China satellite investment soars as SpaceX sparks race for piece of the sky

(By Caixin journalists Gu Zhaowei, Qu Yunxu and Han Wei)

Space is emerging as a strategic domain defined by scarce resources and rapid technological change — a new arena for competition among major powers.

The stakes became clear in early March when Elon Musk moved quickly to deny claims that US airstrikes in Iran had used SpaceX’s Starlink terminals embedded in suicide weapons.

“It is a violation of commercial Starlink terms of service to use the terminal for weapon systems. This applies to all users and is shut down when discovered,” Musk wrote on his social media platform X, adding that the US government operates a separate satellite network, Starshield.

The controversy highlights the growing strategic weight of Starlink, SpaceX’s low-Earth orbit satellite internet service. More than 6,750 Starlink satellites are currently operating in orbit — over two-thirds of all active low-Earth orbit satellites worldwide. The network has also transformed SpaceX’s finances, helping the once chronically unprofitable company achieve positive cash flow and positioning it for major gains.

In December 2025, Musk hinted that SpaceX could pursue an IPO valuing the company at as much as US$1.5 trillion and raising around US$30 billion — potentially the largest IPO on record. The company is also exploring a new frontier: orbital computing supported by its satellite network.

SpaceX’s rapid advance has created urgency for rivals. China in particular is pouring capital and policy support into its commercial space sector as firms race to claim a stake in increasingly crowded orbital lanes.

Part of the urgency stems from the rules governing access to orbit. Under the international rules, satellite spectrum is allocated on a first-come, first-served basis. Operators must launch their first satellite within seven years of filing and deploy 10%, 50% and 100% of a constellation within nine, 12 and 14 years, respectively.

Low-Earth orbit can host roughly 60,000 to 100,000 satellites. Starlink’s filings already account for nearly half that capacity.

In December 2025, China applied to the International Telecommunication Union to deploy another 203,000 satellites across 14 constellations submitted by seven entities — underscoring Beijing’s determination to accelerate the entire commercial space supply chain.

From the first launch of SpaceX’s reusable Falcon 9 rocket in 2015 to large-scale satellite deployment in 2020, Musk spent roughly six years assembling what is now the world’s largest space-based communications network. For years the commercial viability of satellite internet was widely questioned, but scepticism began to fade in late 2023 when Starlink reported it had reached cash-flow breakeven.

Starlink’s business model combines hardware sales, monthly subscriptions and high-margin government and enterprise contracts. Direct-to-consumer services underpin cash flow, while enterprise customers in aviation, maritime and military sectors generate much of the profit.

The financial scale is becoming clearer. Reuters estimates SpaceX’s revenue could reach US$15 billion to US$16 billion in 2025, with about US$8 billion in profit. Starlink may contribute 50% to 80% of that total, marking SpaceX’s evolution from a government launch contractor into a commercial technology giant built around satellite connectivity.

A key advantage is sharply lower costs. Reusable rockets and mass-produced satellites have cut satellite costs from roughly US$1 million to as little as US$250,000, while Falcon 9 rockets now achieve reuse rates of about 95%. The resulting cost reductions create a virtuous cycle in which growing demand further lowers marginal costs.

SpaceX has applied to deploy about 42,000 satellites and has already launched more than 10,000, with over 6,750 currently in orbit.

That scale is driving rapid user growth. Starlink added more than 4.6 million users in 2025 alone. Speaking at the Mobile World Congress in Barcelona on 3 March, Starlink Vice President Michael Nicolls said the network connects more than 16 million users and records around 10 million monthly active users — a figure that could exceed 25 million by the end of 2026.

Beyond commercial services, Starlink has demonstrated strategic value. During the Russia-Ukraine conflict the network became a key communications backbone for battlefield coordination and drone operations. SpaceX has also partnered with Kyivstar, Ukraine’s largest mobile operator, to offer direct-to-cell satellite services.

The system has also been deployed in disaster response, providing connectivity during power and internet disruptions in Venezuela after a US raid in January and supporting emergency calls during last year’s wildfires in Los Angeles.

SpaceX is now expanding the network’s capabilities. Gwynne Shotwell, the company’s president and chief operating officer, said its direct-to-cell service operates in 32 countries and has evolved from text messaging to support voice, video and social media. A second generation of satellites — offering roughly 20 times the link performance and nearly 100 times the data capacity — is expected to begin launching around mid-2027.

Starlink’s trajectory has become a reference model for Chinese commercial space companies. Xu Kun, a partner in the investment banking division at China Renaissance Holdings Ltd., said its performance in conflicts and disaster response has strengthened investor confidence in satellite internet’s long-term strategic value.

SpaceX’s progress has triggered an investment surge in China. At a recent industry conference hosted by a securities firm, investors crowded around speakers seeking new opportunities.

“A company might need 500 million RMB (US$72.4 million) in financing but have 1.5 billion RMB lining up,” one private equity investor told Caixin.

Beijing is also adding policy momentum. The commercial aerospace sector has appeared in the government’s annual work report for two consecutive years, and regulators have reopened a fast-track listing channel on the Nasdaq-style STAR Market for companies in the sector.

Two major projects anchor China’s satellite ambitions. State-owned China Satellite Network Group (China SatNet), the country’s only licensed satellite internet operator, is developing the GW — or Guowang — constellation. Filed with international regulators in 2020, the project envisions 12,992 satellites operating at altitudes between roughly 590 kilometres and 1,145 kilometres.

The company launched its first test satellite in February 2024 and began regular constellation deployment later that year. It has launched 19 batches totalling 154 satellites so far. In 2025 alone the project accounted for more than one-third of China’s spacecraft launches.

