EBITDA and
future cash flow projections of the assets and operations. We consider these are
the appropriate measures that are commonly used to determine the profitability
and growth prospect of a business in the telecommunications industry.

(c)     Valuation of the Disposal

The consideration for the Disposal is set at RMB3,500 million. China Netcom
Group will assume an amount of RMB3,000 million of net indebtedness upon
completion of the Disposal. Thus, the implied enterprise value of the Target
Assets amounts to RMB6,500 million.

In considering the consideration of the Disposal, we have analyzed the
enterprise value of the Target Assets using three valuation methodologies
including: (i) the discounted cash flow ("DCF") analysis, (ii) the comparable
company trading analysis, and (iii) the comparable transactions analysis.

(i)     Discounted cash flow analysis:  The DCF analysis was used as the primary
valuation methodology as in our view it best reflects the value of the potential
future cash flows of the Target Assets. Such analysis takes into consideration
the dynamics of the market, competition in the sector, regulatory environment,
and provides an estimate of the revenues, cost structure and capital
expenditures for the Target Assets. In performing the DCF analysis, we have
reviewed the financial projections of the Target Assets provided to us by the
Company. We assumed that such projections were reasonably prepared on a basis
reflecting the best currently available estimates and judgements of the
management of the Target Assets.

The consideration of RMB3,500 million for the Disposal is reasonable as it falls
within the range of the equity value implied by our DCF analysis. Assuming that
the amount of net indebtedness of RMB3,000 million valued at book value, the
implied enterprise value of the Target Assets equals to RMB6,500 million.

                                       5

<PAGE>

(ii)    Comparable  company  trading  analysis:  The  analysis  was  carried
out by using trading multiples commonly used by investors as a valuation tool in
the telecommunications industry, in particular, Enterprise Value ("EV")/EBITDA.
We have not relied on price/earning ratio, another commonly used valuation
metric, as the Target Assets currently have negative earnings. Trading multiples
were derived by using each respective company's public financials and its
current trading information.

We compared the Target Assets' implied valuation multiples to the trading
multiples of other competitive local exchange carriers ("CLECs") in Asia, the
U.S., and Europe. These companies were chosen based on their market position,
business focus, service offerings, customer mix, stage of development, growth
profile and EBITDA margins.

<TABLE>

                                                                     Implied                    Implied
                                                                     EV/2006                    EV/2006
                                                                    EBITDA(1)                  EBITDA(1)

<S>                                                                     <C>                        <C>
Target Assets                                                           9.9x                       9.9x



                                                                    Reported                   Reported
                                                             financial basis            financial basis
                                                                     EV/2006                    EV/2006
                                                                    EBITDA(2)                  EBITDA(2)

Based on Closing Price of Comparable Companies(3) as of      12 January 2007     20 Trading Day Average

Mean                                                                    9.7x                       9.3x
Median                                                                  7.4x                       6.9x

</TABLE>


Source: Factset, brokers' estimates and trading price as of the close of 12
January 2007 and 20-trading day average share price up to 12 January 2007.

1.      Assuming EV equals RMB6.5  billion and 2006  unaudited  adjusted  EBITDA
equals RMB659 million. 2006 unaudited adjusted EBITDA provided in the "Letter
from the Chairman".

2.      Source from respectively company annual reports and Factset.

3.      Selected  comparable  companies include  hanarotelecom,  LG Dacom,
StarHub, Completel, City Telecom (Hong Kong), Colt Communications, THUS
Communications, and Time Warner Telecom.


Based on the 12 January 2007 closing share price, the Target Assets multiple
implied by the consideration represents 1.4% and 33.5% premium to the mean and
the median trading multiples of the selected group of comparable companies,
respectively. Based on the 20 Trading Days Average closing share price up to 12
January 2007, the Target Assets multiple implied by the consideration represents
5.8% and 42.2% premium to the mean and the median trading multiples of the
selected group of comparable companies, respectively.

The implied valuation multiple of the Disposal is reasonable when compared to
the trading multiples of the above group of comparable companies although it
should be noted that the regulatory environments and stage of development of
these companies are very different from those of the Target Assets.

