China Looks to Comprehensively Boost Commercial Space
The Central Government, provinces, banks, and individual enterprises are seeking ways to strengthen the nation’s commercial space sector.
During the Two Sessions (两会)1 opening two weeks ago, China’s growing privately-held commercial space sector was cited as an example of high-quality development, innovation, and growth. High-quality development has been repeatedly emphasized since 2023 as key to continued modernization efforts and economic growth.
Since the opening of the Two Sessions, new financing and support have been announced, received, and planned.
The Head of the National Development and Reform Commission (发改委) Zhang Shanjie (郑栅洁) announced that in the coming months, a national venture capital guidance fund will be established to enhance and expand innovative enterprises. In a similar move, Pan Gongsheng (潘功胜), Governor of the People's Bank of China (中国人民银行), shared that the bank would launch a science and technology board in the bond market to bolster scientific and technological innovation. To further support innovative enterprises, it was stated that the bank will also improve its lending program regarding innovation, and increase its size from 500 billion Yuan to between 800 billion and 1 trillion Yuan (around 110.6 to 138.3 billion United States Dollars, on March 19th).
In order to properly promote commercial space as a high-quality force for development, city and provincial governments are supporting the sector alongside the Central Government. This support is via a mixture of expanding spaceports, building up industrial clusters, providing funding, tax incentives, and land use rights.
To highlight a few, Beijing’s Haidian District (海淀区) is notably looking to provide 100 billion Yuan (13.8 United States Dollars) to a space cluster made up of around two hundred companies. Shanghai (上海市) is already implementing its 2023-2025 plans to foster and strengthen its regional space enterprises, with a targeted value of 200 billion Yuan (27.6 billion United States Dollars) by its conclusion. Meanwhile, Zhejiang Province (浙江) is planning to strengthen commercial space plans along with 6G innovations, which will involve low Earth orbit satellites, ahead of the 15th Five Year Plan. And Heilongjiang Province (黑龙江) is eyeing investments in satellite technologies to drive local innovations.
A few regional banks are also supporting companies via long-term financing. The Bank of Shanghai (上海银行) is supporting iSpace, of the Hyperbola series of rockets, via various financing agreements while China Zheshang Bank (浙商银行股份有限公司) has granted LandSpace, with its Zhuque launch vehicles, a 50 million Yuan (6.9 million United States Dollars) line of credit to invest in Zhejiang.
As for why China’s provinces are investing in the commercial space sector and aligned enterprises, Professor Keyu Jin (金刻羽), of the London School of Economics, explains2:
“In [China], economic achievement by local government officials translates into political capital. That is to say, those who can deliver economic growth in their region have a greater chance to be promoted in the party hierarchy. The official criteria for promotion include integrity, diligence, and competence, but performance—how well the local official manages the local economy—is essential.”
Professor Keyu Jin’s explanation concerns local economic growth but remains relevant to high-quality investments, like those made in the commercial space sector.
Along with efforts to provide financing after the Two Sessions, individuals from the commercial space sector have put forward suggestions to boost growth and how private enterprises can support government efforts. To begin, the Founder of CAS Space Yang Yiqiang (杨义强) suggests:
"To strengthen the nation's space capabilities, it is imperative to create an integrated development framework that deeply combines advantages of State-funded contractors and commercial sector forces," — "It is important that more 'patient capital' comes to this sphere and plays a major role. At the same time, the government must ensure greater stability and continuity in policies pertaining to the space industry to let investors rest assured that its support for the commercial space sector is long-lasting and stable," — “[The] nation has possessed a certain level of scientific and technological capabilities, there remains a significant gap compared with the United States in terms of spacefaring power.”
Zhang Changwu (张昌武), Founder of LandSpace, emphasized Yang’s statements, saying:
"To match world-class standards, China must expedite breakthroughs in reusable rocket technology, reduce launch costs and carry out more launches," — "Relevant authorities must optimize their launch approval procedures and relax requirements on companies wishing to enter the satellite internet field, to allow qualified participants to engage in network construction."
Meanwhile, the Co-Founder of Galaxy Space (银河航天), a provider of satellite communications, Liu Chang (刘畅) has said that institutional backing of various Chinese satellite mega-constellations is welcomed as it assists in faster deployment and growth, allowing her company to help Belt and Road partner countries to jump from 3G and 4G services to near-6G years ahead of expectations.
As discussed already, various mega-constellation efforts will help scale up China’s launch cadence, as well as the manufacturing needed for the rockets and satellites. Almost fifty thousand satellites are planned to be launched by the 2030s, with over half backed by the Central or Regional Government.
At present there is not enough manufacturing capacity to produce the satellites necessary for these constellations, or the launch vehicles needed to launch them. Several reusable rockets are set to solve the constellation launch shortage, in a massive boon for their operators, while multiple manufacturers will produce the satellites.
Through this mega-constellation strategy, on the state side, demand for increased satellite manufacturing is generated followed by more demand for more launches, at increasingly lower costs. Additionally, these constellations will help develop 6G communications networks to drive digital growth and innovation, like the BeiDou network has already. The existence of a handful of mega-constellations will likely generate a competitive market for their services, with a Senior Researcher at the China Academy of Space Technology, Wang Runfu (王润福) highlighting:
“[There] are multiple companies in China striving to build their massive space-based internet networks, and each of their networks, according to their plans, will have hundreds or even thousands of satellites," — "On the one hand, this will create a tremendously big market with enormous business potential. On the other hand, realizing their ambitious plans requires government guidance, huge investment in infrastructure, business profitability and a solid foundation of satellite design and manufacturing capacity."
Eventually, mega-constellation satellites will be superseded by efforts to build space-based solar power stations for near-limitless clean energy, enabled by a robust and large supply chain for station components along with various low-cost high-flight-rate rockets.
Additionally, as part of efforts to signal new support for private enterprises, top political figures, including President Xi Jinping (习近平) and Premier Li Qiang (李强), met with various heads of private industry in February. A few privately held space companies were among those in attendance.
At the meeting, it was stressed that the private economy has now reached a considerable scale and holds significant weight, with a solid foundation for promoting high-quality development. President Xi is reported to have urged for resolutely dismantling obstacles that prevent enterprises from accessing production factors equally and competing in the market fairly, further opening the competitive areas of infrastructure to various business entities in a fair manner, and continuously making solid efforts to address the difficulties faced by private enterprises in obtaining affordable financing.
By nurturing a strong, effective, and reliable commercial space sector, China hopes to become a leading space power in the coming years, with plans to be a powerhouse of technology and science by 2050.
To assist in this two-and-a-half-decade-long goal with a continually changing and innovating sector, policy could be changed around education with a greater emphasis on vocational training and study. President Xi has called for a bolstering of the role of education to support the scientific and technology sectors to drive future innovation driver growth. Liu Zheng (刘争), who attended the Two Sessions as a member of the Chinese People’s Political Consultative Conference and from Long March launch vehicle manufacturer Capital Aerospace Machinery Co. Ltd. (首都航天机械有限公司), has also discussed and called for new policies to train students wishing to work in the aerospace manufacturing sector.
China’s Two Sessions are annual meetings of the National People’s Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC). The NPC is China’s top legislative body and the CPPCC is the nation’s top political advisory body. Both are key in outlining and deciding nationwide policy.
In her book The New China Playbook, Beyond Socialism and Capitalism (ISBN: 9781800753860) on page 123.