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Response Letter

 Our ref.: CEO/SLD/LEG/105-2

 October 4, 2005

 Mr. David R. Humphrey,

 Accounting Branch Chief,

 United States Securities and Exchange Commission,

 Division of Corporate Finance,

 100 F Street, N.E.,

 Washington, D.C. 20549-3561,

 U.S.A.

 Dear Mr. Humphrey,

 Kowloon-Canton Railway Corporation

 Form 20-F
for the Fiscal Year Ended December 31, 2004

 Filed June 24, 2005

 File No. 1-15004

 I refer to your letter dated August 29, 2005. Set out below is our response to your comments, using the same headings and numbering as in your
letter.

 Tabular Disclosure of Contractual Obligations, page 52

1.
We believe that registrants should generally include scheduled interest payments in the table. Interest on fixed rate obligations should be included at a minimum. If interest on
any obligations is not included in the table because it cannot be reliably estimated, please disclose this fact and state the amounts and significant terms of those obligations in an accompanying footnote to the table.

 We will disclose, in future filings, in the table of contractual
obligations our scheduled interest payments. To the extent interest on any obligations is not included in the table because it cannot be reliably estimated, we will disclose this fact and state the amounts and significant terms of those obligations
in an accompanying footnote to the table.

 Financial Statements

 Note 2. Significant Accounting Policies, page F-7

 (c) Basis of Consolidation, page F-7

2.
We note the various references to certain subs held on behalf of the government for the sole purpose of developing property along the West Rail route. We also note that you
exclude these entities from consolidation. Please explain, supplementally and in detail, how you account for them. Tell us how you record and classify related

 Mr. David R. Humphrey

 US SEC

 October 4, 2005

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 cash
flows in your financial statements. If these are the same entities described on page 60, please explain how the schedule on page F-35 reflects the fact that the government owns 49 B shares. If these are not the same entities, please also provide a
comparable discussion of the other entities. As a related matter, please tell us and disclose in the U.S. GAAP reconciliation footnote, the reasons why these subsidiaries have not been consolidated for U.S. GAAP purposes. Reference is made to SFAS
94, paragraph 13. We may have further comments upon review of your response.

 Both pages F-7 and 60 of the Form 20-F refer to the same group of companies, West Rail Property Development Ltd. and its 13 wholly owned subsidiaries.

 In February 2000, the Corporation and the Government entered into a shareholding agreement (the “Shareholding
Agreement”) for the formation of a group of companies under an intermediate holding company, West Rail Property Development Limited (“WRPDL”), to undertake all property developments along the West Rail, Phase I route. (For details of
the Shareholding Agreement, please see item 4.15 of the Form 20-F filed by the Corporation on May 30, 2001 under Registration No. 1-15004)

 The schedule on page F-35 indicates that the Corporation owns all 51 A shares of WRPDL, but none of the 49 B shares which are wholly owned by the
Government. Each A and B share entitles the holder thereof to exercise one vote for each share held at meetings of WRPDL. The difference between A shares and B shares is that the A shares are not entitled to any distribution by WRPDL other than a
return of the original capital on the 51 A shares (which is HK$510) while the B shares are entitled to all dividends declared by WRPDL, a return of the original capital on the 49 B shares and any of the remaining assets other than the original
capital of A shares (HK$510). In respect of each of the 13 subsidiaries, all the shares are wholly owned by WRPDL or in other words, the Corporation indirectly holds 51% of these subsidiaries through its shareholding in WRPDL.

 These subsidiaries were established by the Corporation for the sole purpose
of developing, on behalf of the Government, commercial or residential properties along the West Rail, Phase I route. Upon disposal of a development property, any property development profits and initial payments from developers will first be applied
towards repayment of the loan from the Corporation (as described below) and all remaining surpluses will then be repatriated to the Government periodically when requested by the Government through WRPDL.

 The Corporation is entitled to appoint three Directors and the Government is
entitled to appoint two Directors to the Board of WRPDL. The two Directors appointed by the Government to the Board can request WRPDL to modify or defer the commencement of the development of any site. The two Directors appointed by the Government
can also request changes to the proposed development, including without limitation, the proportion of commercial and residential properties in a development. Finally, the two

 Mr. David R. Humphrey

 US SEC

 October 4, 2005

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 Directors
appointed by the Government can also request revisions to or create new guidelines for the investment of any funds held by WRPDL. Given that the net sales proceeds from the various property developments accrue to the Government, WRPDL is obligated
to follow such requests.