(iii)   Comparable transactions analysis: Comparable transaction analysis
should be viewed in the context of factors that include market share, business
focus, service offerings and customer mix, regulatory environment, and market
and operating conditions at the time of each transaction. The following are the
recent comparable transactions in the global CLECs sector.

o       In August 2006, PAETEC Communications acquired 100% interest of US LEC;

                                       6

<PAGE>

o       In July 2006, Time Warner Telecom acquired 100% interest of Xspedius;

o       In May 2006, Level 3 Communications acquired 100% interest of Telcove;

o       In May 2006, Telepacific acquired 100% interest of Mpower;

o       In February 2006, Integra acquired 100% interest of Electric Lightwave;

o       In August 2005, C&W acquired 100% interest of Energis;

o       In July 2005, Tele2 and Apax acquired 100% interest of Versatel;

o       In May 2005, Telenor acquired 100% interest of Cybercity;

o       In October 2004, TDC acquired 100% interest of Song Networks;

o       In May 2004, Softbank acquired the fixed line assets of Japan Telecom
        from Ripplewood; and

o       In August 2003, Ripplewood acquired the fixed line assets of Japan
        Telecom.

<TABLE>


                                                                                              Implied
                                                                                    EV/2006 EBITDA(1)
<S>                                                       <C>                                   <C>
Target Assets                                                                                    9.9x


                         Reported financial basis EV/EBITDA(2)                Target Assets EV/EBITDA
                                                                     Premium/(Discount) to Respective
                                                                                         Transactions

Mean                                                      7.7x                                  27.3%
Median                                                    8.1x                                  21.8%

</TABLE>


Sources:  Factset, respective company announcement and brokers' estimates.

1.      Assuming EV equals RMB6.5  billion and 2006  unaudited  adjusted  EBITDA
equals RMB659 million. 2006 unaudited adjusted EBITDA provided in the "Letter
from the Chairman".

2.      Based on EBITDA of acquisition year and based on the comparable
transactions listed above.

The Target Assets multiple implied by the consideration represents 27.3% and
21.8% premium to the mean and the median transaction multiples of the
abovementioned comparable transactions, respectively.

The implied valuation multiple of the Disposal is reasonable when compared to
the transaction multiples of the abovementioned comparable transactions although
it should be noted that the regulatory environments and stage of development of
these companies are very different from those of the Target Assets.

Having considered the above mentioned principal factors, we are of the opinion
that the consideration for the Disposal is fair and reasonable in so far as the
Independent Shareholders are concerned and in the interests of the Company and
its shareholders as a whole.

SUMMARY

Having considered the above principal factors and reasons, we draw your
attention to the following key factors in arriving at our opinion:


                                       7

<PAGE>

(a)     the Board (including the independent  non-executive  directors of the
Company) is of the view that the Disposal will enable the Group to better grasp
the growth opportunities in the northern service region and increase its
concentration on the development of business and services in the northern
service region with a view to gaining better financial results for the Group;

(b)     the Board's representation that the terms of the Disposal were
negotiated on normal commercial terms;

(c)     the consideration  for the Disposal was determined based on various
factors, including the quality of the assets being sold, their growth prospects,
earnings potential, and competitive advantages in their respective markets, as
well as by reference to other financial and operational indicators. When
considering the growth prospects and earnings potential of the assets and
operations being sold, the Company has considered the subscribers number growth,
ARPU, EBITDA and future cash flow projections of the assets and operations,
which we consider to be the commonly used measures to determine the
profitability and growth prospect of a business in the telecommunications
industry;

(d)     the valuation of the Target Assets implied by the  consideration  for
the Disposal: (i) is within the range of the values implied by our DCF analysis,
(ii) implies a reasonable multiple compared to the relevant trading multiples of
other comparable companies, and (iii) implies a reasonable multiple compared to
the multiples implied by relevant transactions;

(e)     As mentioned in the "Letter from the  Chairman",  since the
consideration is RMB3,500 million, the expected gain on the Disposal to the
Company is estimated to be approximately RMB711 million based on the net asset
value of RMB2,789 million as at 30 June 2006; and

(f)     CNC China  shall  have a  pre-emptive  right to  acquire  the  Target
Assets or enter into any joint venture or cooperation with any other party in
respect of the interests in the Target Assets at terms equal to or no less
favourable than those offered by China Netcom Group to other parties in the
future, which we consider to be a favourable term to the Company.