The state-backed operator is also strengthening its financial base. In February its registered capital rose to 10.9 billion RMB following a capital injection from the State-owned Assets Supervision and Administration Commission.

A major rival, Shanghai Spacesail Technologies Co. Ltd., is pursuing a more commercial path. Established in 2018, the firm is developing the Qianfan constellation, which ultimately aims to deploy about 15,000 satellites. Its first phase planned 648 satellites by 2025, though only 108 have been launched so far.

Spacesail is now seeking a new financing round. Market participants expect the company could eventually obtain China’s second satellite internet operator licence.

While China SatNet focuses primarily on the domestic market, Spacesail has begun expanding abroad. In February Brazil’s telecom regulator authorised the Qianfan constellation to operate in the country — a move widely seen as an effort to diversify away from Starlink.

Despite the enthusiasm, China’s satellite internet sector still faces questions about commercial viability. The country’s extensive 5G network already supports one of the world’s most advanced consumer internet ecosystems.

Policymakers are pressing ahead, nonetheless. Analysts say the main driver for a domestic satellite internet network is strategic resilience — ensuring China maintains an independent presence in the increasingly contested infrastructure of space.

The biggest obstacle to China’s ambitions is launch capability. Without reusable rockets to reduce costs, rapid constellation deployment will remain difficult.

Globally, only SpaceX’s Falcon 9 has achieved routine reuse, with launch costs per kilogram less than half those in China.

According to research by the Shanghai Stock Exchange, China has more than 20 commercial rocket companies. Most have successfully launched solid-fuel rockets or small liquid-fuel launch vehicles into orbit, but none has yet achieved a breakthrough in reusable technology.

Several firms are racing to close the gap. LandSpace Technology Corp. plans a recovery test for its reusable Zhuque-3 rocket this year, while CAS Space, Space Pioneer and Galactic Energy are also advancing reusable systems and preparing IPOs.

Xu of China Renaissance said China could achieve its first successful reusable rocket recovery this year, though more advanced systems such as SpaceX’s tower-based “chopsticks” capture mechanism remain far off.

Citic Securities Co. Ltd. analyst Li Taoyang offered a more cautious timeline, saying China could achieve a reusable launch breakthrough by the second half of 2027, paving the way for large-scale launches. In the long run, he expects the rocket market to consolidate around a few dominant models, allowing companies to achieve scale and lower costs.

China conducted 92 space launches in 2025, including 50 commercial missions, according to the China National Space Administration (CNSA). Commercial activity is expanding rapidly: 311 commercial satellites entered orbit that year, accounting for about 84% of all Chinese satellites launched, according to industry estimates.

Two industry sources told Caixin that privately designed satellites now make up more than 40% of total satellite development, reflecting a growing role for market-driven innovation in the sector. Industry participants say this commercialisation push is essential if China hopes to match the deployment speed of Starlink’s constellation.

New launch infrastructure is expanding. Dedicated commercial launch zones have been built at Jiuquan, Xichang and Taiyuan, while Wenchang has opened a commercial launch site. Sea-launch bases are also under construction in Haiyang and Yangjiang.

Launch licensing remains another bottleneck. Approval procedures are strict, and failures often trigger safety reviews that delay subsequent launches.

In November 2025, the State Administration for Science, Technology and Industry for National Defense created a new commercial space department under the CNSA to coordinate regulation across the sector — including launch approvals, satellite constellations and applications — and address long-standing problems of fragmented oversight.

Industry forecasts suggest China’s total launches could exceed 100 in 2026, with commercial missions accounting for more than 60%. In January alone the country completed 18 launches, including 11 commercial missions that sent 127 commercial satellites into orbit. Some analysts expect more than 1,000 spacecraft to enter orbit during the year, with commercial satellites representing 85% to 90% of the total.

Ultimately, analysts say two factors will determine the pace of China’s space network build out: rocket launch capacity and the ability to mass-produce satellites. As launch frequency rises, satellite manufacturers will also need to scale production while reducing costs.

Even as China races to catch up in satellite internet, Musk is pushing toward the next frontier: orbital AI computing. The vision involves building data centres in space powered by solar energy and supported by massive satellite constellations. In February, Musk’s team visited several Chinese solar companies to study the industry’s supply chain.

Solar power in orbit is far more efficient than on Earth, where sunlight is filtered by the atmosphere and interrupted by weather and nightfall. In theory, orbital data centres could generate electricity at a fraction of terrestrial costs. SpaceX plans to use its next-generation Starship rocket to deploy these systems.

China has begun exploring similar ideas. In May 2025 Zijiang Lab — a Hangzhou-based innovation platform — launched 12 computing satellites for its “Three-Body Computing Constellation”, while startups such as Beijing Orbit-Time Technology Co. Ltd. are raising funds for space-based computing platforms.

The near-term goal is “in-orbit computing” — processing satellite data before transmitting it to Earth. This could help address a major bottleneck for China, which lacks a global network of ground stations.

Meanwhile competition for orbital slots and radio spectrum is intensifying. With SpaceX already accounting for nearly half of the commercially valuable low-Earth orbit capacity, the race is accelerating.

Musk added another twist in January when he announced plans to lower Starlink’s operational altitude, bringing some satellites to within roughly 100 kilometres of China’s Tiangong space station. The contest for dominance in space infrastructure, analysts say, is only beginning.

Qin Min, Zou Xiaotong contributed to the story.

This article was first published by Caixin Global as “In Depth: China Satellite Investment Soars as SpaceX Sparks Race for Piece of the Sky”. Caixin Global is one of the most respected sources for macroeconomic, financial and business news and information about China.

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