China pushes private space industry to cut launch costs and rival US dominance

China is accelerating efforts to become a "space power" by nurturing a domestic private space industry aimed at lowering launch costs and narrowing the gap with the United States, which currently dominates the commercial launch market.

The push comes as Beijing seeks to build on major state-led achievements, including the construction of its own space station and a successful Mars rover mission, while addressing weaknesses in launch frequency and cost efficiency that leave it trailing US firms such as SpaceX, says The Economist.

China's launch market remains dominated by the state-owned Long March rocket family, which is widely viewed as reliable but costly and conservative in design. By contrast, SpaceX's reusable Falcon 9 rocket can deliver payloads to orbit at roughly one-third the cost of Chinese launch vehicles, according to industry estimates.

To close that gap, privately backed Chinese companies such as LandSpace and Space Pioneer are racing to develop reusable rocket technology, a capability seen as critical to reducing costs and increasing launch cadence.

Lower launch prices are central to China's plans for large-scale satellite internet systems, including the "Guowang" constellation, which is expected to include about 13,000 satellites, and the "Thousand Sails" project, which aims for around 15,000. Both projects are intended to provide global coverage but remain at an early stage, with roughly 100 satellites deployed for each, compared with around 9,000 already in orbit for SpaceX's Starlink network.

Industry executives and analysts say China faces a market dilemma, with high launch costs limiting demand while sustained demand is needed to justify the investment required to reduce costs. International uptake of Chinese satellite services has been constrained by geopolitical concerns, though domestic demand is emerging.

Chinese technology firms including Huawei and Xiaomi have introduced satellite-enabled smartphones, while automaker Geely is developing navigation constellations for its vehicles, offering early commercial use cases.

The Chinese government has moved to integrate private firms more closely into its national space strategy. A new department within the China National Space Administration is tasked with coordinating commercial players, granting them access to state facilities and funding while maintaining tight oversight.

Analysts say Beijing is unlikely to allow any single private company to gain the level of independence or market power seen among leading US space firms.

Commercial advances also carry military and security implications. Satellite launch and replenishment capabilities can support communications, navigation and coordination of armed forces, particularly during conflicts. Concerns about orbital security have grown as satellite numbers increase, with reports of Chinese spacecraft coming "dangerously close" to Starlink hardware.

China's approach has been likened by analysts to building a high-speed rail system in orbit, in which the state sets the overall plan and infrastructure while private companies compete to develop faster and more efficient launch vehicles, ensuring the country remains competitive in the global space economy.