CITIC PACIFIC<0267> - Announcement

The Stock Exchange of Hong Kong Limited takes no 
responsibility for the contents of this announcement, 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 announcement.

CITIC Pacific Limited
(the "Company")
(incorporated in Hong Kong with limited liability)

CONNECTED TRANSACTION - FORMATION OF A JOINT VENTURE
AND POSSIBLE INVESTMENT IN A JOINT VENTURE COMPANY

ANNOUNCEMENT

The Directors announce:

(1)     A subsidiary of the Company has on 5th January 2000 
formed a joint venture, Lucky Zone Enterprises Inc. ("Lucky 
Zone"), with CITIC Beijing and Mr Larry Yung Chi Kin in the 
proportions 60/20/20. Lucky Zone's wholly owned subsidiary 
in turn on the same day agreed to acquire from *, an independent third 
party, a fixed optical fibre network installation in the PRC which 
when completed will extend to approximately 32,000 km for 
an aggregate consideration of RMB2000 million 
(approximately HK$1,887 million). The consideration covers 
both the already completed portion of the installation as 
well as the not yet completed portion.

(2)     Negotiations are at an advanced stage for a wholly owned 
subsidiary of the Company to make an investment in 50% of 
the entire registered capital of * ("Guoan"), 
which is presently a wholly owned subsidiary of CITIC Beijing 
for a consideration of RMB2,000 million (approximately 
HK$1,887 million). The investment will only be made after 
the reorganisation of Guoan.

CITIC Beijing is a connected person of the Company as CITIC 
HK, a wholly owned subsidiary of CITIC Beijing, is a 
substantial shareholder of the Company. Mr Larry Yung is a 
director and substantial shareholder of the Company. The 
establishment of Lucky Zone constitutes a connected 
transaction for the Company under the Listing Rules and is 
subject to approval by the Independent Shareholders. CITIC 
Beijing and its associates hold approximately 30.5% of the 
existing issued share capital of the Company, Mr Larry Yung 
and his associates hold approximately 19.6% of the existing 
issued share capital of the Company and will abstain from 
voting at the EGM to approve the establishment of Lucky Zone.

A circular containing, inter alia, details of the 
establishment of Lucky Zone, the recommendation from the 
independent board committee of the Company, the advice from 
the independent financial adviser, a notice of the EGM to 
approve the formation of Lucky Zone will be despatched to 
the shareholders of the Company as soon as practicable.

Guoan will upon completion of the reorganisation 
referred to above hold an interest in cable television 
networks; a 100% interest in *, the principal assets of 
which are the holding of approximately 
6% of China United Communications Limited Corporation and 
four GSM networks; an approximately 10% interest in CITIC 
Securities Co., Ltd. and a 100% interest in CITIC Building, 
Beijing. Although a draft agreement in relation to Guoan has 
been initialed by the parties as an indication of the 
understanding of the basis of proceeding of the transaction, 
no legally binding document has been executed. Such document 
will only be executed upon approval by the relevant PRC 
Governmental bodies.

Accordingly the investment in Guoan may or may not proceed. 
Shareholders and investors should exercise caution in 
dealing in the shares of the Company.

The Directors are pleased to announce that a wholly owned 
subsidiary of the Company has on 5th January 2000 formed a 
joint venture, Lucky Zone with CITIC Beijing and Mr Larry 
Yung in the proportions 60/20/20.

DETAILS RELATING TO LUCKY ZONE

Place of incorporation: British Virgin Islands

Date of incorporation: 8th July, 1999

Share capital: 10 shares of US$1.00 each

6 shares of US$1.00 each (60% of the issued share capital) 
held by a wholly owned subsidiary of the Company

2 shares of US$1.00 each (20% of the issued share capital) 
held by a wholly owned subsidiary of the CITIC Beijing

2 shares of US$1.00 each (20% of the issued share capital) 
held by a company controlled by Mr Larry Yung

DETAILS IN RELATION TO LUCKY ZONE'S ACQUISITION OF FIXED 
OPTICAL FIBRE NETWORK INSTALLATION

By an agreement dated 5th January, 2000, Lucky Zone's wholly 
owned subsidary has agreed to acquire from *, an independent third party, 
its entire interest in a fixed optical fibre network 
installation in the PRC which when completed will extend to 
approximately 32,000 km for an aggregate consideration of 
RMB2000 million (approximately HK$1,887 million). The 
consideration covers both the already completed portion of 
the installation as well as the not yet completed portion.

