Shares of Baidu (BIDU 0.92%) popped 6% higher yesterday -- and opened higher this morning -- after a bullish JPMorgan analyst update.

Yes, Qihoo 360 (QIHU.DL) remains a thorn in the side of China's leading search engine. Baidu's guidance for the quarter that recently ended calls for a sequential decline in revenue. Baidu isn't the speedster that it used to be, and it may be too large to ever be that nimble again.

However, when's the last time that Baidu was trading at a forward earnings multiple in the teens? Baidu is still expected to grow at a headier clip than its earnings multiple suggests.

JPMorgan is encouraged by China's improving economy, according to Barron's Emerging Markets Daily blog.

Even if Qihoo 360 gnaws at Baidu's dominant market share, there's still plenty of room for growth. China's growing faster than most countries, and the end result will be advertisers that are willing to spend more money to reach out to the country's expanding middle class.

JPMorgan is encouraged by the prospects for consumer-facing leader Baidu, and streaming video standout Youku Tudou.

Investing in China is obviously risky. Regulators have made it clear that they want more control in cyberspace this year, but those tighter leashes will have a bigger impact on leading social networking website operator Renren (RENN), or Sina Weibo parent SINA (SINA), where the Web 2.0 element of interactive communities is essential.

Youku relies largely on licensed and vetted content. Baidu does host a popular discussion board, though the heart of its business remains search.

However, even Renren and SINA should hold up well. Renren already requires real-name registrations, and Sina Weibo has been gradually getting up to speed.

Ultimately, it's all about investor sentiment and the perception of near-term upside. Shares or Renren, SINA, and Baidu all declined last year.

Baidu is already bouncing back in 2013. After closing out 2012 with several analysts talking down Baidu's prospects, the stock is posting a double-digit percentage gain so far this year.

I wonder if Credit Suisse's Wallace Cheung -- the last analyst to put out a bearish note and slash his price target late last month -- regrets the decision.

Baidu's been better, but it hasn't often been cheaper.