Financial details of the deal were not disclosed, but the New York Times reports that sources close to the company believe Google paid US$5m for a 4 percent stake.
Xunlei's 120 million users will be able to search the site's content using Google's engine, helping Google to improve its estimated 19 percent share of the overall search market in China.
China's current search market leader is Baidu, which handles almost two-thirds of all search queries in the country. Google had a 2.6 percent share in Baidu up until June 2006.
Google's attempts to penetrate the market in China have not all been plain sailing. The company's compliance with Chinese government demands to censor content was slammed by UK MPs last August.
The Chinese search market is currently a fierce battleground, with Microsoft announcing an alliance with Baidu just before Christmas.
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