On a Friday night in mid-April, a gang of Friendlies, the multicolored, panda-cum-Teletubby-like creatures, which are the official mascots of the 2008 Olympics, mill about awkwardly, waving to confused tourists stumbling out of the bars that ring Houhai Lake in Beijing. Several miles away, construction crews are working around the clock on the Olympic stadium and other venues, trying desperately to keep to their schedules for the opening ceremony two years away.

Meanwhile, out of sight, in research labs throughout China, engineers are busy working on another project that the Chinese government plans to unveil at the Olympics: China’s Next Generation Internet (CNGI), a faster, more secure, more mobile version of the current one. And unlike the Friendlies and the stadiums, which the world will forget as soon as the games end, CNGI’s impact will be felt for decades.

CNGI is the centerpiece of China’s plan to steal leadership away from the United States in all things Internet and information technology.

The strategy, outlined in China’s latest five-year plan, calls for the country to transition its economy from one based almost entirely on manufacturing to one that produces its own scientific and technological breakthroughs—using a new and improved version of today’s dominant innovation platform, the Internet. "CNGI is the culmination of this revolutionary plan" to turn China into the world’s innovation capital, says Wu Hequan, vice president of the Chinese Academy of Engineering and the chairman of the CNGI Expert Committee, the group overseeing the project. "We will use it as a way to break through and be competitive in the global economic market."

The technology at the heart of CNGI is an emerging communication standard called Internet protocol version 6 (IPv6). The Internet protocol is the Internet’s version of a postal envelope, containing information such as the destination and return addresses, and details about a package’s contents. The current standard, IPv4 (IPv5 never made it out of the lab), doesn’t have enough unique addresses for every would-be user in the world to connect to the Internet. IPv6 solves this problem, and is also more secure and efficient than its predecessor. For these and other reasons, most experts agree that a shift to an IPv6-based Internet is inevitable.

China is betting that by moving to the next-generation Internet before the rest of the world, China’s researchers, academics and entrepreneurs will be the first ones to develop applications and services that take advantage of the new capabilities. (China isn’t alone in this thinking. Japan and Korea have also launched national initiatives to move to IPv6.) If all goes according to plan, those services will be commercialized, making China home to the next wave of eBays and Googles. But China is also working on ways to use IPv6 to enhance its now infamous control over Internet traffic into and out of the country—which could have dramatic security implications for the United States (see "A New Weapon for Control and Intelligence?" below).