Corporate Governance Practices

The Code on Corporate Governance Practices as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") provide for code provisions (the "Code Provisions") and recommended best practices with respect to: (1) composition and procedures of the Board of Directors (the "Board"); (2) remuneration structure of Directors and senior management; (3) accountability and audit; (4) delegation by the Board and (5) communication with shareholders for corporate governance practices by listed companies. Other than the disclosures made in the section headed "(1) Board of Directors" below, the Company confi rms that for the year ended 31 December 2007, it has complied with all the Code Provisions.

(1) Board of Directors

To serve the best interests of the Company and its shareholders, the Board is responsible for reviewing and approving major corporate matters including business strategies and budgets, major investments, capital market operations, mergers and acquisitions, as well as senior offi cers' appointments. The Board is also responsible for reviewing and approving the announcements periodically published by the Company regarding its business results and operating activities.

The Board membership maintains wide representation. Members of the Board consist of outstanding persons from different professions in mainland China, Hong Kong and overseas. The Board comprises eight executive directors, four independent non-executive directors and two non-executive directors. Mr. Chang Xiaobing has been the Chairman and the Chief Executive Officer ("CEO") of the Company since December 2004. Mr. Shang Bing has been the Company's President since November 2004. Mr. Chang Xiaobing is responsible for chairing the Board and for all material affairs, including development, business strategy, operation and management of the Company. Mr. Shang Bing is responsible for the daily operation and management of the Company.

Under the Code Provisions, the roles and responsibilities of the chairman and the chief executive officer should be separated and should not be performed by the same individual. The Board understands that the principle of the Code Provision is to clearly separate the management of the Board from the daily management of the Company so as to ensure balance of power and authority. The Board believes that at the present stage, Mr. Chang Xiaobing and Mr. Shang Bing have achieved the aforesaid principle of separating responsibilities. These arrangements also facilitate the formulation and implementation of the Company's strategies in a more effective manner so as to support the effective development of the Company's business.

All independent non-executive directors and non-executive directors of the Company are influential members of the society and possess good knowledge and experience in different aspects. They have been making active contributions to the development of the Company. They have kept close contact with the management and often actively express different opinions on matters relating to the shareholders and the capital market at the board meetings. These views and opinions facilitate the Board in their consideration of the shareholders' best interests. All independent nonexecutive directors, except for the equity interests and Directors' remuneration disclosed in this annual report, do not have any business with or financial interests in the Company, its holding company or subsidiaries, and have confirmed their independence to the Company. The functions of non-executive directors include, among others, attending the board meetings, making independent judgments at meetings, playing leading role in resolving any potential interest conflicts, serving on committees by invitation and carefully examining whether the performance of the Company has reached the planned corporate targets and objectives, and monitoring and reporting on the matters related to the performance of the Company.

With respect to the nomination and appointment of new Directors and senior management, the Board identifies candidates within the Company and in the human resources market widely after considering the Company's needs for new Directors and senior management. After obtaining consent from the candidates for the nomination and based on the Company's actual needs, the Board convenes a meeting which includes independent non-executive directors and non-executive directors to consider the qualifications of the candidates. The number of board meetings held during the year and the attendance of Directors are detailed in page 20 of this annual report. Under the Code Provisions, non-executive directors shall be appointed for specific terms and offer themselves for re-election, and all newly appointed directors shall be elected by shareholders at the first general meeting following their appointment pursuant to the articles of association of the company. The Company's nonexecutive directors are not appointed for specific terms but are subject to retirement by rotation at the general meeting and are subject to re-election by shareholders pursuant to the Company's articles of association (the "Articles of Association"). All Directors of the Company are subject to retirement by rotation at least once every three years. Mr. Tong Jilu, Mr. Li Zhengmao, Mr. Li Gang, Mr. Miao Jianhua, Mr. Lee Suk Hwan and Mr. Cheung Wing Lam, Linus, will be due for re-election by shareholders at the annual general meeting to be held in May 2008. Personal particulars of the proposed Directors and their proposed remuneration are set out in pages 10 to 14 and pages 56 to 57 of this annual report.

Following their appointment, all newly appointed Directors are provided with comprehensive orientation information to ensure that they have proper understanding of the Company's operations and businesses, full understanding of their responsibilities under the Listing Rules, applicable regulatory requirements, and the Company's business and corporate governance policies.

The Board has provided clear guidelines for delegation of powers and responsibilities to the management. However, certain important matters must be decided only by the Board, which include, but not limited to, long-term objectives and strategies, expanding new businesses, annual budget, initial announcements on quarterly, interim and final results, dividends, major banking facilities, major investments, capital market operations, mergers and acquisitions, major disposals, major connected transactions and annual internal control evaluation.

The Board convenes meetings regularly and ensures that all Directors have opportunities to present in the meetings and include issues for discussion in the agenda. Notices of the board meetings are delivered to the Directors at least 14 days in advance of the meetings. The Company delivers all documents for the meetings to the Directors at least one week on a best endeavor basis (and ensures no less than three days as required by the Code Provision) prior to of the meetings. The Company Secretary keeps close contact with all Directors and ensures operation of the Board and all committees is in line with the procedures as set forth in the Articles of Association. Additionally, the Company Secretary is responsible for compiling and regularly submitting the minutes of board meetings and committee meetings to all Directors for their review. Each director may obtain the advice and services of the Company Secretary, to ensure that board procedures, and all applicable rules and regulations are followed.