OPINION

Based upon above reasons and principal factors, we are of the opinion as of the
date hereof that:

(a)     the terms of the  Asset  Transfer  Agreement  are on normal  commercial
terms and the Asset Transfer Agreement is entered into in the ordinary and usual
course of business of the Group;

(b)     the terms of the Assets  Transfer  Agreement are fair and reasonable in
so far as the interests of the Independent Shareholders are concerned, and in
the interests of the Company and its Shareholders as a whole; and

(c)     we  would  advise  the  Independent  Board  Committee  to  make a
recommendation to the Independent Shareholders to vote in favour of the Disposal
which terms are set out in the "Letter from the Chairman".

This letter is provided to the Independent Board Committee and the Independent
Shareholders of the Company in connection with and for the purposes of their
evaluation of the terms of the Disposal. In the event of inconsistency, the
English text of this letter shall prevail over the Chinese version.


                                             Yours faithfully,
                                              For and on behalf of
                                              Lehman Brothers Asia Limited
                                              Charles Alexander
                                              Managing Director

                                       8

<PAGE>


                           APPENDIXGENERAL INFORMATION

1       RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules
for the purpose of giving information with regard to the Company. The Directors
collectively and individually accept full responsibility for the accuracy of the
information contained in this circular and confirm, having made all reasonable
enquiries, that to the best of their knowledge and belief there are no other
facts the omission of which would make any statement herein misleading.

2       DISCLOSURE OF INTERESTS

App.1B38(1)App.1B38(1A)As at Latest Practicable Date, the following Directors
and chief executive of the Company had, or were deemed to have, interests or
short positions in the Shares, underlying Shares or debentures of the Company or
any of its associated corporations (within the meaning of Part XV of the
Securities and Futures Ordinance) which were required to be notified to the
Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part
XV of the Securities and Futures Ordinance (including interests and short
positions which they were deemed or taken to have under such provisions of the
Securities and Futures Ordinance), or which are required, pursuant to section
352 of the Securities and Futures Ordinance to be entered in the register
referred to therein, or which are required, pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers contained in the Listing
Rules, to be notified to the Company and the Hong Kong Stock Exchange.


<TABLE>
<CAPTION>

                                                      Number and  description of  equity         No. of Underlying Shares
                                                                             derivatives         involved  in the Options
<S>                                                                  <C>             <C>                          <C>
Director
Zhang Chunjiang                                                      920,000 Options (1)                          920,000
Tian Suning                                                          920,000 Options (1)                          920,000
Zuo Xunsheng (also the chief executive officer)              480,000 Options (1) (2) (3)                          480,000
Zhang Xiaotie                                                480,000 Options (1) (2) (3)                          480,000
Li Fushen                                                     480,000 Options (1) (2)(3)                          480,000
Miao Jianhua                                                 420,000 Options (1) (2) (3)                          420,000
Yan Yixun                                                     354,000 Options (1) (2)(3)                          354,000
                                                                                                            -------------
Total                                                                                                           4,054,000
                                                                                                            =============
</TABLE>


Notes:

(1)     The Options  were all granted on 22 October 2004 under the Share  Option
Scheme approved and adopted by a resolution of the Shareholders passed on 30
September 2004 and subsequently amended by a resolution of the Shareholders
passed on 16 May 2006. Grantees of such Options are entitled to exercise the
Options at a price of HK$8.40 in the following periods:

(i)     in respect of 40 per cent. of the Options granted, from 17 May 2006 to
16 November 2010;

(ii)    in respect of a further 20 per cent. of the Options granted, from 17 May
2007 to 16 November 2010;

(iii)   in respect of a further 20 per cent. of the Options  granted, from 17
May 2008 to 16 November  2010;
and

(iv)    in respect of the  remaining  20 per cent.  of the  Options  granted,
from 17 May 2009 to 16 November 2010.

(2)     The  following  table sets out the number of Options  exercised  by the
Directors concerned from 22 October 2004 (being the date of granting of Options)
up to the Latest Practicable Date and the number of Shares acquired by each of
them as a result of such exercise of Options:


Name of Director                    Number of Options       Number of


                                       1

<PAGE>

                                            exercised          Shares
                                                             acquired

Zuo Xunsheng                                  320,000         320,000
Zhang Xiaotie                                 320,000         320,000
Li Fushen                                     320,000         320,000
Miao Jianhua                                  280,000         280,000
Yan Yixun                                     236,000         236,000


(3)     The Directors  concerned  have ceased to be interested in all the Shares
acquired by them as a result of the exercise of Options as such Shares have been
sold by the Directors concerned.

