China’s Race for Satellite Supremacy Amid Economic Uncertainty

A Long March-2C rocket, carrying the Einstein Probe satellite, lifts off from the Xichang Satellite Launch Center in Xichang, in southwestern China's Sichuan province, on Jan. 9, 2024. STR/AFP via Getty Images

In the arena of tech competition, the Chinese Communist Party (CCP) is scrambling for limited orbital and frequency band resources since low-Earth orbit (LEO) satellites may be critical in the future for 6G technology. However, amid China’s economic downturn, it is unclear whether the CCP can afford to keep tens of thousands of satellites running in the long term.

On Feb. 3, China’s Xichang Satellite Launch Center (XSLC) used a carrier rocket to launch 11 satellites into a predetermined low Earth orbit.

These satellites are part of the Geely Future Mobility Constellation developed by a subsidiary of Zhejiang Geely Holding Group. The first set of 9 satellites was launched on June 2, 2022, and the second set of 11 satellites will be launched this year, with a total of 72 satellites expected to be deployed by next year.

The Geely Future Mobility Constellation is said to be an integrated constellation of communication, navigation, and remote sensing, which can empower self-driving cars, Internet connection, mobile networks, etc. The Geely Galaxy E8 car, which went on sale on Jan. 5, is one of the first models to support satellite communications.

CCP authorities have been actively promoting the entry of private companies into the LEO satellite market, in the hope of eventually dominating the sector.

At present, Geely is promoting its “vehicle-to-everything” model, which connects the vehicle to a satellite-based 5G network. However, the user experience, networking charges, and whether the future can be profitable, are still unknown.

LEO Satellite

The orbital altitude of satellites can be categorized as high-Earth orbit (HEO), medium-Earth orbit (MEO), and low-Earth orbit (LEO). According to a research study by China’s Southwest Securities, satellites with a distance of 22,000 miles or more from the Earth’s surface are HEO satellites, those with a distance of 1,200 to 12,000 miles are MEO satellites and those with a distance of 370 to 1,200 miles are LEO satellites.

In the past, due to the high cost of launching satellites, scientists preferred HEO satellites because they could cover a larger area. However, the disadvantage is that they are too far away from the Earth, which results in lower bandwidth and lower communication rates.

Compared with HEO satellites, LEO satellites have low transmission delay, low propagation loss, smaller satellite terminals, lower cost, and larger system capacity, and therefore have a very competitive advantage in satellite communications.

In the 1990s, the Motorola-financed Iridium SSC was developing and launching LEO satellites. The first-generation constellation was conceived over many years, with a total of 66 satellites launched. Although the system met the technical requirements, it was not a success in the market. Its bulky handsets and high costs led to a serious lack of demand. The company invested a whopping $5 billion in its early days, but it went bankrupt just a year after it began service.

It was not until the emergence of Elon Musk’s SpaceX that hope was restored. SpaceX designed and manufactured the Falcon 9 launch vehicle, whose first-stage booster can be recovered and reused multiple times, completely subverting the previous “one-time use only” mindset. Falcon 9 also keeps setting the record of multiple satellite launches with one rocket. On Jan. 24, 2021, Falcon 9 sent 143 satellites into orbit at once, which greatly reduced the overall cost.

The Upcoming 6G Era

Since the 1980s, mobile communication technologies generally go through a total transformation every ten years. The world went from 1G voice calls to 5G cellular networks today.

No matter how fast is 5G, it is limited by the signal transmission from terrestrial base stations, especially in areas with oceans, deserts, mountains, and wilderness, which can become blind zones. However, it is different with satellites. Satellite links are essentially base stations launched into space. The 5G plus satellite network is now considered to be the future “6G,” which will realize land, sea, and air coverage throughout the entire world.

According to the latest data from the International Telecommunication Union (ITU) at the United Nations, one-third of the world’s population (about 2.6 billion people) will not be able to connect to the Internet by 2023. Relatively speaking, they will be deprived of an important tool for accessing information. This should not be the case in the 6G era, as people will be able to connect to satellites from anywhere on the planet.