The Directors may obtain independent professional advice, upon request, at the expense of the Company. In addition, if substantial shareholders or Directors have significant conflicts of interest in a matter to be resolved, the Board will convene a board meeting in respect of the matter and those Directors who have conflicts of interest must abstain from voting and are not counted in the quorum of the meeting. Furthermore, the Chairman has a clear responsibility of ensuring that all Directors have appropriate knowledge of the matters discussed at the meetings and that all Directors are provided with complete and reliable information regarding those matters. All Directors are required to devote sufficient time to handling affairs of the Company. The management holds formal and informal meetings with all Directors from time to time to provide sufficient and timely information so that Directors can make informed decisions. All board members have the right to inspect the documents and relevant information of the Board. The Directors, including independent non-executive directors, have visited various branches in the PRC frequently to understand more about the Company's daily operations. The Company has arranged relevant training for Directors conducted by professional advisers, such as lawyers and accountants, from time to time.

In 2007, the Board held four full board meetings for, among other things, discussion and approval of important matters such as the 2006 annual results, the 2007 interim results, the first and third quarter results for 2007, 2007 annual budget and reports on internal controls. Set forth below is an overview of the attendance during the year by the Board members at various meetings:

		Meetings Attended / Held
		Board Meetings	Audit Committee Meetings	Remuneration Committee Meetings
	Executive Director
	Chang Xiaobing (CEO)	4 / 4	N/A	N/A
	Shang Bing	4 / 4	N/A	N/A
	Tong Jilu	3 / 4	N/A	N/A
	Yang Xiaowei	3 / 4	N/A	N/A
	Li Zhengmao	3 / 4	N/A	N/A
	Li Gang	3 / 4	N/A	N/A
	Zhang Junan	3 / 4	N/A	N/A
	Miao Jianhua1	2 / 4	N/A	N/A
	Li Jianguo2	2 / 4	N/A	N/A
	Non-executive Director
	Lu Jianguo3	4 / 4	N/A	1 / 1
	Lee Suk Hwan1	1 / 1	N/A	N/A
	Independent Non-executive Director
	Wu Jinglian3, 4	4 / 4	5 / 6	1 / 1
	Shan Weijian4	4 / 4	4 / 6	N/A
	Cheung Wing Lam, Linus3, 4	4 / 4	6 / 6	1 / 1
	Wong Wai Ming4	4 / 4	6 / 6	N/A
	Notes:
	1.Mr. Miao Jianhua was appointed as an executive director on 12 July 2007 and Mr. Lee Suk Hwan was appointed as a non-executive director on 23 October 2007.
	2. Ms. Li Jianguo resigned as an executive director on 9 July 2007.
	3. Mr. Wu Jinglian, Mr. Lu Jianguo and Mr. Cheung Wing Lam, Linus, are members of the Remuneration Committee.
	4. Mr. Wong Wai Ming, Mr. Wu Jinglian, Mr. Shan Weijian and Mr. Cheung Wing Lam, Linus, are members of the Audit Committee.

(2) Committees under the Board of Directors

The Company has established two committees under the Board, the Audit Committee and the Remuneration Committee. Each committee has a written charter and is provided with sufficient resources to perform its duties. The committees report their decisions or recommendations to the Board after meetings.

(3) Preparation of Financial Reports and Financial Reporting

The Directors understand that the Hong Kong Companies Ordinance has provided that the Directors shall prepare financial statements for each year to give a true and fair view of the financial position of the Company as at the balance sheet date of the year and profits or losses and cash flows of the Company for the year ended the balance sheet date.

In preparing financial statements, the Directors shall:

(a)	select and consistently apply appropriate accounting policies and make fair and reasonable judgments and estimates in applying the selected accounting policies;
(b)	state reasons for any serious deviation from the applicable accounting principles; and
(c)	prepare financial statements on a going concern basis, unless it is inadvisable to assume that the Company or the Group (i.e. the Company and its subsidiaries) will continue to operate in the foreseeable future.

In addition, a statement of the independent auditors about their reporting responsibilities related to the financial statements is set out in the independent auditor's report on page 64 of this annual report.

The Directors are also responsible for keeping appropriate accounting records to safeguard the assets of the Company and taking appropriate procedures to prevent and investigate whether there are any fraud and other irregularities.

With respect to financial reporting, the management provides explanations and information to the Board so that the Board can evaluate the merit of the financial and other information that need to be approved. The Board of Directors has also made a balanced, clear and explicit evaluation of the position and performance of the Company in the communication with the shareholders.

(4) Code of Ethics of Directors and Staff and Procedures for Securities Transactions by Directors

The Company has set out relatively comprehensive standards governing the acts of officers and general staff, including the Code of Ethics for Management and Senior Officers and Code of Ethics for Employees which are available at the Company's website (www.chinaunicom.com.hk). The Company has also prepared the Procedures for Dealing of Securities by Directors in accordance with Model Code for Securities Transactions by Directors of Listed Companies, as set out in Appendix 10 of the Listing Rules. The Company had made specific enquiries and all directors confirmed that they had complied with the relevant code for securities transactions in 2007.