(4)     All of the interests held by each of the Directors set out above are
long positions.


Save as disclosed above, as at the Latest Practicable Date, none of the
Directors nor the chief executive of the Company had or was deemed to have any
interests or short positions in the Shares, underlying Shares or debentures of
the Company or any of its associated corporations (within the meaning of Part XV
of the Securities and Futures Ordinance) which were required to be notified to
the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the Securities and Futures Ordinance (including interests and short
positions which they were deemed or taken to have under such provisions of the
Securities and Futures Ordinance), or which were required, pursuant to section
352 of the Securities and Futures Ordinance to be entered in the register
referred to therein, or which are required, pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers contained in the Listing
Rules, to be notified to the Company and the Hong Kong Stock Exchange.

China Netcom Group is the ultimate holding company of the Company who, through
China Netcom Group Corporation (BVI) Limited ("CNC BVI"), was beneficially
interested in approximately 69.88% of the issued share capital of the Company as
at the Latest Practicable Date. The executive Directors also hold executive
positions with China Netcom Group. Details of the shareholding of China Netcom
Group in the Company are set out in the paragraph headed "Substantial
Shareholders" in this Appendix. Save as disclosed herein, none of the Directors
is a director or employee of a company which has, or is deemed to have, an
interest or short position in the Shares or underlying Shares which would fall
to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part
XV of the Securities and Futures Ordinance.

None of the Directors is materially interested in any contract or arrangement
subsisting as at the Latest Practicable Date which is significant in relation to
the business of the Group taken as a whole.

Since 31 December 2005, the date to which the latest published audited
consolidated financial statements of the Group were made up, none of the
Directors nor any expert named in the paragraph headed "Qualification of expert"
in this Appendix has any direct or indirect interest in any assets which have
been acquired or disposed of by or leased to any member of the Group, or are
proposed to be acquired or disposed of by or leased to any member of the Group.

3       SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors and the chief executive of the Company, as
at the Latest Practicable Date, the following corporations had, or were deemed
to have, interests or short positions in the Shares or underlying Shares which
would fall to be disclosed to the Company and the Hong Kong Stock Exchange under
the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures
Ordinance, or who was, directly or indirectly, interested in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any member of the Group:

                                       2

<PAGE>


<TABLE>
<CAPTION>


Name of substantial shareholder                       Number of Shares interested              Percentage  of
                                                                                                total  issued
                                                                                           share  capital (%)
                                                           directly           indirectly
<S>                                                <C>                 <C>           <C>                <C>
China Netcom Group                                                -  4,945,148,000(1)(2)                74.35
CNC BVI                                            4,647,449,014(1)    297,698,986(1)(2)                74.35
AllianceBernstein L.P.                                            -       332,783,700(3)                 5.00
Telefonica Internacional S.A.U.  (or an affiliate)      331,769,305                    -                 4.99

</TABLE>

Notes:

(1)     China Netcom Group beneficially owns  4,647,449,014  Shares held by its
wholly-owned subsidiary, CNC BVI and one share held by CNC Cayman, Limited ("CNC
Cayman"), a wholly-owned subsidiary of CNC BVI. The percentage of total issued
share capital of the Company beneficially held by China Netcom Group is 69.88%.

(2)     China  Netcom  Group is deemed  under  the  Securities  and  Futures
Ordinance to be interested in 297,698,985 Shares held by CNC BVI as trustee on
behalf of certain Shareholders representing a 4.48 per cent. of the issued share
capital of the Company.

(3)     AllianceBernstein  L.P is interested in 332,783,700 Shares held by its
subsidiaries AllianceBernstein Limited, AllianceBernstein Investment Management
Australia Limited, AllianceBernstein New Zealand Limited, AllianceBernstein
Australia Limited and AllianceBernstein Japan Ltd..

(4)     All of the interests held by each of the substantial shareholders as
listed in the table are long positions.


