Author: Clay Dillow
Posted on: CNBC, March 28th, 2017




China’s breakneck economic expansion may be flagging, but the country’s ambitions in space show no signs of slowing down. Alongside ongoing efforts to rival NASA by placing robotic landers, and eventually astronauts, on the moon and Mars, China’s government is increasingly looking to its burgeoning space sector to rival U.S. companies like Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX, which is targeting March 30 for the latest launch of its Falcon 9 rocket..

Though Chinese space authorities have publicly announced the country’s ambitions to forge itself into a major space power by the early 2030s, President Xi Jinping’s government is also considering ways to direct spending that will push Chinese tech companies toward breakthroughs in downstream technologies like robotics, aerospace, artificial intelligence, big data analytics and other 21st-century technologies.

The majority of China’s space ambitions remain focused on boosting Chinese prestige at home and abroad. But a push within Xi’s government to triple spending on space science as well as the emergence of a small but growing group of privately backed space start-ups suggest that both Chinese industry and government see long-term economic benefits in their investments in space technologies.

That increasing flow of capital toward both China’s state-run and private space-related tech companies could place increased pressure on NASA, and eventually on commercial space companies in the United States and Europe.

Satellites and space launchers

Though the exact value of China’s spending on its space programs remains shrouded in secrecy, many analysts peg its civilian space budget at around $3 billion annually in recent years, a fraction of the $19.3 billion the United States allocated to NASA in 2016. But on that relatively small budget, China has managed to accomplish big things.

Prior to 2003 China — whose space program dates back to the 1950s — had never put an astronaut (a «taikonaut» in Chinese nomenclature) into orbit. In the years since, it has moved rapidly toward parity with space powers like Russia and the United States. In 2016, China launched more rockets than Russia for the first time, equaling the 22 rockets launched by the United States. Included among those missions was Shenzou 11, which carried a crew of two to dock with China’s Tiangong-2 spacecraft, a temporary orbiting space habitat serving as a stepping stone for a larger, permanent Chinese space station in the early 2020s.

These missions, along with China’s ambitious plans to send both robots and manned missions to distant bodies like the moon and Mars are largely about prestige, says Dr. James Lewis, a senior vice president at the Center for Strategic and International Studies. «It’s escaping what they would call the domination of the West and the U.S.,» he says. «It’s a way to assert China’s independence and a return to the global stage. It sends a message: We’re a great power.»


But while China’s space program has historically served as a state-driven enterprise to demonstrate the nation’s technological prowess, China is now looking to its space program to pay economic dividends as well. Beijing recently set its GDP growth target for 2017 at 6.5 percent — the lowest in 25 years — as an economic boom, long fueled by cheap labor and low-end manufacturing, appears to have reached the limits of its expansion.


The march of the unicorns 

Though China is home to 43 start-ups worth at least $1 billion, according to CB Insights’ «Unicorn List,» President Xi has expressed a desire to see more of them, particularly in information technology and network-related businesses, that could serve as China’s next growth engine. And there are signs both within and outside of Xi’s government, indicating that Beijing believes its space ambitions can provide a boost to both state-owned and private enterprises in China, catalyzing the kinds of technological breakthroughs that will lift both China’s global standing and its slowing economy.

In the past year a number of Chinese space launch start-ups have emerged, largely with the backing of universities and hedge funds. Two-year-old OneSpace is developing a 59-ton launch vehicle that it plans to launch for the first time in 2018. ExPace, founded early last year, plans to market its solid-fueled Kuaizhou rocket to those looking to loft small satellites into orbit. Likewise, Landspace — launched in 2015 — claims it will conduct its first commercial launch this year.

These companies aren’t exactly SpaceX or Blue Origin. Though technically commercial start-ups, their relationship with the Chinese government are conspicuous. ExPace’s Kuaizhou rocket is reportedly based on the launcher for Chinese antisatellite weapons and missile defense interceptors, while Landspace’s rocket is based on the government’s Long March 11 rocket (for its part, OneSpace was reportedly founded with support from the National Defense Science and Industry Bureau).

But launching small satellites atop rocket technologies borrowed from China’s national space programs is simply a way into the market. OneSpace plans to eventually develop a manned space capsule, and Landspace is reportedly mulling a far more powerful, liquid-fueled rocket that could compete directly with the likes of SpaceX, Blue Origin or France’s Arianespace.


A private-sector push


The emergence of these and other start-ups underscores a move by China to capitalize on its growing space prowess and to drive at least some of the industry’s investment and innovation outside of traditional government programs. Where rockets are concerned, fostering a commercial launch industry will allow Chinese companies to market rocket technology commercially to foreign customers without running afoul of international norms and agreements that deter governments from doing that kind of business. But it will also allow companies to tinker and, ideally, improve upon government designs.

Beyond rocket hardware, China is also reportedly mulling a major boost in spending on space science programs that will challenge Chinese firms to develop new materials, sensors and other technologies. The current five-year plan (running through 2020) already calls for five major space exploration projects. These include a dark matter-seeking satellite that launched in December 2015 and an experimental quantum communications satellite that launched last year that could lead to significant breakthroughs in communications and cryptography. An ongoing build-out of geolocation and Earth observation satellites is also providing China with vast reserves of the currency that information technology companies trade in: data.

«These programs are part of a comprehensive, deliberate, long-term strategic vision for economic and societal transformation,» says Dr. Alanna Krolikowski, a post-doctoral research fellow at the China Institute at the University of Alberta. «What’s needed is actually new drivers of growth, and those have to come from services, from innovation, from essentially becoming an economy that’s more similar to an advanced industrialized economy.»

By building out its network of BeiDou satellites — China’s equivalent of GPS — and Earth-imaging satellites like those in its Gaofen constellation, China can generate the kinds of data that companies can turn into high-tech service enterprises. In the United States, companies like Planet Labs, Digital Globe, Spaceknow, and Orbital Insights have generated novel — and in some cases quite lucrative — methods for generating and processing satellite imagery into meaningful data they can then sell to companies around the world. Through its own investments, China could likewise become a provider of similar information, though it’s unclear how much freedom of innovation companies will have with the Chinese government acting as the central clearinghouse for satellite data.

«There is a real vision for making the fundamental infrastructure investments in the satellite constellations themselves,» Krolikowski says. «Those investments are justified in terms of their downstream impact on the economy and what they’re going to do for upgrading the scientific, technological and industrial base in China — what they’re going to do to foster that transition toward an innovation economy that the government emphasizes.»


China expands its footprint

While its space industry is a part of China’s vision for economic transition, it is only one component, Lewis says. Much of Beijing’s desire for economic transition has manifested itself in massive investments in more traditional technology industries, like semiconductors, into which the government is pouring $150 billion to boost China’s domestic chip production (a move that has drawn the ire of both the Obama and Trump administrations).

Budget disparities aside, many U.S.-based analysts have expressed concern that NASA is reining in its ambitions as China expands its footprint in orbit and beyond.

But that could change if President Trump decides to reenergize NASA and shift its priorities. Already he has expressed interest in trying to create a «Kennedy moment» again.





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