US-China competition spurs investment in space technology – BBC News
- Jonathan Josephs
- BBC business reporter
Image source,Getty Images
Bill Nelson, administrator of the US space agency NASA, said the US is “in a space race with China to return to the moon”.
Nelson told the BBC he wanted to make sure “we get there first”.
His comments evoked memories of the 1960s and 1970s, when NASA was locked in a space race with the Soviet Union. But half a century later, much of NASA's work is done by the private sector.
Nelson said the companies are crucial because they allow huge costs to be shared and allow NASA to tap into the “creativity of private sector entrepreneurs.”
He points to Elon Musk's Space Exploration Technologies Corp, or SpaceX, which was awarded a $3bn (£2.4bn) contract in 2021 to build a lunar lander and has also developed the most powerful rocket yet.
Other private companies are also feeling the benefits of the space race. Earlier this year, NASA signed a $3.4 billion deal with Jeff Bezos’ Blue Origin to also build a lander, but for a follow-up lunar landing.
These are just two of the companies that have benefited from billions of dollars in government funding, spent at least in part to try to stay ahead of China amid broader tensions between the world's two largest economies.
In late August, India became the fourth country to achieve a soft landing on the moon and the first to reach the moon's south polar region.
Despite India's successes, it is China's space program that NASA watches most closely.
China, the only country with its own space station, has brought lunar samples back to Earth and has plans to reach the polar regions of the lunar surface.
That worries Nelson: “My concern is that we find water at the south pole of the moon and China gets there and says this is our territory. You can't come here, this is ours.”
Nelson claimed that China's move to assert sovereignty over parts of the South China Sea by building artificial islands confirmed his concerns.
Nelson also noted that China has not signed the U.S.-led Artemis Accords, which are intended to be a best practices framework for space and lunar operations.
China says it is committed to peaceful exploration of space and has previously dismissed U.S. concerns about its space program as “frame-ups and smears on China's normal and legitimate outer space undertakings.”
The competition has driven huge investments by NASA, which says its spending was worth $71.2 billion to the U.S. economy in the year to September 2021 — up 10.7% from the previous year.
While big companies like SpaceX attract media attention, NASA's spending reaches far deeper into the economy.
“A quarter of our spending goes to small businesses,” Nelson said.
Sinead O'Sullivan, a former NASA engineer and current aerospace economist at Harvard Business School, said the funding could accelerate the growth of small businesses, especially start-ups.
She said governments often serve as start-ups’ first clients, and those contracts allow them to tap into private investors and raise further funding.
“We often talk about venture capital and private equity, but government is just as important, if not more important,” Ms O’Sullivan said.
More coverage on space exploration:
The race to return to the moon may get all the attention, but it has also helped drive an explosion in other, far more lucrative space activities.
The Soviet Union became the first country to put a satellite into orbit in 1957, when it began the original space race with the United States. Now, more than 10,500 satellites orbit Earth, according to the European Space Agency.
Chad Anderson, founder of investment firm Space Capital, attributes the industry's development over the past decade to SpaceX.
“The only reason we’re talking about space as an investment class now is because of SpaceX,” he said. “More than 10 years ago, before their first commercial flight, the entire market was run by the government.”
About half of the satellites now in orbit were launched in the past three years, according to analytics firm BryceTech.
This is mainly due to two companies: OneWeb and Elon Musk's Starlink.
“The space economy is much broader than just rockets and satellite hardware. It's the invisible backbone of our global economy,” Anderson explained.
He said that as the number of satellites in orbit continues to grow, more and more companies are finding new uses for the data provided by satellites, including agriculture, insurance and maritime industries.
Image source,Getty Images
New Zealand-based Rocket Lab is another important force in the space economy.
A competitor to SpaceX, the company has completed 40 launches for customers including NASA and some U.S. government agencies.
Peter Beck, the company's founder and former dishwasher engineer turned rocket launcher, says this is just the tip of the iceberg when it comes to financial opportunities beyond Earth.
“Launch is a $10 billion opportunity. Then you have infrastructure, like building satellites, which is about a $30 billion opportunity. And then you have applications, which is an $830 billion opportunity.”
He is not the only one making bold claims. US investment bank Morgan Stanley estimates that the global space industry could grow to more than $1 trillion a year by 2040.
What might the future of private spaceflight look like?
Baker is cautious about opportunities on the moon, especially mining.
“Right now, it’s not economically feasible to mine the moon and bring it back to Earth,” he said.
Bill Nelson of NASA sees possibilities in medical research, pointing to crystal growth research conducted by pharmaceutical company Merck on the International Space Station in 2019, which could help develop cancer treatments.
He also said that optical fibers might be able to be manufactured more efficiently in zero gravity.
“Eventually, you’re going to see a lot of commercial activity in low-Earth orbit.”