China’s digital Silk Road expands into orbit Is America ready to compete?

The American space sector has long embodied the startup ethos of “fail fast, learn faster,” fueling innovation that helped the U.S. maintain leadership in rocket launches, satellite technologies, and space-based intelligence. However, as detailed in a recent War on the Rocks analysis, this leadership is increasingly under threat from China’s rapidly advancing commercial space industry, which is now central to Beijing’s ambitions of global space dominance.

While China’s space program was historically state-dominated—originating with Mao’s 1958 “Two Bombs, One Satellite” initiative and marked by the successful 1970 launch of DFH-1 satellite—the past decade has seen a strategic pivot. Beginning in 2014, Beijing adopted policies to foster private space startups by opening Earth observation, launch services, and research to private investment. A series of regulatory reforms culminated in 2025 with the China National Space Administration drafting a development plan for 2026–2035 aimed at further streamlining licensing and access to national test facilities.

This approach has catalyzed hundreds of Chinese commercial space startups spanning launch, satellite communications, Earth observation, in-orbit servicing, and semiconductor technologies. Many operate dual-use systems linked closely to military applications. This burgeoning ecosystem is closing the gap with the U.S. and challenging American primacy in space.

Chinese firms, including Shanghai Spacecom, China SatNet, Huawei, Honqing Technology, and Geespace, plan to launch approximately 54,000 satellites over the next decade to provide global low Earth orbit (LEO) internet connectivity. Shanghai Spacecom’s “Thousand Sails” constellation has already launched 90 satellites within a year, with plans for 648 more by the end of 2025. Agreements extend beyond China to Brazil, Thailand, Malaysia, and Kazakhstan, among others, enhancing Beijing’s Digital Silk Road influence.

This expansion risks exporting China’s digital censorship and surveillance abroad, while bolstering its military satellite communications infrastructure for operations far from its mainland.

Chinese companies like Chang Guang Satellite have launched extensive constellations—Jilin-1 boasts over 130 multispectral, infrared, video, and hyperspectral satellites—placing them among the global leaders in revisit rate and image quality. Notably, Chang Guang has provided geospatial intelligence to Russia’s Wagner Group and Yemen’s Houthis, underscoring military and geopolitical implications. Furthermore, Chinese providers are aggressively underpricing services internationally, threatening Western remote sensing firms.

China launched 68 rockets in 2024, deploying 270 satellites, but must significantly increase launch cadence to meet satellite deployment goals. State-run Long March rockets prioritize government payloads, limiting commercial access. To address this, commercial firms such as CAS Space and LandSpace are developing reusable boosters, and startups like CosmoLeap and Yushi Space are innovating rocket recovery methods (“chopstick” technique). China’s first dedicated commercial spaceport in Hainan, recently opened, will alleviate infrastructure bottlenecks.

Despite current limitations compared to SpaceX’s more frequent launches, China’s launch sector is rapidly maturing. This growth supports China’s dual-use satellite firms, offers tactical launch flexibility in conflict, and advances ambitions in lunar economic infrastructure.

The article emphasizes that the U.S. government must take decisive steps to empower its commercial space sector, or risk losing the strategic advantages of space:

• Export control reform:
  Loosen and unify export controls on dual-use space technologies, simplifying compliance to enable startups to compete internationally. Recent reforms moving many space technologies from ITAR to Commerce Department control are positive but insufficient. A modern digital compliance system is recommended to ease burdens.

• Streamlined launch licensing:
  The FAA’s 2021 “Part 450” launch regulations, while intended to expedite licensing, have introduced complex and lengthy pre-application processes, causing multi-year delays. Updating these rules to offer clearer guidance, reduce administrative hurdles, and include pre-application timelines within statutory review periods will accelerate U.S. launch cadence.

• Enhanced open-source intelligence:
  Traditional intelligence focused on military systems misses China’s commercial space growth. The U.S. should adopt open-source intelligence tools to track Chinese startups from inception, better assess threats, and inform acquisition priorities. Sharing counterspace threat data with cleared U.S. space startups (e.g., via platforms like the Space Force’s Orbital Watch) is vital.

• Expanded contracting opportunities:
  Defense acquisition must scale commercial solutions rapidly, connecting startups directly with operational needs. Programs like the Defense Innovation Unit’s bridge between startups and end users should be broadened. Facility clearance sponsorships need acceleration to enable startups to access classified contracts. The government should prioritize outcome-based contracts over prescriptive requirements and expand use of flexible mechanisms like Other Transaction Authorities to reduce compliance burdens.

China’s commercial space sector is no longer a fringe player but a core element of its national security and geopolitical strategy. The United States, though still ahead technologically, risks losing its lead unless it modernizes regulatory frameworks and acquisition practices to fully unleash American entrepreneurial agility.

The future of global connectivity, commerce, and security in space will be shaped by which nation best integrates government ambition with commercial innovation. For America to remain dominant, it must act swiftly to empower its startups and streamline government partnerships—embracing risk and agility over legacy caution.

By Tamilla Hasanova