(Bloomberg Businessweek) -- From electric cars to civilian drones to solar panels, Chinese companies have rapidly emerged as global leaders in advanced industries that the government considers critical. There’s one area, though, where the nation has fallen flat. More than a decade after President Xi Jinping instituted reforms to jump-start Chinese space startups, the country’s rocket and satellite makers are nowhere near to matching the world’s premier company, SpaceX.
Elon Musk’s company operates more than 6,000 Starlink satellites, providing broadband access from Argentina to Zimbabwe, while Chinese companies have only a few dozen. SpaceX is the pioneer in reusing parts of its rockets, enabling the company to slash its costs, and is now testing the much larger reusable Starship rocket. Chinese companies rely on single-use ones with older technology.
Customers from all around the world pay to have cargo carried aloft by Musk’s rockets, but Chinese rockets largely carry domestic payloads. It’s no wonder, then, that SpaceX had about 100 launches in 2023, eight times more than all Chinese private-sector startups combined. This year the gap is even bigger, with fewer than 10 launches of Chinese startups’ rockets and more than 90 for Musk’s Falcon series. (Including state-owned rockets, China launched about 50 times through September.)
“Their rockets are now flying routinely and executing commercial missions, while China has not yet mastered this technology,” says Huo Liang, chief executive officer of Deep Blue Aerospace, a startup that’s developing rockets with boosters that can be recycled for multiple launches.
China is intent on changing that also-ran status. While Chinese space companies are doing well compared with their counterparts in Europe, India or Japan, Xi isn’t interested in comparisons with second- or third-tier players. His goal, as he pointed out during a meeting with space scientists on Sept. 23 in Beijing, is to “build China into a space power.”
The government is providing more aid to its space business. That includes assistance in developing reusable rockets, such as a new center in Beijing to help transfer technology to the companies. In September startups Deep Blue and LandSpace Technology both conducted their most ambitious tests yet of vertical takeoff and landing—a must for reusable rockets—and several startups and government-owned companies aim for missions in 2025 and 2026.
Chinese satellite makers are also ramping up production, and companies are expanding their orbital communications networks. In August a Chinese rocket launched into orbit 18 new Spacesail satellites, the first batch in a long-anticipated low-Earth orbit (LEO) constellation intended to rival Starlink. Geespace, a subsidiary of Chinese automotive conglomerate Zhejiang Geely Holding Group, in September sent 10 satellites to low-Earth orbit, its second launch this year. Geely now has 30 satellites and plans to have a 72-satellite constellation by the end of 2025.
The government wants to make launches easier through a new state-funded facility for use by commercial operators. The complex, on the coast of the island province of Hainan, will be able to accommodate more than 10 types of rockets and conduct more than 30 launches annually. State media reports that the first flight of a privately built rocket will take place in 2025.
Until now the government has reserved Hainan for state companies with links to the military, forcing startups to make do with remote inland facilities or floating launchpads offshore. “China is at distinct disadvantage in terms of launch sites compared with the US,” says Jianwei Li, managing partner of Zhencheng Capital, a Chinese venture capital company that’s invested in Deep Blue.
Nearby is the Wenchang Aerospace Supercomputing Center, completed last year at a cost of about 1.2 billion yuan ($169 million). The nation’s only supercomputing facility that focuses on the space industry, the center has 36 computers equipped with Nvidia Corp.’s A100 graphics processing units, acquired before Washington banned exports of such advanced chips to China in 2022.
“There’s this discussion that the government hasn’t done enough to support” the industry, says R. Lincoln Hines, assistant professor in the Sam Nunn School of International Affairs at the Georgia Institute of Technology. The new facilities in Hainan indicate “there has been a shift at high levels to provide more support for having a successful commercial space industry.”
There’s a limit to how big a role Xi will be willing to cede to the private sector. China’s startups have enjoyed much less official support compared with Musk’s company, which over two decades has received more than $18 billion in contracts from NASA, the Pentagon and other federal customers. Xi’s government instead has largely given its money to state-owned enterprises with links to the People’s Liberation Army.
And since building LEO constellations is a top priority, the government is unlikely to entrust that task to the startups, says Alanna Krolikowski, assistant professor of political science at Missouri University of Science and Technology. “China’s answer to Starlink is not a traditionally commercial project, it’s a critical piece of national infrastructure,” she says. “Building it is non-negotiable.”
Even if the state-owned enterprises take the lead in such strategically important space projects, the startups will be playing a bigger role in the years ahead, says Clayton Swope, senior fellow at the Center for Strategic and International Studies in Washington.
“China is significantly behind, timewise,” he says. But that also means Beijing can follow a road map that the US government created over both Democratic and Republican administrations to support SpaceX as Musk’s company grew. Xi can “rewind 10 years to see how this played out,” says Swope, “because they’re mimicking how this worked out in the US.” —With Lulu Shen
(Corrects chart to adjust the number of launches for China and Russia.)
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