The following chart shows details of the length of the 
network.

                          Kilometer               Fibre Kilometer

Already completed       15,706.17               72,485.60

Under process/not yet completed 16,393.00               82,378.00

Full length                32,099.17               154,863.60

The consideration has been agreed on normal commercial terms 
following arm's length negotiations between the parties.

Any funding of Lucky Zone will be several and prorata to each 
shareholder's equity interest in Lucky Zone and will be on 
normal commercial terms (or better) to the Company. The 
Company's share of the funding of Lucky Zone will be 60% of 
RMB 2,000 million i.e. RMB 1,200 million (approximately 
HK$1,132 million) and will be funded out of available 
resources of the Company.

Details of any further funding (there being no further 
amounts currently proposed) will be disclosed in the 
Company's published annual report and accounts.

A deposit of RMB200,000,000 will be paid by Lucky Zone's 
subsidiary (established for the purpose of this acquisition) 
to * or as it may nominate, on or about 15th January, 2000.

A further amount of RMB500,000,000 will be made to * or as it may nominate 
within six months from the date of the agreement. The balance of 
the consideration will be made depending on construction 
progress.

Conditions:

The approval of the formation of Lucky Zone by Independent 
Shareholders at the EGM.

Completion

Lucky Zone will complete the acquisition upon Independent 
Shareholders approval being obtained.

REASONS FOR THE FORMATION OF LUCKY ZONE

The Company and its subsidiaries and associated companies 
are principally engaged in the businesses of infrastructure, 
trading and distribution and property development. The 
Company's long term objective remains to develop a large 
diversified business focusing on infrastructure and 
supported by trading and distribution, and property 
development.

The subsidiaries of Lucky Zone have agreed that, except as 
is allowed under PRC law, they will not be involved in the 
operation or management of the fixed optical fibre network 
installation. CITIC Beijing will be responsible to liaise 
with relevant parties in the PRC in relation to the 
management of the installation. The identity of such party 
has not yet been determined and a further announcement will 
be made in the event this were to be discloseable under the 
Listing Rules.

The formation of Lucky Zone and the acquisition by it of the 
fixed optical fibre network installation represents an 
excellent opportunity for the Group to take an ownership 
interest in the fixed optical fibre network installation.

GENERAL

CITIC Beijing and Mr Larry Yung are connected persons of the 
Company and the value of the capital commitment of the 
Company in relation to the formation of Lucky Zone exceeds 
3% of the consolidated assets of the Group. Accordingly, the 
formation of Lucky Zone constitutes a connected transaction 
for the Company under the Listing Rules and is subject to 
approval by the Independent Shareholders. CITIC Beijing and 
its associates who together hold approximately 30.5% of the 
existing issued share capital of the Company have confirmed 
that they would abstain from voting on the formation of Lucky 
Zone at the EGM. Mr Larry Yung and his associates who hold 
approximately 19.6% of the existing issued share capital of 
the Company and will abstain from voting at the EGM to approve 
the formation of Lucky Zone.

An independent board committee will be established for the 
purpose of considering the terms of the formation of Lucky 
Zone and giving recommendation to the Independent 
Shareholders in respect of the formation of Lucky Zone. An 
independent financial adviser will be appointed to advise 
the independent board committee of the Company in respect 
of the formation of Lucky Zone.

The Directors (including independent non-executive 
Directors) are of the opinion that the formation of Lucky 
Zone is of benefit to the Company, its shareholders and the 
Group.

A circular containing, inter alia, details of the formation 
of Lucky Zone, the recommendation from the independent board 
committee of the Company, the advice from the independent 
financial adviser and a notice of the EGM to approve the 
formation of Lucky Zone will be despatched to shareholders 
of the Company as soon as practicable.

