For a country struggling with how to tackle the Internet, the latest plans from Beijing-based technology firm, China Recreation District (CRD), seem rather surprising: it plans to launch the “largest project on virtual worlds” in China, with support from the government.

Scheduled to launch right before the Olympics, the project aims to provide infrastructure for a virtual economy in which businesses worldwide are able to trade. This grandiose schemes is relying on the backing from 200 content producers, including China Mobile, Everbright Bank. A rather unsual partner, the Chinese government, is expected to facilitate business and consumer adoption.

In addition to Second Life and other well-established virtual worlds, CRD will have to compete with the local HiPiHi and uWorld. Not sure that their alliance with the government will turn out be such a competitive advantage.