Internet Strategy: China's Next Generation Internet

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).

Call CNGI the first-mover advantage to end all first-mover advantages. "[China is] looking to leapfrog the U.S.," says Michael Gallagher, who was assistant secretary of commerce for communications and information, and President Bush’s top adviser on Internet issues before joining the law firm Perkins Coie in February. According to Chinese and U.S. sources familiar with the project, the Chinese government has already invested close to $200 million in CNGI and has created a special office of the State Council dedicated solely to the project. China’s major telecommunications companies, each of which is responsible for building a portion of the network, have also spent hundreds of millions of dollars so far. Today, CNGI connects 100 universities, 100 research institutes and 100 companies in 20 cities. At the Beijing Olympics in 2008, China plans to use CNGI for everything from broadcasting the events to controlling the Olympic facilities.

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