An excellent summary of China's internet sector by a Chinese blogger:
Although my institution is an investor in a Chinese VC fund, I continue to fear that there's no gold in them thar' hills. All we know for sure is that 1. there were a couple of grand slams (Baidu, Shanda) and 2. at least several billion of capital is looking for a home in the "Chinese YouTube". At last count there were more than 10 of these. Lots of my peers are investing with every decent quality China VC they are "allowed to invest with". I'm skeptical and worried that the few dollars we have in this space may earn US VC 2000 vintage returns.