Feb. 27 (Bloomberg) -- Richard Li, billionaire chairman of PCCW Ltd., plans to set up an online financial news provider with Caijing magazine in China to target investors in the world’s fastest-growing major economy, according to four people with knowledge of the matter.

The venture, which will focus its coverage on China, Hong Kong and Taiwan, may start operations by the end of the year, according to the people, who declined to be named because the plan is confidential. Journalists are being recruited for the mainly English service, two of the people said.

Li, the 42-year-old son of Hong Kong’s richest man, is raising investments in business media after Shanghai stocks rallied the most of any major market this year. Caijing, China’s top finance publication, may gain international readers through the partnership with Li, who controls the Hong Kong Economic Journal newspaper and the Now pay-television service.

“Online distribution of financial news is the way to go in China,” said Vivek Couto, executive director at Media Partners Asia. “Traditional media such as newspapers and magazines are under some pressure.”

Plans for the Internet news venture are at a preliminary stage and details of the business model and distribution methods haven’t been completed, said three of the people.

Advertising Revenue

Online advertising revenue in China will increase to 22.5 billion yuan ($3.3 billion) this year, from 18.3 billion yuan in 2008, Credit Suisse Group AG analysts Wallace Cheung and Sharon Jing wrote in a Jan. 6 report. Globally, advertising spending will drop 7.3 percent to $427.4 billion this year, the first decline since 1999, according to estimates this month at UBS AG.

Newspaper ad sales may drop 4 percent to 32.2 billion yuan this year, while revenue growth from magazine advertisements is likely to slow to 2.6 percent as the Chinese economy decelerates, according to the Credit Suisse analysts.

Joseph Lo, who represents Li’s Pacific Century Group at public relations company Brunswick Group Ltd. in Hong Kong, couldn’t immediately comment. Daphne Wu, general business manager at Beijing-based Caijing, declined to comment.

Bloomberg LP, the parent of Bloomberg News, competes with Thomson Reuters Corp., Dow Jones & Co. and other media services in selling financial and business information.

Li’s father, Li Ka-shing, is chairman of Cheung Kong (Holdings) Ltd. and was estimated by Forbes magazine this month to be worth $16.2 billion.

Projected Drop

Caijing is among the 10 best-selling magazines in China, according to Media Partners Asia.

The projected drop in China’s newspaper industry mirrors shifts worldwide from print to online media. In the U.S., ad sales at the New York Times Co., Gannett Co. and McClatchy Co., which together own about 135 dailies, fell more than 13 percent in 2008, and the companies forecast further declines this year.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, has gained 15 percent this year, the most among global indexes. China has pledged to spend 4 trillion yuan to support growth and combat slowing demand for exports resulting from the global recession, helping the benchmark recover from a 65 percent decline last year.

To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net

Last Updated: February 26, 2009 22:05 EST