Are you sure the Internet is a product of a free and liberal society? It may just be coincidence; America happened to be the largest economy on Earth when the Internet was developed.
I would argue that the basic design of the Internet is the most efficient way to build a large-scale, general-purpose computer network; this is why it has subsumed or is in the process of subsuming every other system. Had China been the world's largest economy at the time I think they would have developed the Internet too -- maybe they would have tried to build some kind of censorship in, but they would have quickly discovered that it is just more efficient to censor at the edges (I think they are already aware of this fact, given the amount of censorship they require from social media websites and the last-resort role the Great Firewall plays; there is also the general tolerance of businesses using VPNs to avoid the Great Firewall).
For what it's worth, there is innovation coming out of China, and it is happening at an increasing pace as the Chinese economy grows. The freedom to criticize your government or to organize a protest movement is not really necessary for technical innovation.
Is it a coincidence that USA was the largest economy on Earth? I don't think so. On the contrary, I think it became the most powerful country on Earth due to the free competition of talent and ideas, which is impossible without free speech.
Besides, Internet, being as wide open to anonymity as it is, simply never would never have been developed in a country like China, it would be deemed too dangerous. They may compete these days in electronics, but it doesn't mean they can compete in everything. Totalitarian society is always rotten in one way or another, and it manifests in all its output, including business, science, technology and culture. I'm saying this as a person born in the USSR.
The US became the largest economy on Earth because it had 1700's era technology with which which to settle a colossal landmass rich in natural resources and with no real enemies to contend with, plus all the immigrants from all over the world to help make it a reality.
The US started a game of Civilization on easy mode.
Actually, it had colonial powers to contend with, but more importantly, internal factions. The fact that instead of disintegrating into multiple warring entities, it united and grew to become the powerful USA, speaks volumes to the strength of its foundation.
Incidentally, this is precisely where your Civilization analogy goes wrong: the real newly formed states have way more powerful centrifugal factors than those embedded into mechanics of the game.
Keep in mind that in 1776 when the Continental Congress declared independence, Britain was the largest economy in the world. America's declaration of independence lists out all the abuse of power and lack of freedom people endured under British rule. Despite all that, Britain had become the wealthiest country in human history at the time, commanding the most cutting-edge technology (the USA copied steam engines from the British) and having the most extensive system of trade to have ever existed up to then.
Sure, a measure of freedom is necessary to allow an economy to grow, but not nearly as much freedom as people enjoy in the USA. China is a case-in-point: their economy has rapidly expanded as the communist party has started to understand how far a bit of economic freedom goes. For all the freedoms people have in Japan, China managed to unseat Japan as the world's second-largest economy, and is on track to become the world's largest economy within our lifetimes.
China is not the USSR. China has embraced certain capitalist approaches -- like capital markets. The Chinese have figured out what the USSR never fully grasped: economic freedom is not the same thing as political freedom. The USSR tried to micromanage every aspect of the economy, but the Chinese have figured out that it is good enough to have a party member seated on the board of directors.
Right now it seems China's success is only temporary, owing a lot to undervaluation of its currency and to the low cost of labor. It cannot stay in this place forever - sooner or later the growth will stop, the cost of labor will go up, and that's when all the totalitarian warts, such as their weak justice system, corruption and ineffective management, will become obvious.
I would argue that the basic design of the Internet is the most efficient way to build a large-scale, general-purpose computer network; this is why it has subsumed or is in the process of subsuming every other system. Had China been the world's largest economy at the time I think they would have developed the Internet too -- maybe they would have tried to build some kind of censorship in, but they would have quickly discovered that it is just more efficient to censor at the edges (I think they are already aware of this fact, given the amount of censorship they require from social media websites and the last-resort role the Great Firewall plays; there is also the general tolerance of businesses using VPNs to avoid the Great Firewall).
For what it's worth, there is innovation coming out of China, and it is happening at an increasing pace as the Chinese economy grows. The freedom to criticize your government or to organize a protest movement is not really necessary for technical innovation.