SecProbe.io

CORRESP
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[China Unicom Limited Letterhead]

August 26,
2005

Mr. Larry
Spirgel

Assistant Director

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

United States of America

  RE:

  China
  Unicom Limited

  Form 20-F
  for the fiscal year ended December 31, 2004

  Filed
  June 28, 2005, File No. 1-15028

Dear Mr. Spirgel:

This is in response to the Staff’s comment letter
dated July 29, 2005, relating to the annual report on Form 20-F
of China Unicom Limited (the “Company”) for the fiscal year ended December 31, 2004
(the “2004 Form 20-F”).

We will submit a copy of this letter as “correspondence”
via EDGAR.  In addition, we are
submitting on paper as Appendix A to this letter a copy of the 2004 Form 20-F marked
to show revised disclosure that we have prepared in response to the comments
indicated below.  We propose to include
this revised disclosure in our annual report on Form 20-F for the fiscal
year ending December 31, 2005 (the “2005 Form 20-F”) in response to the
Staff’s comments.  The revised disclosure
has been prepared to reflect facts, data and conditions in our business and
operations as of the date of this letter or as of particular past dates as
indicated, and will be updated in our 2005 Form 20-F to reflect facts,
data and conditions as of the respective dates as will be required or otherwise
described in our 2005 Form 20-F.  We
do not propose to amend our 2004 Form 20-F.

For your convenience, we have included your comments
in this response letter in italicized form and keyed our response
accordingly.  Our responses to the comments
are as follows.  The page number
references in our responses are to the attached marked copy of our 2004 Form 20-F.

Interconnection
Agreements, pages 63-64.

1.                                       We
note your disclosure that you collect the tariff from your subscribers and keep
or pay RMB0.06 per minute, depending on which network a call terminates.  Tell us and disclose your liability to fixed
line operators if the tariff is uncollectible.
Additionally disclose your basis for the measurement and recognition of
the interconnection charge, including the terms of the interconnection
settlements and how they are accounted for in the financial statements.

According to the interconnection agreements between
the Company and the fixed line operators (the “Interconnection Agreements”),
the Company and the relevant fixed line operator bear the credit risk for their
respective subscribers.  Accordingly, if
the tariff is uncollectible from the Company’s subscribers, the Company would
still be required to pay interconnection charges to fixed line operators, and
vice versa.  Key terms of the
Interconnection Agreements are as follows:

1)                                      the
interconnection charge is measured based on the related actual call volume
generated through the relevant operator’s billing system and the applicable
tariff;

2)                                      at
the end of each month, each operator’s billing for interconnection usages,
including interconnection revenues and charges, will be sent to and confirmed
by the counter party;

3)                                      the
interconnection net receivables (or interconnection net payables) are settled
once a month; and

4)                                      the credit risk of ultimate subscribers is borne by the
operator of the calling party and the liability to the other operator is not
affected even if the tariff is uncollectible from the calling party.

On a monthly basis, the Company records as an expense its
interconnection charges that have been confirmed and agreed.  The amount of the expense includes those
charges that may ultimately not be collected from its subscribers.  The Company also records the revenues from
interconnection arrangements with other operators on a monthly basis based upon
the amounts confirmed by such other operators.
Historically, for all confirmed and agreed interconnection settlement
with other operators, all balances have been duly received or paid.  Accordingly, no allowance for doubtful
accounts is recorded.

Since the Company is the principal obligor to provide
telecommunication services (including interconnection service) to its
subscribers and bears the credit risk for uncollectible tariffs from its
subscribers, interconnection charges payable to other operators are recorded as
a separate item of operating expenses on the Company’s consolidated statements
of income.  In response to the Staff’s
comment, in future filings, the Company will add the following sentence in the section titled
Interconnection Arrangements under “Item 4.
Information on the Company”:  “For all interconnection services, we are required to pay the
interconnection fees regardless of our ability or inability to collect the
tariff from our subscribers.
Interconnection charges are accrued on a monthly basis based on the
actual call volume and applicable tariff rate.”.

2

2.                                       Tell
us, and disclose, if the interconnection settlement agreements require fixed
line operators to pay you the interconnection fees, if they are unable to
collect the tariff from their subscribers.

