The deregulation of China’s space industry has catalyzed the emergence of private startups that may one day give American companies a run for their money.
In 2014, Beijing began allowing private entities to launch small satellites into orbit from Chinese territory. Since then, dozens of homegrown start-ups have begun working towards developing robust launch systems for commercial flights to the final frontier.
The Chinese have been gradually increasing investment in the private space industry over the past decade. According to a report by Space Angels, a New York-based financial services company focusing on space ventures, a little over $16 billion have been invested in private space entities since 2009, with the Chinese market now accounting for almost three percent of the total share.
Attracting greater attention within this highly specialized sector are companies developing launch vehicles equipped to take small payloads (satellites weighing several hundred pounds) into low-earth or sun-synchronous orbits—usually for commercial purposes. These satellites can be sent to low-earth or on sun-synchronous orbits aboard launch vehicles, such as a rocket, to take images, collect scientific data, or serve communications purposes.
Chinese investment in the private spaceflight industry is fast-growing, though presently small. Nearly all of the
The private space industry in the United States has a two-decade head start over their Asian rivals. For example, Blue Origin—owned by Amazon’s Jeff Bezos—was founded in 2000. But recent developments indicate that the Chinese are catching up fast.
Right now, the most fundamental metric of determining the success of a private space enterprise is whether the firm in question has sent a payload into orbit. Several American operations already boast of putting small satellites into orbit, with Rocket Lab laying claim to as many as twenty-five. However, the Chinese have so far had mixed results in this regard.
Back in 2006, it took American giant SpaceX four attempts to reach orbit with Falcon I. The Chinese have already had two attempts to match that feat over the past year, with
Cost competition will be also a driving force in determining the winners and losers in the industry.
Chinese companies like LinkSpace and OneSpace are thought to be pursuing other means of bringing down the cost of launch vehicles, with the former investing in disposable boosters and the latter developing reusable rockets. OneSpace and iSpace have begun successful sub-orbital testing as well, which is believed to be a major breakthrough in sending payloads into orbit.
Liquid propellants are critical to making launch vehicles better and cheaper, but Chinese companies have yet to make headway in incorporating them. While the American company SpaceX increasingly uses liquid fuel to power its products, media reports indicate that Chinese rocket systems still rely primarily on solid propellants.
Also of interest to observers is the development of reusable rockets by SpaceX. Since small rockets only carry small payloads, the margins in the industry are thin. Reusable rockets lower costs and have the potential to increase profit margin increases dramatically.
Another way to achieve value is cheap, skilled labor. And this is where China has a clear advantage over the United States. The Chinese now far outstrip the United States in the number of science majors graduating from higher education institutions each year. According to the World Economic Forum, China has produced nearly 4.7 million graduates in STEM (science, technology, engineering, and mathematics) in recent years, compared to 568,000 in the United States.
Chinese ambitions for the final frontier can be gauged by their investment in space technology in recent years—a lunar landing being just one of the many firsts.
Chinese firm LinkSpace plans to conduct sub-orbital tests for bigger launch vehicles in the coming year, with an orbital launch planned for 2021, according to a report by Reuters.
The race for commercial spaceflight also hinges on the assumption that the market for sending small satellites into orbit is big enough to accommodate tens of big companies to pursue the development of cheap rockets. In connection with this, reports indicate that the Chinese firms plan on conducting more than a hundred launches as early as next year.
They also plan to bring down the cost of one launch to under $4.5 million, a fraction of the amount currently charged by US firm Northrop Grumman to put a payload into orbit. The Chinese further claim that their ventures are more cost-effective than American companies like Rocket Lab or Virgin Orbit.
The Diplomat website reports that an internal study of the U.S. National Aeronautics and Space Administration or NASA concluded governmental agencies require significantly higher budgets to develop the technology that private companies had produced. Such assessments could prove important as talk on space turns to bases on the moon, mining of asteroids or establishment of propellant depots.
State support is playing an important role to keep the startup space commercial space industry from going under. In the United States, programs such as the Commercial Orbital Transportation System offer a variety of help to private industries.
In China, the secretive military has opened up its launch facilities to private investors on the directives of President Xi Jinping, who has identified space as a critical frontier in his goal to make China great again. Additionally, the Chinese state has helped set up manufacturing plants and provided product design assistance to firms investing in commercial space activities.
With regards to the American model, some technological experts have raised questions about the concentration of wealth in the hands of a few, as a small number of billionaires control the private space industry between themselves, giving startups little hope. Individual problems with these executives, like financial or personal troubles, could compromise U.S. interests in the industry, critics warn.
The Chinese have been arguably more forthcoming in this regard, with more than sixty private space firms registered in the country, most of them controlled by young entrepreneurs. Some Chinese companies have also been putting money in U.S. space companies on the brink of collapse to further strengthen its position in the industry.
Today, the primary objective of both American and Chinese companies in this nascent industry is to develop safe and reliable launch vehicles. With the stakes so high, many of the companies are essentially betting on success to gain a foothold in the industry. As Ryan Woo notes in a recent report for Reuters, one unsuccessful launch, and the finances, morale, and manufacturing of the firm can take a deadly hit.