China’s aerospace information industry is soaring, but financing needed to reach new heights
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China has ramped up efforts to develop an aerospace information industry as Beijing aims to steer economic growth toward a tech-heavy path and gain a stronger footing amid its space technology rivalry with the United States.
But more private capital and entrepreneurship are needed as a catalyst to boost the industry, analysts said.
Listed as one of the eight frontier areas in the 14th five-year plan for 2021-25, the aerospace information industry infuses data captured in space with ground-based big data analytics to cater to a wide range of applications, including transport, energy, communications and the military.
The industrial chain spans satellites, data application services, artificial intelligence (AI) and deep learning to support the processing of huge amounts of data captured by satellites in space.
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On Monday at a forum in the southwest municipality of Chongqing, a group of companies, research agencies and space associations announced they would set up a joint industrial association to boost the development of the industrial chain.
An investment fund cluster of 100 billion yuan (US$14 billion) was also launched to support key infrastructure and industrial giants, the local government-backed Chongqing Daily said.
The new association also vowed to focus its resources on nurturing a group of leading private firms, while also raising the commercial loan limit for high-quality companies to 10 million yuan (US$1.4 million).
Over 400 companies had registered as commercial space firms by the end of last year, and the scale of China’s aerospace information industry is expected to reach 44.69 billion yuan (US$6.3 billion) in 2025, up from 29.3 billion yuan in 2021, according to research by China Fortune Securities in August.
Globally, the aerospace information industry took a 73 per cent share of the global commercial space market, which reached around US$384 billion in 2022, the report said.
“China’s space industry overall is still at an early stage of development, but with rapid growth potential,” the report said.
Olivier Contant, the executive director of the International Academy of Astronautics, told the forum that the size of the aerospace information industry is expected to reach US$1 trillion, according to the Chongqing Daily.
He also called for greater international cooperation to help the technology reach new heights, support start-ups and help integration into the industrial ecosystem.
The rapid development and deployment of these technologies by China are raising concerns in Washington
“The rapid development and deployment of these technologies by China are raising concerns in Washington about potential shifts in global technological leadership and the implications for military applications,” said Pravin Pradeep, an industry analyst focused on aerospace and defence at US-based business consulting firm Frost & Sullivan.
China is making fast progress in the aerospace information sector, Pradeep added, but it still faces uncertainty with its ground stations and associated infrastructure as it lacks the extensive network of highly capable debris tracking and global monitoring stations operated by the US.
“The United States currently holds a significant lead in the aerospace industry, a key factor in this lead is the clear distinction between public and private sectors in the US, which contrasts with the less defined separation in China,” Pradeep added.
He said that China’s space programme tends to lean more towards strategic purposes, rather than commercial ventures, which gives private companies fewer opportunities to foster innovation and flexibility, while in the US, the sector is heavily influenced by economic factors.
Bridging the gap with the US would require Beijing to foster entrepreneurship, analysts said.
“China’s aerospace information industry has a crowded upstream and a disproportionate downstream growth, this has become a huge challenge to its commercialisation,” Wang Yihan, vice-president of the Chinese Society of Astronautics, told Monday’s meeting, according to the Chongqing Daily.
China’s private aerospace companies generally have weak financing capabilities
A research paper on China’s space industry by Qian Jiwei at the National University of Singapore in 2020 also said Beijing’s lack of support for its private sector was influencing its space race with the US.
State-owned enterprises are considered national champions, creating a conflict of interest in policies encouraging the involvement of the private sector and efforts to support leading firms, including in the aerospace information industry, Qian said.
“China’s private aerospace companies generally have weak financing capabilities. The financing channels are limited to only a few types of venture capitals which could rarely secure the financial backing of banks,” she said.
Another hurdle China needs to face involves the escalating tech sanctions from the US, which pose threats to this industry’s ground equipment that relies heavily on AI chips, Pradeep added.
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