Save as disclosed above, as at the Latest Practicable Date, the Directors and
the chief executive of the Company were not aware of any other person who had,
or was deemed to have, an interest or short position in the Shares and
underlying Shares, which would fall to be disclosed to the Company and the Hong
Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
Securities and Futures Ordinance, or, who was, directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of any member
of the Group, or any options in respect of such capital.

4       LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any
litigation, arbitration or claim of material importance and no litigation,
arbitration or claim of material importance is known to the Directors to be
pending or threatened against any member of the Group.

5       SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or
proposed to enter into, any service contract with the Company or any member of
the Group (excluding contracts expiring or determinable by the employer within
one year without payment of compensation (other than statutory compensation)).

6       MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material
adverse change in the financial or trading position of the Group since 31
December 2005, being the date to which the latest published audited consolidated
financial statements of the Group were made up.

7       CONSENT

Lehman has given and has not withdrawn its written consent to the issue of this
circular with the inclusion of its letter and references to its name in the form
and context in which they appear.

                                       3

<PAGE>

As at the Latest Practicable Date, an associate of Lehman is interested in
approximately 0.017% of the issued share capital of the Company. Save for the
aforesaid, Lehman is not beneficially interested in the share capital of any
member of the Group and it does not have any right, whether legally enforceable
or not, to subscribe for or to nominate persons to subscribe for securities in
any member of the Group.

8       QUALIFICATIONS OF EXPERT

The following are the qualifications of the professional adviser who has given
opinions or advice contained in this circular:



Name                                 Qualifications
Lehman Brothers Asia Limited         a licensed corporation for Types 1 (dealing
                                     in securities), 2 (dealing in futures
                                     contracts), 4 (advising on securities) and
                                     6 (advising on corporate finance) regulated
                                     activities under the Securities and Futures
                                     Ordinance


9       Rules 14.64(8) & 14A.59(11)COMPETING INTEREST

China Netcom Group is engaged in fixed-line telecommunications business and
other related businesses in the PRC and Asia-Pacific which are similar to that
of the Company. The executive Directors also hold executive positions with China
Netcom Group. On 6 September 2004, China Netcom Group, the Company and CNC China
entered into a non-competition agreement, under which China Netcom Group
undertakes not to compete with the Company without the Company's prior written
consent.

Apart from the above, none of the Directors is or was interested in any
business, apart from the Company's business, that competes or competed or is or
was likely to compete, either directly or indirectly, with the Company's
business.

10      PROCEDURES FOR DEMANDING A POLL AT THE EXTRAORDINARY GENERAL MEETING

In accordance with the Listing Rules, any vote taken at the Extraordinary
General Meeting to approve the Disposal must be taken by poll. According to
article 70 of the articles of association of the Company, a resolution put to
the vote of the meeting shall be decided on a show of hands unless (before or on
the declaration of the result of the show of hands or on the withdrawal of any
other demand for a poll) a poll is demanded by:

(a)     the chairman of the meeting; or

(b)     at least three Shareholders present in person (or in the case of a
member being a corporation, by its duly authorised representative) or by proxy
and entitled to vote at the meeting; or

(c)     any  Shareholder  or  Shareholders  present in person (or in the case
of a member being a corporation, by its duly authorised representative) or by
proxy and representing in the aggregate not less than one-tenth of the total
voting rights of all Shareholders having the right to attend and vote at the
meeting; or

(d)     any  Shareholder  or  Shareholders  present in person (or in the case
of a member being a corporation, by its duly authorised representative) or by
proxy and holding shares conferring a right to attend and vote at the meeting on
which there have been paid up sums in the aggregate equal to not less than
one-tenth of the total sum paid up on all shares conferring that right.

A poll shall be taken at such time (being not later than thirty days after the
date of the demand) and in such manner (including the use of ballot or voting
papers or tickets) as the chairman of the Extraordinary General Meeting may
appoint. On a poll, every Shareholder present at the Extraordinary General
Meeting shall be entitled to one vote for every fully paid-up Share of which he
is the holder. The result of such poll shall be deemed for all purposes to be
the resolution of the meeting at which the poll was so directed or demanded.


