Insight - Increasing Understanding of China's Commercial Space Activities

Tuesday, November 3, 2020

By Ian Christensen, Director of Private Sector Programs

As two of the most comprehensive global space programs, the space-related relationship between the United States and China plays a critical role. In the context of an overall strained and competitive relationship, future developments in these countries’ space activities will have significant effects on the overall stability of the space domain. The utilization of space is increasingly recognized as a key focus area for both national security and economic development in both the U.S. and China. Both countries are seeking to position their space programs as drivers of economic growth, diplomatic influence and leverage, and security advantages. As they do so the potential for misunderstanding and misrepresentation increases; and political and legal measures on both sides of the bilateral pose barriers for beneficial information exchange.

Analysis of Chinese space activities in the United States typically focuses on the potential threat posed by China’s national security space capabilities and on the security and soft power implications of the potential “new space race” in human space exploration. These concerns mirror those of the broader U.S.-China relationship, with one glaring exception - the lack of focus on economic aspects of the relationship in space. Within the context of the overall trend toward “decoupling” the U.S.-China economic relationship, there may be stability benefits in understanding perspectives and trends at a more nuanced level. Focused analysis of the economic nature of space activities in both countries could yield both a more informed strategic picture for commercial competition and identify areas in which both countries may have shared interests in developing a domain conducive to commercial activity, decoupled from an overall competitive relationship. 

Chinese commercial space activity has increased in scope, scale, the number of companies and the amount of investment capital in recent years. A first-of-its kind analysis of China’s commercial space sector published in September 2019 by the U.S. Institute for Defense Analyses (IDA) Science and Technology Policy Institute (STPI) identified 78 commercial space companies in China. These companies were active in the satellite manufacturing, launch, remote sensing, communications, data analytics and ground systems segments of the space industry. China has also become the leading non-U.S. location and source for venture funding of space companies. Space consulting firm Bryce Space and Technology reports that $314.2 million was invested “into Chinese [space] ventures during 2019, up from $288 million in 2018. These investment totals far exceeded those for other non-U.S. countries, with Japan placing second at $130.6 million.” The same report estimated the investment in U.S. companies totalled $4.8 billion in 2019.

In the United States, although there is a general awareness of China’s rising space capabilities and an increasing amount of analysis of those capabilities, literature often focuses on China within the context of great power competition. It is also sometimes questioned whether China has a true commercial space sector. However, in the last 12 to 18 months, discussion of China’s space industry in analytical U.S. sources has been increasing. Examples of these include the STPI report mentioned above, a 2020 analysis of Chinese perspectives on the U.S. space program published by the China Aerospace Studies Institute (CASI), testimony before the US-China Economic and Security Review Commission, and a July 2020 report on the “State of the Space Industrial Base” in the United States. China’s commercial space sector is also receiving increasing attention in trade press sources, including a small but growing number of China (or Hong Kong) based sources that publish in English. Notable examples of these include: Taikonautica, Go Taikonauts, and the DongFang Hour.

Given this context, Secure World Foundation has also expanded its efforts to understand and engage with developments in China’s commercial space sector. We recently added a Chinese perspective to our Advisory Committee in the person of Dr Guoyu Wang, and, in the interests of promoting wider awareness of space governance and space sustainability issues, are working with a Chinese publisher to produce a Chinese language translation of our Handbook for New Actors in Space. In March 2019, we hosted a discussion panel, “U.S.-China Engagement in Space,” in which experts discussed how the United States and China interact in space and looked towards possibilities for further engagement across commercial, civil, and national security issues. SWF’s 2020 Summit for Space Sustainability included both a Spotlight Talk by Li Shouping, General Director of the Space Law Center of the China National Space Administration, in which he shared perspectives on space sustainability, and an interactive workshop session on U.S.-China engagement which discussed perspectives on developing improved information engagement around the commercial space aspect of the U.S.-China space relationship. 

SWF is also working directly with Chinese stakeholders to build understanding and address communication challenges. Since early 2019, the Secure World Foundation, in partnership with the Caelus Foundation, has worked with the Chinese Society of Astronautics to organize an ongoing series of discussions and workshops focusing on U.S-Sino space commercialization trends and perspectives. The First Sino-U.S. Space Commercialization Workshop was held in conjunction with the 2019 China Space Conference in April 2019 and discussed academic and practitioner perspectives on both Chinese and U.S. approaches to the commercialization of space. The Second Sino-U.S. Space Commercialization Workshop was held in September 2020 as a half day session under the theme of a Perspectives Dialogue: Key Views for Areas of Interest and Understanding. During the session, commercial space-related stakeholders from both the United State and China shared their viewpoints on trends, challenges, and opportunities in the commercialization of space. Informal discussions have also been held under the auspices of this activity, including on the margins of the 2019 International Astronautical Congress in Washington, DC in October 2019. SWF, Caelus Foundation, and the Chinese Society of Astronautics plan to further develop this dialogue series as a platform for exchanges and discussion of commercial space developments in the two countries.

Finally, again in partnership with Caelus Foundation, we are in the process of finalizing a research effort looking at awareness and perceptions of Chinese commercial space activities within the U.S. commercial space industry. Based on a series of interviews with space industry stakeholders and on literature review of U.S. and Chinese publications, both conducted between June and August 2020, this research effort explores current perspectives that commercial space stakeholders in the United States have about the emerging Chinese commercial space sector and seeks to identify significant questions and gaps in information that these stakeholders have. We are in the final stages of drafting, and following a peer review period, expect to publish a whitepaper early in 2021.

A preliminary assessment from this research indicates that significant gaps exist in the U.S. commercial space community’s understanding of the goals, positions, and approaches to commercial space activities in China. These gaps range from the structure of the aerospace sector in China, the role of central and provincial governments, the nature of internal competition in China, legal uncertainty regarding trade and competition, to fundamental basics such as whether or not “commercial space" activities actually exist in China and where quality information sources exist. While the existence of these information gaps is not surprising, these obscurities limit the abilities of space stakeholders in both countries to fully navigate and participate in the emerging global space economy. From a market and business perception standpoint, our research suggests that concerns about China’s commercial space activities seem to be partially based on a desire for information to better understand future market conditions, plan strategy, and prepare for competition.

It is our intention that the whitepaper from this research will help efforts to identify areas where further nuance can be developed to better understand the context and nature of the relationship between the U.S. and Chinese space industry sectors. This will have implications for diplomatic and national security strategy, for business and economic development, and for space safety and sustainability efforts. While recognizing the relationship between the United States and China is one of competition, the global space community can benefit from finding means and topics through which the two leading space powers might positively engage each other.