6G essentially aims to interconnect everything, and its market potential is immeasurable. Therefore, LEO satellites, which are critical in developing 6G communications, have become a top priority.

Seizing Resources

Elon Musk’s “Starlink” is a constellation of satellites operating in low-Earth orbit. When the program launched in 2018, the CCP saw the huge market potential of 6G on the one hand, but on the other hand, it feared that Starlink could potentially break down the CCP’s Internet firewall.

As a regime that tightly controls speech, breaking China’s Internet censorship firewall would be vehemently opposed by the CCP, and in September 2020, a mysterious Chinese company called GW submitted a plan for the GW constellation to the ITU, intending to launch 12,992 LEO satellites.

At the time, no one knew what GW was, and it was only revealed in the following year that GW stood for “Guowang,” which essentially means “China Starlink.” This is a part of the CCP’s plan to launch LEO satellites to compete with the United States.

However, low-Earth orbit paths are limited. According to a 2021 estimate by the China Academy of Information and Communications Technology (CAICT), low-Earth orbit can accommodate a total of about 100,000 satellites. There are also advantages and disadvantages between different orbits and frequency bands. The ITU Radio Code applies the “first come, first serve” principle to the use of orbits and frequency bands.

According to data cited by China’s Dongguan Securities, as of April 10, 2022, the number of applications for LEO satellites in the world had reached 74,353, with the United States applying for 50,626 satellites and China applying for 14,220 satellites.

In July 2023, Shanghai announced the creation of the G60 mega constellation, which plans to put more than 12,000 satellites into orbit. At this point, China has applied for about 26,000 LEO satellites.

China’s Technical Capabilities Questioned

To date, however, the so-called “China Starlink” has not launched a single LEO satellite, more than three years after it first applied for an orbit and frequency band.

According to the rules of the ITU, the entity that applied for the relevant frequency must launch the satellite within seven years before it can be considered to have actually acquired the right to use the frequency.

The application for the GW mega constellation was formally accepted on Nov. 9, 2020, so the satellite launches must be completed by Nov. 9, 2027. It is questionable whether China will have enough capacity to launch 13,000 satellites in the limited time available.

China’s satellite launch technology is not comparable to that of SpaceX. At present, the CCP does not have the technology to recover and reuse the first-stage rocket boosters, and the number of Chinese satellites launched by one rocket is less than a fraction of the number of satellites launched by Falcon 9. Therefore, the cost of launching satellites in China is much higher than SpaceX.

At the same time, the cost of manufacturing satellites in China is also significantly higher than SpaceX in the United States. According to a Chinese study, a satellite costs SpaceX about $500,000 each, while the average cost of Chinese LEO satellites is about 30 million yuan ($4.2 million), which is more than eight times that of its rival.

Moreover, the average lifespan of LEO satellites is not long. According to SpaceX’s previous report to the U.S. Federal Communications Commission (FCC), the effective lifespan of its satellites is five to seven years. In other words, all these LEO satellites launched into the sky will have to be replaced every 5 to 7 years, so the cost of manufacturing and launching satellites is ongoing.

Another very important point is that chips and semiconductors are China’s weak area, especially under export restrictions from the United States and its allies. Su Tzu-yun, research fellow and director of Taiwan’s Institute of National Defense and Security Research, previously told The Epoch Times, “Without advanced chips, [China] does not have a shot at 5G and 6G.”

In addition to the commercial prospects that a satellite-based Internet can bring, countries are now realizing that it is also relevant to national security. In the Russia-Ukraine War, Starlink played an important role for Ukrainian drones to attack the Russian army. Now that the CCP is building its own Starlink, it is clear that it still wants to use it to counter the United States.

However, with China’s economy in a steep decline and its financial sector on the verge of collapse, it is not clear whether the CCP will have the financial resources to maintain its mega constellation of 26,000 satellites.