Cover Story: Is China’s Commercial Space Sector Ready to Blast Off?

[para. 1] On January 23, a Long March-6 rocket successfully launched 18 satellites into low Earth orbit, joining them to the growing Spacesail Constellation. The constellation, developed by Shanghai Spacecom Satellite Technology Ltd., aims to provide broadband internet services from space and is one of China's three mega-constellation projects. The project started in August with a vision to deploy over 14,000 satellites to rival SpaceX's Starlink constellation.

[para. 4-5] Founded in 2018 with backing from the Shanghai government, Spacecom has recently gained significant momentum. In February, it secured 6.7 billion yuan ($924 million) in new funding and has completed four satellite launches since August. The commercial space sector in China is flourishing due to strong government support, allowing for faster satellite deployments and technological breakthroughs, including the development of reusable rocket technology.

[para. 6] Nevertheless, the sector has faced setbacks. In June, Space Pioneer encountered a failed test of its rocket, raising safety concerns about private space ventures. In December, Chang Guang Satellite withdrew its IPO application, highlighting investor skepticism about the profitability and future prospects of the industry.

[para. 7-9] Despite these challenges, China's national space ambitions also include sending astronauts to the Moon by 2030. The commercial space sector remains in early stages, partly because of limited access to private investment. Efforts are being made to change this, as emphasized by Li Guoping, Chief Engineer of the CNSA, who outlined plans to streamline licensing processes and encourage commercial companies’ participation in national projects.

[para. 10-11] In January, Chang Liang, a political adviser, advocated for stronger support to help aerospace companies expand globally. Li Guoping's remarks sparked debate about the need for policy support to ease market restrictions, and by 2024, the necessity of an integrated commercial space ecosystem became clear, especially after SpaceX’s achievements.

[para. 12-13] Spacecom’s success stems from the G60 Starlink initiative, launched in 2021 to offer global internet. This year, the company raised significant funding, facilitating future ventures. The goal is to launch over 1,000 satellites through phased deployments by 2027, competing with other ambitious Chinese projects like China Satellite Network Group’s Guowang mega-constellation.

[para. 16] In 2024, Spacecom and competitors completed foundational work, preparing for increased satellite launches over the next three years. The space industry’s foundations, including satellite manufacturing capabilities, are well-established, creating conducive conditions for ambitious projects like the Spacesail Constellation.

[para. 19-22] The commercial space sector has excited the real-world applications of satellite internet. Recent connectivity tests and demonstrations highlight potential applications in various domains, stimulating expectations for reusable rocket technology. Despite technological advances, Chinese rocket developers face challenges scaling production, affected by limited orders and market constraints.

[para. 24-27] Spacecom’s expansion has prompted higher demand for satellite manufacturing. The Songjiang District facility anticipates producing 500 to 600 satellites yearly by 2026. Companies are focusing on reusable rocket technology to lower costs and boost launch efficacy, although developers are still striving to match SpaceX’s profitable model.

[para. 30-32] Despite substantial investments in the aerospace sector, Chinese companies face limited exit opportunities, exemplified by Chang Guang Satellite’s withdrawn IPO. Issues like inclusion on U.S. sanction lists and significant shareholder debt exacerbated concerns, impeding public listing efforts for commercial aerospace companies.

[para. 35-39] Chang Guang Satellite, established in 2014, highlights challenges such as profitability expectations that hinder public listing efforts. Reporting losses from 2019 to mid-2022, the sector understands the urgency of clear listing policies and exit strategies to attract capital and boost investor confidence.