                                       4

<PAGE>

11      MISCELLANEOUS

(a)     The  joint  company  secretaries  of the  Company  are Li  Fushen  and
Mok Kam Wan. Mok Kam Wan is an associate member of The Institute of Chartered
Secretaries and Administrators in the United Kingdom and The Hong Kong Institute
of Chartered Secretaries. The qualified accountant of the Company appointed
pursuant to Rule 3.24 of the Listing Rules is Leung June Man who is a member of
the American Institute of Certified Public Accountants and a member of the Hong
Kong Institute of Certified Public Accountants.

(b)     The registered office of the Company is at Room 6701, The Center, 99
Queen's Road Central, Hong Kong.

(c)     Computershare  Hong Kong Investor Services  Limited,  the share
registrar of the Company in Hong Kong, is located at Rooms 1712-1716, 17th
Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

(d)     The English text of this circular and form of proxy shall prevail over
the Chinese text.

12      DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at
Linklaters, 10th Floor, Alexandra House, Chater Road, Hong Kong during normal
business hours on any Business Day from the date of this circular until 6
February 2007 and at the Extraordinary General Meeting:

(a)     the Asset Transfer Agreement;

(b)     the letter of consent from Lehman referred to in the paragraph headed
"Consent" in this Appendix;

(c)     the letter from Lehman dated 24 January  2007,  the text of which is
set out in pages 13 to 24 of this circular;

(d)     the memorandum and articles of association of the Company; and

(e)     the annual reports of the Company for the financial years ended 31
December 2004 and 2005.

                                       5

<PAGE>

                   NOTICE OF THE EXTRAORDINARY GENERAL MEETING

                               [GRAPHIC OMITTED]
               CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
                          [CHINESE CHARACTERS OMITTED]
                    (Incorporated in Hong Kong with limited
                    liability under the Companies Ordinance)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the shareholders
of China Netcom Group Corporation (Hong Kong) Limited (the "Company") will be
held on 14 February 2007 at 10:00 a.m., in The Ballroom, Island Shangri-la, Hong
Kong for the purposes of considering and, if thought fit, passing, with or
without modifications, the following resolution as an Ordinary Resolution:

Ordinary Resolutionin

"TTHAT the asset transfer agreement dated 15 January 2007 (the "Asset Transfer
Agreement") entered into between China Netcom (Group) Company Limited ("CNC
China") and China Network Communications Group Corporation ("China Netcom
Group"), a copy of which has been initialled by the chairman of this meeting and
for the purpose of identification marked "A", pursuant to which CNC China agreed
to dispose of the telecommunications assets, liabilities and business operations
of the Company in Guangdong Province and Shanghai Municipality of the PRC to
China Netcom Group (the "Disposal") for a cash consideration of RMB3,500 million
(comprising an initial amount of RMB1,050 million payable in cash the next
business day after completion of the Disposal and the remaining RMB2,450 million
payable in cash within 30 days after completion of the Disposal) and China
Netcom Group agreed to assume an aggregate principal amount of RMB3,000 million
of debt, be and is hereby generally and unconditionally approved and the
directors of the Company be and are hereby authorised to do all such further
acts and things and execute such further documents and take all such steps which
in their opinion may be necessary, desirable or expedient to implement and/or
give effect to the terms of the Asset Transfer Agreement."


                             By Order of the Board
           [  ]China Netcom Group Corporation (Hong Kong) Limited
Li Fushen                                                           Mok Kam Wan
                           Joint Company Secretaries


Hong Kong, 24 January 2007

Registered office
 Room 6701, The Center
 99 Queen's Road Central
 Hong Kong

Notes:

1.      A member entitled to attend and vote at the  Extraordinary  General
Meeting is entitled to appoint one or more proxies to attend and, on a poll,
vote in his stead. A proxy need not be a member of the Company.

2.      A form of proxy for use at the meeting is  enclosed.  In order to be
valid, a form of proxy together with any power of attorney or other authority,
if any, under which it is signed, or a notarially certified copy of such power
of authority, must be deposited at the Company's registered office at Room 6701,
The Center, 99 Queen's Road Central, Hong Kong, at least 48 hours before the
time appointed for holding the Extraordinary General Meeting. Completion and
return of the form of proxy will not preclude a member from attending and voting
in person at the meeting or at any adjourned meeting should a member so wishes.

3.      In accordance  with the Rules  Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited, voting on the above ordinary resolution
will be taken by poll.


