Imagine that your nation is entirely dependent on a belligerent and economically unstable foreign country for a precious commodity. Imagine that without that commodity, your entire society would grind to a halt. Got it? OK, now imagine that your nation is China, the belligerent nation is the US, and the commodity is CPUs.

For China to maintain its blistering pace of growth — about 8 percent over the course of the global financial meltdown — the nation's leaders know they must transition to a postindustrial economy as rapidly as they transitioned to a free-market economy 30 years ago. Computers are key to doing that. The country's demand for PCs is enormous. The Chinese purchased 39.6 million of them in 2008. And that number is only going to climb — 75 percent of the population still doesn't have access to the Internet. But the vast majority of PCs sold in China are running central processing units created by the US companies Intel and AMD. This poses a range of problems; perhaps the biggest is that it locks China into paying first-world prices for CPUs. China is also deeply reluctant to build military hardware on top of Western processors. (And if that sounds paranoid, keep in mind that there's concern in Washington over whether the US military should use American-designed chips that have merely been manufactured overseas.)

Given those issues, it's not hard to understand why the Chinese government sponsored an ambitious initiative to create a sort of national processor. Work on the Loongson, or Dragon Chip, began in 2001 at the Institute of Computing Technology in Beijing. The goal was to create a chip that would be versatile enough to drive anything from an industrial robot to a supercomputer. One of the first Loongson-powered computers appeared in 2006, an ultracompact desktop PC known as the Fuloong (Lucky Dragon). It was built by the Chinese company Lemote, which soon followed that up with a cheap netbook. And China is now boasting that a third-generation multicore Loongson chip, currently in the prototype stage, will be used to power a petaflop supercomputer.

China's decision to roll its own processors has gone largely unnoticed in the West. It shouldn't. The country is incredibly motivated for the project to succeed — it has become a cornerstone of the National High-Tech R&D Program embarked upon in 1986. And we know that the Chinese are very good at leveraging economies of scale. The Loongson chip is going to change more than just computer-ownership rates in the most populous nation on the planet. It's going to have a profound impact on computers everywhere.

For starters, it could help usher in an era of true post-Windows PCs. Because the Loongson eschews the standard x86 chip architecture, it can't run the full version of Microsoft Windows without software emulation. To encourage adoption of the processor, the Institute of Computing Technology is adapting everything from Java to OpenOffice for the Loongson chip and releasing it all under a free software license. Lemote positions its netbook as the only computer in the world with nothing but free software, right down to the BIOS burned into the motherboard chip that tells it how to boot up. It's for this last reason that Richard "GNU/Linux" Stallman, granddaddy of the free software movement, uses a laptop with a Loongson chip.

Loongson could also reshape the global PC business. "Compared to Intel and IBM, we are still in the cradle," concedes Weiwu Hu, chief architect of the Loongson. But he also notes that China's enormous domestic demand isn't the only potential market for his CPU. "I think many other poor countries, such as those in Africa, need low-cost solutions," he says. Cheap Chinese processors could corner emerging markets in the developing world (and be a perk for the nation's allies and trade partners).

And that's just the beginning. "These chips have implications for space exploration, intelligence gathering, industrialization, encryption, and international commerce," says Tom Halfhill, a senior analyst for Microprocessor Report.

Will Loongson-based PCs make inroads with average consumers in the West? You can already order a Lemote netbook online. It isn't any cheaper or better than other entry-level netbooks, and reviews from geeky hardware enthusiast sites are less than enthusiastic. But these crude first-generation products hark back to another wave of boxy, underpowered consumer goods that were initially regarded as mere curiosities in the West. They were called Toyotas.

Christopher Mims (christopher.mims @gmail.com) wrote about new drilling technologies in issue 17.09.