“Xi’s goal was that if China has to become a critical player in technology, including in civil space and aerospace, it was critical to develop a space ecosystem that includes the private sector,” says Namrata Goswami, a geopolitics expert based in Montgomery, Alabama, who’s been studying China’s space program for many years. “He was taking a cue from the American private sector to encourage innovation from a talent pool that extended beyond state-funded organizations.”
As a result, there are now 78 commercial space companies operating in China, according to a 2019 report by the Institute for Defense Analysis. More than half have been founded since 2014, and the vast majority focus on satellite manufacturing and launch services.
For example, Galactic Energy, founded in February 2018, is building its Ceres rocket to offer rapid launch service for single payloads, while its Pallas rocket is being built to deploy entire constellations. Rival company i-Space, formed in 2016, became the first commercial Chinese company to make it to space with its Hyperbola-1 in July 2019. It wants to pursue reusable first-stage boosters that can land vertically, like those from SpaceX. So does LinkSpace (founded in 2014), although it also hopes to use rockets to deliver packages from one terrestrial location to another.
Spacety, founded in 2016, wants to turn around customer orders to build and launch its small satellites in just six months. In December it launched a miniaturized version of a satellite that uses 2D radar images to build 3D reconstructions of terrestrial landscapes. Weeks later, it released the first images taken by the satellite, Hisea-1, featuring three-meter resolution. Spacety wants to launch a constellation of these satellites to offer high-quality imaging at low cost.
To a large extent, China is following the same blueprint drawn up by the US: using government contracts and subsidies to give these companies a foot up. US firms like SpaceX benefited greatly from NASA contracts that paid out millions to build and test rockets and space vehicles for delivering cargo to the International Space Station. With that experience under its belt, SpaceX was able to attract more customers with greater confidence.
Venture capital is another tried-and-true route. The IDA report estimates that VC funding for Chinese space companies was up to $516 million in 2018—far shy of the $2.2 billion American companies raised, but nothing to scoff at for an industry that really only began seven years ago. At least 42 companies had no known government funding.
And much of the government support these companies do receive doesn’t have a federal origin, but a provincial one. “[These companies] are drawing high-tech development to these local communities,” says Hines. “And in return, they’re given more autonomy by the local government.” While most have headquarters in Beijing, many keep facilities in Shenzhen, Chongqing, and other areas that might draw talent from local universities.
There’s also one advantage specific to China: manufacturing. “What is the best country to trust for manufacturing needs?” asks James Zheng, the CEO of Spacety’s Luxembourg headquarters. “It’s China. It’s the manufacturing center of the world.” Zheng believes the country is in a better position than any other to take advantage of the space industry’s new need for mass production of satellites and rockets alike.
The most critical strategic reason to encourage a private space sector is to create opportunities for international collaboration—particularly to attract customers wary of being seen to mix with the Chinese government. (US agencies and government contractors, for example, are barred from working with any groups the regime funds.) Document 60 and others issued by China’s National Development and Reform Commission were aimed not just at promoting technological innovation, but also at drawing in foreign investment and maximizing a customer base beyond Chinese borders.
“China realizes there are certain things they cannot get on their own,” says Frans von der Dunk, a space policy expert at the University of Nebraska–Lincoln. Chinese companies like LandSpace and MinoSpace have worked to accrue funding through foreign investment, escaping dependence on state subsidies. And by avoiding state funding, a company can also avoid an array of restrictions on what it can and can’t do (such as constraints on talking with the media). Foreign investment also makes it easier to compete on a global scale: you’re taking on clients around the world, launching from other countries, and bringing talent from outside China.
Although China is taking inspiration from the US in building out its private industry, the nature of the Chinese state also means these new companies face obstacles that their rivals in the West don’t have to worry about. While Chinese companies may look private on paper, they must still submit to government guidance and control, and accept some level of interference. It may be difficult for them to make a case to potential overseas customers that they are independent. The distinction between companies that are truly private and those that are more or less state actors is still quite fuzzy, especially if the government is a frequent customer. “That could still lead to a lack of trust from other partners,” says Goswami. It doesn’t help that the government itself is often very cagey about what its national program is even up to.
And Hines adds that it’s not always clear exactly how separate these companies are from, say, the People’s Liberation Army, given the historical ties between the space and defense sectors. “Some of these things will pose significant hurdles for the commercial space sector as it tries to expand,” he says.
None of these new companies are yet profitable, and it will be quite some time before they are. “There isn’t any sign of indication that this industry will flop,” says Hines. “But many experts do think a lot of these companies will go out of business.” Apart from the challenge of attracting customers outside China, many companies are still trying to figure out who exactly their customers ought to be.
American companies like SpaceX and Blue Origin had billionaire founders ready to burn cash to take on large risks, push past big failures, and finally get off the ground. And while a Chinese billionaire entered the industry last year, “there is no Chinese Elon Musk to push these riskier ventures forward,” says Hines. It’s also unclear whether Chinese companies, even those supported by wealthy backers, will have that appetite for risk.
Zheng says one thing Spacety has offered is exceptional transparency with clients for whom it is developing satellites—something that’s still uncommon for Chinese firms. “Many of them have no kind of spaceflight experience,” he says. “They want to see and learn what goes on, but the large companies won’t allow for that. We’re different.”