 Under Hong Kong GAAP (“HK
GAAP”), the consolidated financial statements of WRPDL and its subsidiaries are not consolidated in the financial statements of the Corporation as the Corporation has no effective control over nor beneficial interests in the net assets of WRPDL
and its subsidiaries, other than the amount of capital provided.

 The Government through its appointed Directors has substantive participating rights in deciding on when to commence the development of a site, the allocation of the mix of commercial and residential properties of each development and the
investment of any surplus funds. Therefore, the Corporation has concluded that the Government (as the minority shareholder) has substantive participating rights. Consequently, considering the guidance in EIFT 96-16, Investor’s Accounting for an
Investor When the Investor has a Majority of the Voting Interest but Minority Shareholder or Shareholders Have Certain Approval or Veto Rights, the Corporation believes that under US GAAP, it is precluded from consolidating the financial
statements of the WRPDL and its subsidiaries.

 All costs
incurred or to be incurred in relation to the West Rail property developments are funded by loans from the Corporation to WRPDL which bear interest at an annual rate of 1% over the Corporation’s average cost of borrowings in the preceding year,
and are referred to as “loan to subsidiary” in the consolidated balance sheets. Up to December 31, 2004 all expenses incurred by WRPDL or its subsidiaries in relation to the development of properties along the West Rail, Phase I
route, were paid by the Corporation from its own funds and a corresponding amount was added to the “loan to subsidiary”. The net cash payments made by the Corporation during the year in respect of expenses attributable to the West Rail
property developments are recorded in the consolidated cash flow statement under the heading “investing activities” and sub-heading “loan to subsidiary”.

 In future filings, we will revise our disclosure to make it clear as to why these subsidiaries are not consolidated for
US GAAP purposes.

 (g) Depreciation, page F-10

3.
Please refer to the discussion of leasehold land in Item (ii). Supplementally tell us whether you make an upfront payment for the use of this land and subsequently depreciate
that prepayment balance over the period of time you have the use of the land. Alternatively, please tell us whether this land is accounted for as an investment property and you are therefore required to account for the lease as if it were a finance
lease. If true, please explain your accounting in expanded detail. If neither of our assumptions apply, please describe the nature of theses business arrangements and explain the basis for your accounting. We may have further comments upon review of
your response.

 Mr. David R. Humphrey

 US SEC

 October 4, 2005

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 All land
in Hong Kong is held under lease, as opposed to freehold which we understand is the case in the US. The Corporation occupies certain leasehold land situated along its railway network. An upfront payment in the form of a lease premium is paid to the
lessor, which is the Government of Hong Kong, and is recognized as a prepaid asset on the balance sheet and amortised over the unexpired lease term of the land for HK GAAP purposes. Under US GAAP, the transaction through which the right to use
the land is acquired is classified as an operating lease in accordance with the first sentence of paragraph 25 of SFAS No. 13 (Accounting for Leases), because the criteria set out in paragraph 7(a) and 7(b) of SFAS No. 13 are not met.
Under US GAAP the upfront payment is considered as a prepaid operating lease payment which is amortized over the unexpired lease term of the land. Consequently, no accounting difference exists between US GAAP and HK GAAP.

 The Corporation also holds leasehold land which is embedded or non-separable
from investment properties that were acquired by the Corporation. The land together with the properties are treated as investment properties. Under HK GAAP investment properties are stated in the balance sheet at their open market value which is
assessed annually by external qualified valuers. Under HK GAAP no depreciation is provided on investment properties as the valuation takes into account the state of each property at the date of valuation.

 Under US GAAP, investment properties are considered to be capital
leases under section 7 of SFAS No. 13 as the lease terms of these leases are equal to or greater than 75% of the estimated economic life of the buildings involved and the cost thereof is amortized to the income statement over the period of the
relevant lease. Under US GAAP, investment properties are not revalued and are stated at cost less accumulated depreciation and impairment losses. The difference in accounting for investment properties under HK GAAP and US GAAP is set out
in note 44(a) to the financial statements.

