Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification, Investment
Banking, Ratings Definitions, and potential conflicts of interest begin on Page I of the Appendix Section.
June 1, 2009
CHINA INTERNET AND MEDIA
CHINA INTERNET AND MEDIA: RECENT INDUSTRY DEVELOPMENTS
China Macro: Government to raise capital to back stimulus plan
• Government pleased with stimulus package so far. The government has assigned 24 teams to inspect the progress
of the $600B stimulus package since November. The report card came back satisfactory despite small
misappropriations at the local level. Thus far, the government has spent roughly 11% of the budget to carry out
investments in affordable housing, infrastructure projects and technological upgrades, which all have been behind the
advancement of the country’s export industry.
Infrastructure needs remain a priority. The Chinese government has allocated 270 billion RMB ($39.7 billion) for
infrastructure investments so far this year. Adding another 30 billion RMB from last year's budget meant that the
country had already allocated 300 billion RMB ($44B; 7% of total stimulus plan) to infrastructure projects since the
fourth quarter of last year. A key priority is the urban subway system. The plan is to expand/build the railway system
in 19 cities to 2,100 km from 778 km in 10 cities today. For example, Beijing is expected to become the city with the
longest urban rail system, with plans to build 18 routes stretching 561 km compared to eight lines in operation,
totaling nearly 200 km currently. Although Beijing’s population is more than twice to that of New York City, the
number of daily subway riders is 3.5M vs. 6.5M for the Big Apple. Given the horrific traffic conditions in China’s
capital, we can see the real need to develop the public transportation system.
• Addressing funding concerns through bond offerings. One major concern about the stimulus pack