A Great Leap Forward?

As legend chairman Liu Chuanzhi prepared to sign last week's Internet deal with AOL Time Warner, he jokingly made a show of trembling hands to confidants. His gesture had a serious undertone. The $200 million agreement between these two strong-willed partners makes both sides nervous. Eighteen months in the making, it links behemoth AOL, the most visible symbol of American new media prowess, with Legend, a government-nurtured start-up that has grown to become China's most successful computer maker.

Although China still hasn't joined the World Trade Organization, this deal can be viewed as a WTO walk-up, a signal...