 (l) Jointly controlled
operations, page F-12

4.
Tell us how your policy under Hong Kong GAAP complies with U.S. GAAP. In this regard, explain to us in detail why equity or consolidation method accounting would not be applied
to these jointly controlled operations under U.S. GAAP. Your response should also define what is meant by “interest in jointly controlled operations.” To the extent you are accounting for these under proportionate consolidation, tell us
how your disclosures comply with Item 17(c)(2)(vii) of the Form 20-F, and provide the applicable disclosures in the U.S. GAAP reconciliation footnote.

 Mr. David R. Humphrey

 US SEC

 October 4, 2005

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 The
interest in the jointly controlled operations of the Corporation solely relates to a revenue sharing arrangement we have with a business partner. We have no equity interest in these operations.

 In essence, the jointly controlled operations involve the use of the assets
and other resources of the Corporation and its business partner cooperating in revenue generating activities, rather than the establishment of a corporation, partnership or other entity. Each party uses its own property, plant and equipment and also
incurs its own expenses and liabilities. The agreement relating to the jointly controlled operations provides a means by which the revenue from the provision of the services and any expenses incurred in common are shared between the Corporation and
its business partner.

 The jointly controlled operation
relates to the revenue sharing arrangement in the through-train operations where the tracks of the Corporation are connected to the tracks of the business partner in the Mainland China. For instance, when a passenger takes a train starting in Hong
Kong to Guangzhou, the revenue is proportionately allocated to the Corporation and the PRC business partner.

 Under HK GAAP, the assets/liabilities which the Corporation controls and the expenses that it incurs in respect of its involvement in the jointly
controlled operations are recognized in the financial statements of the Corporation. Since the assets, liabilities, income and expenses are already recognized in the financial statements of each party and, consequently, in the consolidated financial
statements of the Corporation, no adjustment or other consolidation procedures are required in respect of these items. As the interest in the jointly controlled operations is not an equity interest and no separate joint venture entity has been
formed, the equity or proportionate consolidation method of accounting is not appropriate.

 Proportionate consolidation is not used because the Corporation does not have any interest in the assets and liabilities of its business partner under the terms of these arrangements. Consequently, the disclosures
called for in Item 17(c)(2)(vii) of Form 20-F are not applicable.

 The accounting treatment for the jointly controlled operations under US GAAP is consistent with HK GAAP.

 Note 9. Segmental Reporting, page F-24

5.
In the U.S. GAAP reconciliation footnote, provide disclosure that you have two reportable business segments, Transport Division and Property Services. Also, disclose the primary
profitability measure used by the chief operating decision maker in assessing segment performance and allocating resources as is required under paragraph 30 of SFAS 131. Further, expand the “Results of Operations under U.S. GAAP”
discussion on page 44 to discuss any significant differences in

 Mr. David R. Humphrey

 US SEC

 October 4, 2005

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 your
results of operations on a segmental basis, including the primary segment profitability measure used by management. In this regard, we would generally expect the measures and balances disclosed in your footnote to be consistent with the disclosures
and balances in MD&A. However segment operating profits on page 40 differ. Please revise or advise.

 Currently, we have two reportable business segments, Transport Services and Property Services. There are two profitability measures as indicated on page
F-24 and page 40 of the Form 20-F. The profitability measure presented in Segmental Reporting on page F-24 does not include certain corporate expenses, whereas the segmental operating profits presented on page 40 of the Form 20-F includes an
allocation of these corporate expenses. The profitability measure shown in page 40 of Form 20-F where the corporate expenses are apportioned to each business segment is to enable reconciliation to the operating profits of the Corporation, but it is
not used internally for assessing business performance or for resource allocation purposes.

 We will disclose, in future filings, that we have two reportable business segments which are Transport Services and Property Services, and the primary profitability measures used for HK GAAP segment reporting purposes
and SFAS No. 131. In addition, in future filings, we will provide an analysis and discussion of the results of operations on a segment basis, for both profitability measures should the results using each profitability measure be significantly
different.

6.
For each period presented, please supplementally reconcile the aggregate capital expenditures disclosed as “other information” with the payments for capital
expenditures disclosed in the cash flow statement on page F-6.

 The difference between the aggregate capital expenditure reported on an accrual basis on page F-24 and the payments for capital expenditure reported in the consolidated cash flow statement on page F-6 represents
mainly a