LOL, the "internet" needs to be overhauled? What's your next analysis, that it's all a series of tubes? The "internet" has nothing to do with it, since the "internet" is nothing more than a conduit for transmission. The problem is the systems attached "at the end" of the internet, meaning your computer, my computer, the compuers in area 51, whatever. I wouldnt be surprised to find top secret government computers running XP SP2 with Acrobat 6.0, Internet Explorer 6.0, Norton antivirus 2.0, and half a dozen random tray icons and toolbars installed. Hell I work for IT in a multi-billion dollar BANK and see this shit every day. Just ridiculously outdated systems with employees happily clicking buttons on anything they want, with someones entire personal account on the other screen, totally unmasked and unencrypted. Heck, we dont usually get notified of viruses on these systems till 1-2 weeks after infection, by the time it filters it's way to our department.
I'm sure all the chinese have to do is some basic ip/port scanning, and then try to connect to default services like remote desktop/VNC and presto, they're in lol.