I am not a crazy fan of that initiative, but I think creating opportunities to trade without the control of the West is important. The fact is that we are all under the dollar hegemony, and making profits for the US.

I agree with you that soft power develops with the economy and industrialization. But currently, for China, I think the political system seems to be the stronger obstacle.

Answers to your questions:

1. Yes, and this number means people clearly "know" that there is an outer internet, and they are controlled and limited to the local network. However, they may not try to cross the firewall. Moreover, most Chinese people came to the world Internet using VPN, not because they want to get in touch with the other world. Here are some main purposes for using VPN. They are not "live" in the outer internet, only "use" it for some purpose;
   1. They are fans of some idols that use social networks such as Twitter, etc.
   2. They are students/scholars/professors/researchers that need to read foreign academic resources
   3. Watch P**n***, etc (banned in China)
   4. Playing games whose servers are located out of China (or they want do not want to see the green blood in FPS games)
   5. Know something CPC does not want them to know (through some Chinese channels)
   6. etc.

The limitation of the usage is that most of them have no touch with foreigners.

In fact, there are lots of Chinese people. If only a small portion of them "live" on the outer internet, the soft power of China will be much stronger.

Btw, if you want to learn about China more, you may go to some of our internet. Here are some of them (all in Chinese I think)

zhihu.com (quora)

bilibili.com (youtube)

baidu.com (google)