China's Impact on US Commercial Space

Just don't call it a space race

For better or worse, space has been a place where people often think in terms of rivalries.

There was of course the original space race between the US and the Soviet Union, about which there’s not much I can say that hasn’t already been said.

Now though, many in the space industry agree that we are in the early stages of another competition, once again involving the United States but this time facing a novel challenger; the Peoples Republic of China.

Historically, China’s space program began in the late 1950s after the launch of the Soviet Union’s first Sputnik satellite. While the program has been active for several decades, with its first orbital launch in 1970, there has been a significant increase in investment since the turn of the century.

China’s commitment to its space program comes as the country more broadly establishes itself as a technical superpower. According to a report by the Congressional Research Service, China accounted for nearly 5% of global R&D investment in 2000 and by 2018 increased that share to 26.3%¹.

In this post, I’ll talk about the below topics, touching upon China’s plans for its space program and how that ultimately has an impact on the US’s commercial space industry.

• What Are China’s Ambitions in Space?

• Is There a Possibility of Cooperation?

• How Is The US Government Reacting?

• What Does This Mean For Private Space Companies?

What Are China’s Ambitions in Space?

China achieved its first crewed space mission in 2003 and since that time has been targeting increasingly more ambitious milestones in space. Some recent significant accomplishments include completing in 2020 its third generation of BeiDou global navigation systems (offering an alternative to those provided by the US, Russia, and EU), becoming the first nation to land a spacecraft on the far side of the moon in 2019, and in 2021 becoming the second nation to land a rover on Mars and communicate back to Earth.

China’s Zhurong rover on Mars. Source: China National Space Administration

In terms of crewed space exploration, China has been developing its own Tiangong space station, the core module of which was launched in April 2021. That would allow China to maintain a continual presence of Taikonauts in space, similar to what the International Space Station provides for the US, Russia, and their partners.

Looking even further ahead, in 2019 the head of the China National Space Agency, Zhang Kejian, stated that the nation would seek to have a permanent research facility on the moon by the early 2030s. Other goals include a Mars sample return in the late 2020s

Broadly China’s goals in space are not unlike its efforts in other technical and scientific fields. The nation seeks to establish its own, independent and prestigious accomplishments and eventually claim leadership in that field.

Besides the US and its partners in the Artemis program, no nation has expressed such ambitious plans for space exploration and so it is easy to see why many are predicting an escalating competition for the role of preeminence in space.

Chinese Taikonauts aboard Tiangong space station for the first time

Is There A Possibility of Cooperation

With both nations planning ambitious ventures in space, why is the narrative forming in an antagonistic manner rather than through one of cooperation? In fact, there is even precedent of international cooperation in space amongst seemingly adversarial nations, exemplified by the International Space Station where US Astronauts and Russian Cosmonauts have been cohabitating since 2000. So why couldn’t this be the same between the US and China?

Well, policy between China and the US, both inside and outside the space domain, makes any cooperative space campaigns seem unlikely. Once again the International Space Station provides an excellent illustration. In 2007, Chinese Vice Minister of Science and Technology Li Xueyong expressed interest in participating in the ISS, stating “this program has 16 countries currently involved and we hope to be the 17th partner.” However, the US has consistently vetoed China’s participation in the ISS and in 2011 banned NASA from working with China on any projects, citing potential national security concerns as well as worries regarding technology transfer.

Concern over technology transfer has originated not just from the US’s public sector, but from the private space world as well. In a Wired interview in 2012, SpaceX’s CEO Elon Musk cited China as the reason for not patenting its own technology.

“We have essentially no patents in SpaceX. If we published patents, it would be farcical, because the Chinese would just use them as a recipe book"² -Elon Musk

Furthermore, it seems that China would like to leverage its growing capabilities in space as an argument for its role as the leader in science and engineering. A 2012 report by the U.S.-China Economic and Security Review Commission determined that policymakers in China “view space power as one aspect of a broad international competition in comprehensive national strength and science and technology.”

Overall, this is consistent with the broadening US approach of disentangling technology projects and exchanges with China which has only increased since the veto of China’s participation in the ISS back in 2011. Consequently, I think it’s fair to assume that the American and Chinese space exploration programs will remain separate for some time to come.

How Is The US Government Reacting?

US policymakers seem to be taking China’s rise in technical prominence increasingly seriously. One way this is exemplified is through the currently in-development US Innovation and Competition Act of 2021. While the bill has yet to move through the House of Representatives, it was passed by an overwhelming majority in the Senate 68-32 in a rare case of bipartisanship. Formally, the bill’s stated purpose is “the strengthening of U.S. leadership in critical technologies through basic research in key technology focus areas.”³ The bill’s goal more informally is in “challenging China’s efforts to displace the United States”⁴, particularly in areas of emerging technologies.