<PAGE>

                               [GRAPHIC OMITTED]
               CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
                          [CHINESE CHARACTERS OMITTED]
                    (Incorporated in Hong Kong with limited
                    liability under the Companies Ordinance)
                                (Stock Code: 906)


Form of proxy for the Extraordinary General Meeting
to be held on 14 February 2007 at 10:00 a.m.


I/We (Note 1)
             -------------------------------------------------------------------
of
  ------------------------------------------------------------------------------
being the registered holder(s) of                             Shares (Note 2) of
                                 -----------------------------
US$0.04 each in the share capital of the above-named Company HEREBY APPOINT
THE CHAIRMAN OF THE EXTRAORDINARY GENERAL MEETING (Note 3)
or                                                of
  ------------------------------------------------  ----------------------------
as my/our proxy to attend and act for me/us at the Extraordinary General Meeting
(and any adjournment thereof) of the said Company to be held in
The Ballroom, Island Shangri-la, Hong Kong on 14 February 2007 at 10:00 a.m.
for the purposes of considering and, if thought fit, passing the Resolution
as set out in the Notice of the Extraordinary General Meeting and at such
Extraordinary General Meeting (and at any adjournment thereof) to
vote for me/us and in my/our name(s) in respect of the Resolution as
indicated below (Note 4).


--------------------------------------------------------------------------------
RESOLUTION                                 FOR                  AGAINST
--------------------------------------------------------------------------------
To approve the Asset Transfer
Agreement and the transaction
contemplated thereunder
--------------------------------------------------------------------------------

Dated this  day of   2007 Signed (Note 5)

Notes:

1.      Full name(s) and address(es) to be inserted in BLOCK CAPITALS.

2.      Please insert the number of shares registered in your name(s) to which
this proxy relates. If no number is inserted, this form of proxy will be deemed
to relate to all the shares in the Company registered in your name(s).

3.      If any proxy other than the Chairman of the Extraordinary General
Meeting is preferred, strike out the words "THE CHAIRMAN OF THE EXTRAORDINARY
GENERAL MEETING" and insert the name and address of the proxy desired in the
space provided. A member may appoint one or more proxies to attend and vote in
his stead. ANY ALTERATION MADE TO THIS FORM OF PROXY MUST BE INITIALLED BY THE
PERSON WHO SIGNS IT.

4.      IMPORTANT: IF YOU WISH TO VOTE FOR THE RESOLUTION, TICK THE APPROPRIATE
BOX MARKED "FOR". IF YOU WISH TO VOTE AGAINST THE RESOLUTION, TICK THE
APPROPRIATE BOX MARKED "AGAINST". Failure to complete any or all the boxes will
entitle your proxy to cast his votes at his discretion. Your proxy will also be
entitled to vote at his discretion on any resolution properly put to the
Extraordinary General Meeting other than those referred to in the Notice of the
Extraordinary General Meeting.


                                       1

<PAGE>

5.      This form of proxy must be signed by you or your attorney duly
authorised in writing or, in the case of a corporation, must be either executed
under its common seal or under the hand of an officer or attorney or other
person duly authorised to sign the same.

6.      In the case of joint holders of any shares, any one of such joint
holders may vote at the Extraordinary General Meeting, either personally or by
proxy, in respect of such shares as if he were solely entitled thereto. However,
if more than one of such joint holders is present at the Extraordinary General
Meeting, either personally or by proxy, the vote of the joint holder whose name
stands first in the Register of Members and who tenders a vote, whether in
person or by proxy, will be accepted to the exclusion of the votes of the other
joint holder(s).

7.      To be valid, this form of proxy together with the power of attorney
(if any) or other authority under which it is signed (if any) or a notarially
certified copy thereof, must be deposited at the registered office of the
Company at Room 6701, The Center, 99 Queen's Road Central, Hong Kong not less
than 48 hours before the time for holding the Extraordinary General Meeting or
any adjournment thereof (as the case may be).

8.      The proxy need not be a member of the Company but must attend the
Extraordinary General Meeting in person to represent you.

9.      Completion and delivery of the form of proxy will not preclude you from
attending and voting at the Extraordinary General Meeting if you so wish. In
such event, the instrument appointing a proxy shall be deemed to be revoked.


                                       2