The private space sector in China is following the US blueprint to take on established multi-billion dollar US-backed players like SpaceX and Blue Origin.
China has been reaching for the stars for a while now. Even as the world came to a standstill owing to the COVID-19 pandemic, China continued its outer space endeavors – sending a rover to Mars, testing a new crewed vehicle capable of ferrying its taikonauts and bringing back rocks from the moon.
In August, a rocket Chinese-made rocket successfully took off, reached a height of about 300 meters, hovered there briefly, and returned to Earth intact. Similarly, November saw the launch of Ceres-1, a new 62-feet high rocket with a payload capacity of 770 pounds, successfully placed communications satellite Tianqi 11 into space.
What makes these two seemingly unremarkable events worth taking note of is that neither was an initiative of state-owned space enterprises – the China Aerospace Science & Industry Corporation Limited (CASIC) or the China Aerospace Science and Technology Corporation (CASC). These reusable rockets were by privately-owned Chinese startups such as LinkSpace, which are fast emerging as the country’s response to the likes of SpaceX and Blue Origin.
The Paradigm Shift Toward Private Players
Until a decade ago, China’s space initiatives were solely controlled by the state and run through its two enterprises – CASIC and CASC. The exorbitant cost of building and launching satellites, which only national budgets were capable of supporting, was one of the primary reasons why private players in the space sector were considered unfathomable.
As the costs of space operation began to plummet, the biggest hurdle started seeming surmountable. With Elon Musk‘s SpaceX launching, crashing and burning, and trying again, and finally succeeding in sending its reusable rockets into space and back, the idea of privatization of space operations became more and more tangible.
In China, the shift to treat the space sector as a playing field of innovation, primarily to be able to compete with arch-rival US, came after Xi Jinping assumed power in 2014. The Chinese government gave the go-ahead for private players to come into civil space development.You will find more infographics at Statista
A whole new segment of startups started mushrooming. From nearly 30 players in 2018 to close to 80 new startups today, China’s private space sector has truly boomed in less than a decade.
Chinese Private Space Sector Designed on US Blueprint
China’s objective behind opening up civil space and aerospace to private players was to gain a stronghold in the space ecosystem. According to Namrata Goswami, a geopolitics expert who has been keenly studying the Chinese space program, China has taken a cue from the American private sector to promote innovation in the space sector by expanding its purview beyond state-run organizations.
The private space sector in China is being developed using the US blueprint of using government subsidies and contracts to keep these companies afloat. Venture capital funding, which, according to an IDA report, was at $516 million in 2018 has also been instrumental in lending impetus to these operations. Even though it pales in comparison to the $2.2 billion raised by American players, the figure is still no mean feat for an up-and-coming industry.
Watch: China’s Space Startups gear up to take on established SpaceX and Blue Origin
The Element of Govt Control
Given that most of the startups are dependent on the state in varying degrees for financial support as well as business operations, the question of government control cannot be overlooked. Lincoln Hines, a researcher on China’s space capabilities at Cornell University, is of the opinion that some opacity over how this emerging industry operates is likely to prevail.
The connection between these startups and the state remains mysterious, with the lines between what is state-owned (and controlled) and what is private, growing increasingly fuzzy. What we do know is that in July last year, the Chinese government issued a new set of guidelines to give a direction to the companies operating the civil space sector. These guidelines pertain to the research, technological, safety, manufacturing, and testing protocols for companies building small or medium reusable rockets with up to 200-km range.
The Lure of Foreign Investment
For both the Chinese government as well as the private players operating in the civil space sector, the lure of foreign investment remains high. One of the reasons behind the Chinese government’s move to foster a private space sector was the strategic advantage of curating opportunities for international investments.
Document 60, which serves as the basis of opening up aerospace to private players, focuses not just on technological innovation but also on attracting foreign investment. Getting private players to manufacture these products was the best recourse of making them available to international buyers who’d be wary of direct dealings with the Chinese government.
For the companies operating in the sector, foreign investment provides an opportunity to cut back reliance on government funds, as a result, break-free from a spectrum of restrictions that come with it. It also makes competing on a global scale by venturing into international markets and working with outside talent, easier.
The bottom line is that it will be a while before China’s homegrown space startups start competing with multi-billion corporations-backed ventures like SpaceX and Blue Origin. Nor will they be servicing the ISS anytime soon. Even so, for an industry still in its infancy, it has surely grown by leaps and bounds already.