According to the Interconnection Agreements, if the
fixed line operators are unable to collect tariffs from their subscribers, they
are nevertheless required to pay interconnection charges to the Company.  In response to the Staff’s comment, in future
filings, the following sentence will be added in the section titled
Interconnection Arrangements under “Item 4.
Information on the Company”:  “For all interconnection services, the fixed line operators are required
to pay interconnection fees regardless of their ability or inability to collect
the tariff from their subscribers.”.

Contractual Obligations and Commercial
Commitments, page 97.

3.                                       It
appears that your tabular contractual obligations exclude any liability for
interest payments.  Please include in the
table, or provide in the footnotes supplemental information regarding fixed
interest payments that you are required to make in connection with your
contractual obligations.  Refer to our
Final Rule: Disclosure in Management’s Discussion and Analysis at
http://www.sec.gov/rules/final/33-8182.htm.

As of December 31,
2004, in addition to the contractual obligations included in the table on page 97
of the 2004 Form 20-F, the Company had the following estimated fixed
interest payment obligations on long-term bank loans and finance lease
obligations:

  Due in 2005

  Due in

  2006

  Due in

  2007

  Due in

  2008

  Due after

  2008

  Interest range

  4.78% - 5.58%

  4.78% - 5.58%

  4.78% - 5.58%

  4.78% - 5.58%

  4.78% - 5.58%

  Fixed interest
  payment obligations on long-term bank loans and finance lease obligations
  (RMB in million)

  1,096

  662

  304

  95

  22

3

The Company confirms that no other contractual
obligations include fixed interest payments.
The Company will include fixed interest payment obligations in the table
of contractual obligations in future filings in response to the Staff’s
comment.

32.          Leasing
of CDMA Network Capacity, page F-67.

4.                                       We
note that you accounted for the CDMA Network Capacity Agreement as an operating
lease.  Tell us your consideration of
paragraph 7 of SFAS 13.

The Company evaluated each of the criteria of SFAS 13,
paragraph 7 at the inception of the CDMA Network Capacity Lease Agreement dated
November 22, 2001 (the “Original CDMA Lease”), among China Unicom Corporation
Limited (“CUCL”, a wholly-owned subsidiary of the Company), China United
Telecommunications Corporation (“Unicom Group”) and Unicom New Horizon Mobile
Telecommunications Company Limited (“Unicom New Horizon”, a wholly-owned
subsidiary of Unicom Group), and determined that it was an operating
lease.  The analysis
under each of the four criteria are included below.

Criteria (a)                                         The lease
transfers ownership of the property to the lessee by the end of the lease term

According to the terms of the Original CDMA Lease, the
ownership of the CDMA network will not be automatically transferred to the
Company by the end of the Original CDMA Lease.
Thus, this criteria is not met.

Criteria (b)             The
lease contains a bargain purchase option

The Company has the option to purchase the network
assets under certain circumstances at the fair value of the network at the time
of exercising the option.  According to
the terms of the Original CDMA Lease, the future acquisition price will be
negotiated between CUCL and Unicom New Horizon, based on the appraised value of
the network determined by an independent appraiser.  The parties have agreed that such purchase
price will not exceed an amount which, taking into consideration the lease
payments made previously, would enable Unicom New Horizon to recover its
investment with an internal rate of return of 8%.  Thus, if the fair value is determined to be
greater than this amount, the network assets could not be acquired under the
option.

According to SFAS 13 paragraph 5(d), a bargain
purchase option is defined as “a provision allowing the lessee, at his option,
to purchase the leased property for a price which is sufficiently lower than
the expected fair value of the property at the date the option becomes
exercisable that exercise of the option appears, at the inception of the lease,
to be reasonably assured”.  Because the
acquisition price under the purchase option will be based on fair value as
determined by an independent appraiser in the future, such price will not
render the exercise of the option appear, at the inception of the Original CDMA
Lease, to be “reasonably assured”.  Thus,
the purchase option is not a bargain purchase option.

4

In addition, the Company also considered that the
economic penalty to exit the CDMA business would not be significant.  According to the terms of the Original CDMA
Lease, the Company may terminate the Original CDMA Lease by not less than 180
days’ prior written notice.  Such
termination will take effect from the end of any additional term already
committed by the Company, and upon the termination of the Original CDMA Lease
for any reason, no party will have further obligation to the others under the
Original CDMA Lease.  Furthermore, if the
Company decided to exit the CDMA business, other operators, including Unicom
Group, could operate the CDMA network independently without any relocation of
the CDMA network or any disruption of operations.