Lastly, China needs to figure out a legal framework that can guide the commercial industry in more explicit terms, and specify what’s allowed and what is not. It is the only major space power without a specialized space law. (The American version is Title 51 of the United States Code.) While the hope is that free enterprise can generate innovation, national governments are still liable for whatever space activities a country’s private companies conduct. There’s a need to license and approve these missions, ensuring that governments know what they’ve signed up for.
Despite all this, China’s space industry is rolling forward. These new startups haven’t just adopted American business practices—they’ve also begun to embrace American startup culture as a way to foster business relationships and grow. During my video call with Spacety’s Zheng, the company’s Beijing CEO, Yang Feng, briefly dropped in to say hello, on his way back from a party where he’d been schmoozing and enjoying drinks with many peers and partners in the industry. “It’s part of the way we do business now,” Zheng said. “Innovation is not just new technology itself—it’s also a new way of doing things.”
SpaceX has successfully landed Starship after flight for the first time
On March 3, SpaceX’s Starship pulled off a successful high-altitude flight—its third in a row. Unlike in the first two missions, the spacecraft stuck the landing. Then, as in the last two, the spacecraft blew up.
What happened: At around 5:14 p.m. US Central Time, the 10th Starship prototype (SN10) was launched from SpaceX’s test facility in Boca Chica, Texas, flying about 10 kilometers into the air before falling back down and descending safely to Earth.
About 10 minutes later, the spacecraft blew up, from what appears to have been a methane leak. Still, the actual objectives of the mission were met.
Rocket Lab could be SpaceX’s biggest rival
In the private space industry, it can seem that there’s SpaceX and then there’s everyone else. Only Blue Origin, backed by its own billionaire founder in the person of Jeff Bezos, seems able to command the same degree of attention. And Blue Origin hasn’t even gone beyond suborbital space yet.
Rocket Lab might soon have something to say about that duopoly. The company, founded in New Zealand and headquartered in Long Beach, California, is second only to SpaceX when it comes to launch frequency—the two are ostensibly the only American companies that regularly go to orbit. Its small flagship Electron rocket has flown 18 times in just under four years and delivered almost 100 satellites into space, with only two failed launches.
On March 1, the company made its ambitions even clearer when it unveiled plans for a new rocket called Neutron. At 40 meters tall and able to carry 20 times the weight that Electron can, Neutron is being touted by Rocket Lab as its entry into markets for large satellite and mega-constellation launches, as well as future robotics missions to the moon and Mars. Even more tantalizing, Rocket Lab says Neutron will be designed for human spaceflight as well. The company calls it a “direct alternative” to the SpaceX Falcon 9 rocket.
“Rocket Lab is one of the success stories among the small launch companies,” says Roger Handberg, a space policy expert at the University of Central Florida. “They are edging into the territory of the larger, more established launch companies now—especially SpaceX.”
That ambition was helped by another bit of news announced on March 1: Rocket Lab’s merger with Vector Acquisition Corporation. Joining forces with a special-purpose acquisition company, a type of company that ostensibly enables another business to go public without an IPO, will allow Rocket Lab to benefit from a massive influx of money that gives it a new valuation of $4.1 billion. Much of that money is going toward development and testing of Neutron, which the company wants to start flying in 2024.
It’s a bit of an about-face for Rocket Lab. CEO Peter Beck had previously been lukewarm about the idea of building a larger rocket that could launch bigger payloads and potentially offer launches for multiple customers at once.
But the satellite market has embraced ride-share missions into orbit, especially given the rise of satellite mega-constellations, which will probably make up most satellites launched into orbit over the next decade. Neutron is capable of taking 8,000 kilograms to low Earth orbit, which means it could deliver potentially dozens of payloads to orbit at once. As a lighthearted mea culpa, the introductory video for Neutron showed Beck eating his own hat.
Recovering from the SolarWinds hack could take 18 months
SolarWinds Orion, the network management product that was targeted, is used in tens of thousands of corporations and government agencies. Over 17,000 organizations downloaded the infected back door. The hackers were extraordinarily stealthy and specific in targeting, which is why it took so long to catch them—and why it’s taking so long to understand their full impact.
The difficulty of uncovering the extent of the damage was summarized by Brad Smith, the president of Microsoft, in a congressional hearing last week.
“Who knows the entirety of what happened here?” he said. “Right now, the attacker is the only one who knows the entirety of what they did.”
Kevin Mandia, CEO of the security company FireEye, which raised the first alerts about the attack, told Congress that the hackers prioritized stealth above all else.
“Disruption would have been easier than what they did,” he said. “They had focused, disciplined data theft. It’s easier to just delete everything in blunt-force trauma and see what happens. They actually did more work than what it would have taken to go destructive.”
“This has a silver lining”
CISA first heard about a problem when FireEye discovered that it had been hacked and notified the agency. The company regularly works closely with the US government, and although it wasn’t legally obligated to tell anyone about the hack, it quickly shared news of the compromise with sensitive corporate networks.
It was Microsoft that told the US government federal networks had been compromised. The company shared that information with Wales on December 11, he said in an interview. Microsoft observed the hackers breaking into the Microsoft 365 cloud that is used by many government agencies. A day later, FireEye informed CISA of the back door in SolarWinds, a little-known but extremely widespread and powerful tool.
This signaled that the scale of the hack could be enormous. CISA’s investigators ended up working straight through the holidays to help agencies hunt for the hackers in their networks.
These efforts were made even more complicated because Wales had only just taken over at the agency: days earlier, former director Chris Krebs had been fired by Donald Trump for repeatedly debunking White House disinformation about a stolen election.