If passed, the bill would mean a $250B investment toward science and innovation much of that funding going towards the National Science Foundation. In response, China has characterized the bill as “full of Cold War mentality.”

The growing focus on competitiveness with China seems to be one of the few things that US politicians are increasingly aligning on. While its unclear if space exploration will take a leading role in the rivalry between the US and China as it did between the US and the Soviet Union in the ’60s, the contents of the Innovation and Competition Act of 2021 illustrate that at least a significant amount of the US government’s focus will be on the space industry.

To consider what political alignment toward investing in space might look like, perhaps we can look to the last time that there was such urgency resulting from competition around space leadership. This would have been in the ’60s during the first space race. The below chart illustrates the NASA budget as a percentage of the US Federal Budget. It peaked in 1966 at 4.41% or $5.9B, which would be about $50B in 2021 dollars. This was the height of American efforts to compete with the Soviet space program and NASA spending has broadly been on a steady decline since then.

NASA Budget as a % of Federal Budget from 1958 to 2017

What Does This Have To Do With Private Space Companies?

Even if you were convinced by this argument that the rising challenge from China’s space ambitions would lead to more political spending on space, why would that be relevant to commercial space companies?

Well, let’s consider back in the 1960s where the money from the Apollo program was spent. While the effort was undoubtedly led by NASA, NASA itself only employed about 33,000 federal employees in the mid-’60s. A much larger portion of the force supporting the Apollo program consisted of private contractors, about 377,000 individuals. NASA leveraged an army of highly skilled engineers and scientists in private companies around the US to meet the nation’s grand ambitions for the moon. Furthermore, if such an ambitious endeavor was embarked on today, I believe that the emphasis would be even more on private partners than it was during the Apollo program.

In recent years, NASA has only been increasing its collaboration with private space companies. In prior programs like Apollo or the Space Shuttle, NASA had often paid contractors to execute on technologies that the agency guided. Increasingly though, NASA is looking to simply pay for end services. An example of what this practically looks like can be seen in the recent Commercial Lunar Services Payload (CLPS) program. This program is meant to increase NASA’s capacity to perform research on the Moon. Previously, NASA might have designed a Moon rover themselves and paid contractors to build it. Instead, NASA informed private companies that it had payloads it wanted to get to the moon. NASA consequently had those companies compete to provide the service of delivering the payloads to the Lunar surface, however the companies best-thought fit.

Models of the first three commercial Moon landers selected for the CLPS program. Source: NASA

This process of purchasing services is starting to pervade through much of NASA’s ambitions in the space industry. This has been most evident in the past decade through the Commercial Resupply Services contracts and the Commercial Crew Program in which NASA purchased rides from private companies for resupplying the ISS and for taking astronauts to the ISS. The benefit to NASA for relying more heavily on private services has been positive, with the most significant value coming from cost savings. A 2017 report out of NASA found “quantitatively that the Commercial Resupply Services (CRS) are significant advances in affordability by any measure”⁵. Consequently I think the use of private services to meet NASA’s needs will only grow.

SpaceX’s Dragon spacecraft undocking from ISS after delivering supplies. Source: NASA/SpaceX

Furthermore, it is not just NASA that is increasingly emphasizing partnerships with private space companies. The US military branches of the Space Force and Air Force are doing so as well. Just in the past few years, the armed forces have instituted multiple programs and technology accelerators to increase coordination with entrepreneurs and private companies. These include AFWERX, the Defense Innovation Unit, the Space Rapid Capabilities Office, and others. These organizations have expressed interest in leveraging private partnerships in furthering all kinds of advanced space capabilities like on-orbit refueling, advanced propulsion systems, and rapid space-based delivery to anywhere on Earth’s surface. In addition, these organizations seek to partner not just with the larger, legacy companies that have been contracting with the defense sector for generations. The military is also working extensively with early-stage companies and startups that may not have always found ways to compete for contracts with the armed forces.

What It All Means

Ultimately I believe that in response to the growing competition from China in space, the US government and military will increase their investments into US space capabilities. Civilian government (NASA) and military efforts in space are increasingly being achieved through service-based partnerships with private US space companies. Consequently, it seems likely that the growing space competitiveness of China is going to bring significant new opportunities and funding to private companies that can help the US achieve its next generation of ambitious milestones beyond Earth.

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1. https://fas.org/sgp/crs/misc/R44283.pdf

2. https://www.wired.com/2012/10/ff-elon-musk-qa/

3. https://www.congress.gov/bill/117th-congress/senate-bill/1260

4. https://www.csis.org/analysis/what-us-innovation-and-competition-act-gets-right-and-what-it-gets-wrong

5. https://ntrs.nasa.gov/citations/20170008895