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Business trends

China's space-startup boom fueled by government boost

Country looks to tap into growing commercial rocket and satellite sectors

China became the first country to land a probe on the far side of the moon on Jan. 11, indicative of Beijing's reach for the stars. (China National Space Administration/Xinhua News Agency via AP)

TOKYO/HONG KONG -- China is ramping up a campaign to nurture space startups in an attempt to solidify its technological base and grab the lead in the emerging sector of small satellites and low-cost rocket launches.

Among the highest-profile startups is Shanghai-based LinkSure Network. Founded in 2013, LinkSure is trying to build a constellation of 272 satellites by 2026 to provide satellite-based internet service around the world, with the first satellite set for launch later this year. The company's core members come from a Chinese space agency and the central government.

Space startups are burgeoning as China embarks on a strategy of military and civilian cooperation initiated by President Xi Jinping in 2015. The small satellite market is an especially attractive target for them, having become more accessible as rockets and satellites grow smaller and smarter. U.S. companies such as OneWeb and SpaceX are already planning to deploy thousands of small satellites to blanket the Earth with broadband connectivity.

"Chinese startups have a competitive edge because of the help they receive from the government in the form of technology transfers and financial support," said Nobutaka Komatsu, an independent investment analyst. Komatsu questions the Chinese space sector's ability to win orders outside China due to security concerns, but says companies will be supported by the large domestic market and could expand into nations aligned with Beijing.

China is rapidly emerging as a major space power, being one of only three countries to have independently sent humans into space and constructed its own space station. Earlier this month, it became the first nation to land a probe on the far side of the moon. Now, it wants to explore the commercial sector.

"Space startups have boomed in China thanks in part to supportive government policies," said Wang Jianfei, chief executive of Beihang Investment, a venture capital company specializing in aviation.

Following Beijing's call to commercialize space technologies, satellite-based remote sensors and other celestial devices have been developed, luring private companies and venture capitalists to grab a slice of the multibillion-dollar market, Wang said.

Chang Guang Satellite Technology is another Chinese satellite venture. Founded in the city of Changchun in 2014 and owned by the Chinese Academy of Sciences and others, Chang Guang is China's first commercial operator of high-resolution optical imaging satellites.

The company operates 10 small Earth observation satellites and plans to build up to 60. Its satellites typically weigh up to 200 kg and are put into sun-synchronous orbits at altitudes of up to 650 km, producing images with a resolution of 1 meter. They can be used for surveying, transportation, emergency response and environmental protection, as well as perform military reconnaissance and surveillance, the company says.

A Long March-3B rocket carrying the Chang'e lunar probe lifts off form the Xichang Satellite Launch Center on Dec. 8. (Xinhua via AP)

Chang Guang has been showcasing its technology to raise its market presence. On Jan. 21, it launched two more satellites and in September, released a video taken from space of a rocket launch for a suborbital test by Chinese startup OneSpace.

The company also provided photos to aid in the search for missing Malaysia Airlines Flight MH370.

Another satellite startup, Beijing-based Commsat Technology Development, put seven mini observation satellites into orbit last month as part of efforts to create a constellation of 72 satellites by 2022. Established in 2015, Commsat aims to use its satellites to provide "internet of things" services.

"Cooperation between state-owned enterprises and private corporations could lead to more innovations, new breakthroughs, and significant cost reductions," said Commsat in November when it announced a partnership with state-run space companies. "Competition in the space business is intensifying," it noted. "Partnership between the military and the private sector will enhance our global competitiveness in the field of low-earth orbit satellites."

Cultivating space ventures has become a key policy under Xi. The country's most recent space program white paper, published in December 2016, called on the government to "give impetus to mass entrepreneurship and innovation."

The Chinese Academy of Sciences also stresses that science and technology are vital to reviving the country's status as a global power. Transformative breakthroughs in science and technology have had "a far-reaching impact on the rise and fall of a nation and the destiny of a country," it said in a 2009 report titled "Science and Technology in China -- A Roadmap to 2050."

Because of its inability to keep pace with technological advancements, China "fell from [being] a world economic power into a poverty-stricken country, subject to insult and humiliation by other powers," the report said. "We must vigorously support China's science and its sustainability, and build up an innovation-driven country by modern science."

This year, a number of Chinese rocket startups are expected to attempt orbital launches, including Beijing-based LandSpace Technology. Founded by Tsinghua University in 2015, the company attempted to put a small communications satellite into a 500-km sun-synchronous orbit for China Central Television in October, but the 19-meter-long rocket ran into trouble after reaching an altitude of 337 km.

LandSpace is competing with two other space startups. In April, i-Space succeeded in launching its Hyperbola 1S rocket more than 100 km into space. The company was established in 2016.

Another rival, OneSpace, established in Beijing in 2015, conducted two suborbital tests in May and September and is now preparing for low-orbit satellite launches.

The rapid Chinese advances have put other countries on notice, Japan in particular. Prime Minister Shinzo Abe's government announced in March a plan to invest 100 billion yen ($900 million) in space ventures over the next five years. The amount compares with Japan's annual space budget of about $3 billion.

Japan's space industry has long been dominated by the Japan Aerospace Exploration Agency, or JAXA, and a few large space companies such as Mitsubishi Heavy Industries and IHI. But the country's labor mobility is limited, making it hard for startups to attract specialists. To alleviate this, the government is creating a database of engineers available to startups.

JAXA is also outsourcing production of satellites and rockets to startups, such as satellite operator Axelspace and small-rocket launcher Space One, both based in Tokyo.

Space One was established last year by IHI, electronics giant Canon, construction company Shimizu and the government-owned Development Bank of Japan. The newcomer leverages IHI's experience in developing small rockets for JAXA, such as the 9.5-meter-long SS-520 and the 26-meter-long Epsilon.

It is up against stiff competition from Chinese companies as well as from more established players such as the European Space Agency's light launcher, Vega, introduced in 2012.

With U.S. President Donald Trump talking about a "space force" and "American dominance in space," the line is increasingly blurred between the private and the public sectors in every country.

"We are looking to space ventures to help Japan keep up with the pace of development in the global space industry, by acting fast and providing services at low cost," said Norihiro Sakamoto, a researcher at the policy unit of Japan's ruling Liberal Democratic Party.

Nikkei staff writer Coco Liu in Hong Kong contributed to this report.

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