SUMMARY OF PRINCIPAL TERMS OF THE PROPOSED INVESTMENT IN 
GUOAN

Negotiations are at an advanced stage for a wholly owned 
subsidiary of the Company to make an investment in 50% of 
the entire registered capital of * ("Guoan"), 
which is presently a wholly owned subsidiary of CITIC Beijing 
for a consideration of RMB2,000 million (approximately 
HK$1,887 million). The investment will only be made after 
the reorganisation of Guoan. The timing of this 
reorganisation and the obtaining of the approval referred 
to below is still unknown. The balance of the 50% interest 
in Guoan will continue to be held by CITIC Beijing. Guoan 
will upon completion of the reorganisation referred to above 
hold an interest in cable television networks; a 100% 
interest in *, the principal assets of which are the holding of 
approximately 6% of China United Communications Limited Corporation and 
four GSM networks; an approximately 10% interest in CITIC Securities 
Co., Ltd. and a 100% interest in CITIC Building, Beijing.

Although a draft agreement in relation to Guoan has been 
initialed by the parties as an indication of the 
understanding of the basis of proceeding of the transaction, 
no legally binding document has been executed. Such document 
will only be executed upon approval by the relevant PRC 
Governmental bodies.

The subsidiary of the Company has agreed that, except as is 
allowed under PRC law, it will not be involved in the 
operation or management of any of Guoan or of its underlying 
assets. CITIC Beijing will continue to manage Guoan.

The investment in Guoan may or may not proceed. Shareholders 
and investors should exercise caution in dealing in the 
shares of the Company. A further announcement will be made 
in full compliance with the Listing Rules as soon as 
practicable if and when the investment in Guoan 
materialises.

The Directors have noted the recent increases in the price 
of the shares and wish to state that the Directors are not 
aware of any reasons for such increases save for the matters 
as disclosed in this announcement.

Save for the above, there are no negotiations or agreements 
in relation to intended acquisitions or realisations which 
are discloseable under paragraph 3 of the Listing Agreement, 
nor are the Directors aware of any matters discloseable under 
the general obligation imposed by paragraph 2 of the Listing 
Agreement, which is or may be of a price-sensitive nature.

Shareholders and investors should exercise caution in 
dealing in the shares of the Company.

DEFINITIONS

"associate"     as defined in the Listing Rules

"CITIC Beijing" *(China 
        International Trust and 
        Investment Corporation), the 
        holding company of CITIC HK

"CITIC HK"      China International Trust & 
        Investment Corporation Hong Kong 
        (Holdings) Limited, a 
        substantial shareholder of the 
        Company (holding 30.5% interest 
        in the Company) and a wholly 
        owned subsidiary of CITIC 
        Beijing

"Company" or "CITIC     CITIC Pacific Limited *
  Pacific"      

"connected person"      as defined in the Listing Rules

"Directors"     directors of the Company

"EGM"   extraordinary general meeting of 
        the Company to be convened for 
        approving the Investment

"Group" the Company and its subsidiaries 
        or, where the context so 
        requires, any of them

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

"HK$"   Hong Kong dollars

"Independent    the shareholders of the Company
  Shareholders" other than CITIC Beijing, Mr. 
        Larry Yung and their respective 
        associates

"Guoan"         *, a company       
        established in accordance with 
        the laws of the PRC

"Listing Rules" the Rules Governing the Listing 
        of Securities on the Stock 
        Exchange

"PRC"   the People's Republic of China 
        excluding, for the purpose of 
        this announcement, Hong Kong, 
        Macau and Taiwan

"RMB"   Renminbi, the legal currency of 
        the PRC

"Stock Exchange"        The Stock Exchange of Hong Kong 
        Limited

"substantial    as defined in the Listing Rules
  shareholder"

Made by the order of the board of the Company, the Directors 
of which individually and jointly accept responsibility for 
the accuracy of this announcement.

(The exchange rate of Renminbi to Hong Kong dollars quoted 
in this announcement adopts a rate of HK$1 equivalent to 
RMB1.06.)

By Order of the Board
Alice Tso Mun Wai
Secretary

Hong Kong, 5th January, 2000

(* For the Chinese name, please refer to the press announcement today.)