In fact, at the time of launching the CDMA business
and entering into the lease arrangement, the Company had the capability to
construct its own CDMA network and considered such an option.  However, due to uncertainties of CDMA
business in China at that time, the Company chose to operate its CDMA business
through the lease arrangement with Unicom New Horizon.  The terms of the Original CDMA Lease enabled
the Company to develop the CDMA business while allowing the Company the
flexibility to exit the business, if deemed necessary.  With such flexibility, the Company had full
commercial discretion to determine whether it would continue with the CDMA
lease, which in turn had heightened the uncertainty of whether the purchase
option would be exercised.

Criteria (c)                                         Lease term is
equal to 75% or more of the estimated economic life of the leased property

According to the terms of the Original CDMA Lease, the
initial lease period was one year, renewable for additional lease periods of
one-year term each at the Company’s option.
The lease terms permitted the Company to terminate the lease by giving
an advance written notice of 180 days to Unicom New Horizon.  No penalty will be imposed in the event of
lease termination.  For each additional
lease period, the Company can also determine to increase or decrease the capacity
to be leased.  At the inception of the
Original CDMA Lease in 2002, the estimated economic life of the CDMA network
was approximately 7 years.

Although the Company had the legal right to extend the
lease beyond 75% of the estimated economic life of the network, as a business
matter the Company initially determined that it would reassess the economic
decision of continuing with the CDMA business after three years.  Moreover, under the listing rules of the
Hong Kong Stock Exchange, because the Original CDMA Lease is a connected party
transaction, approval of independent shareholders was a requirement for
extension beyond three years.  Because of
the Company’s business expectations and the inability to freely extend beyond
2004 without an approval that could not be assured at the inception of the
Original CDMA Lease in 2002, the expected lease term was determined to be three
years, which is less than 75% of its estimated economic life at the time of the
lease inception.

5

Criteria (d)                                        The present
value at the beginning of the lease term of the minimum lease payments equals
or exceeds 90 percent of the fair value of the leased property

As stated above, at the inception of the Original CDMA
Lease, the Company’s expected lease term was 3 years.  The actual lease payments were calculated
based on the unit lease rental multiplied by the actual capacity leased.  And the lease payments per unit of capacity
that we were obligated to make under the Original CDMA Lease were determined on
the basis that if full capacity was leased it would permit Unicom New Horizon
to recover the network construction cost with an internal rate of return on its
investment of 8% over a period of 7 years.
At the inception of the Original CDMA Lease, the Company calculated the
present value of the estimated minimum lease payments based on the expected
capacity to be leased over the expected lease period of 3 years, which was
significantly less than 90% of the costs incurred by Unicom New Horizon in the
construction of the network at the inception of the lease.  The construction costs of CDMA network at
that time approximated the fair value since the CDMA network was newly
constructed.

In summary, based on the above assessment of the 4 criteria
under paragraph 7 of SFAS 13, at the inception of the Original CDMA Lease, the
Company considered that (i) the transfer of ownership is not automatic
under the Original CDMA Lease, (ii) the Original CDMA Lease does not
contain a bargain purchase option which is reasonably assured of exercise due
to uncertainties relating to the exercise of the purchase option, (iii) the
3 years’ expected lease period is below 75% of the CDMA network’s estimated
economic life, and (iv) the minimum lease payments over the expected 3
years’ lease period are below 90% of the cost or fair value of the CDMA
network, and therefore the Company concluded that the Original CDMA Lease
should be treated as an operating lease.

37.          Events
After Balance Sheet, page F-75.

(b) New
connected transaction agreements

(i)            New CDMA Lease, page F-75.

5.                                       Tell
us you accounted for the new CDMA Lease and your basis in the accounting
literature.

In January 2005, after the initial 3 years’
expected lease term of the Original CDMA Lease had expired, the Company entered
into a new CDMA lease agreement with Unicom New Horizon (the “New CDMA Lease”).  The Company performed a re-assessment of the
classification of the New CDMA Lease, taking into consideration the
modifications of the lease arrangement and the guidance in SFAS 13.

6

The major modifications which needed to be considered
for the impact on the accounting for the lease arrangement are a change in the
method of calculating leasing fee and a change in the initial lease term from 1
year to 2 years.

In t