The Chinese commercial space industry is treading a well-worn path: first, drive down costs through scale, then leverage that cost advantage to unlock the market. This mirrors the historical trajectories of the solar photovoltaic and lithium-ion battery industries.
From opening to private enterprises in 2014, to the first privately-developed rocket successfully reaching orbit in 2019, to the relaxation of IPO conditions in 2025, the sector has completed a foundational decade.
Analysts from UBS Securities, including Li Kunlun, noted in a recent report that the Chinese commercial space industry is nearing an inflection point for commercialization. They argue that with reusable technology approaching commercial deployment and new application scenarios emerging, such as space-based computing, the total addressable market for commercial space could expand by an order of magnitude.
The next step for China's commercial space is not merely about launching rockets more frequently, but about integrating rockets, satellites, solar panels, laser communications, and ground-based manufacturing systems to create a cost-reduction curve similar to those seen in solar and battery manufacturing.
The Cost Reduction Curve: Rockets Following the Solar and Battery Playbook
In 2019, the launch cost for China's first privately-developed commercial rocket was approximately $10,000 to $15,000 per kilogram. By 2025, industry leaders had reduced this figure to around $4,000 per kilogram. Cumulative commercial launches also reached about 95 by 2025.
Projections indicate that if the industry's learning rate remains between 20% and 35%, and cumulative launches approach 1,000 by 2030, launch costs could further drop to $900-$1,900 per kilogram. The learning rate refers to the percentage cost reduction each time cumulative production doubles. These curves are driven by engineering iteration, localized supply chain clustering, and capacity expansion—a formula China's manufacturing sector has already executed successfully.
Regression analysis of cost curves for Chinese solar modules and lithium batteries shows learning rates of approximately 34.9% and 26.2%, respectively.
The underlying logic for commercial space is similar, supported by the compatibility of China's manufacturing ecosystem. Data from Space Pioneer shows that about 95% of its rocket components can be sourced from suppliers in the automotive, aviation, and machinery industries. Currently, roughly 30% of suppliers still come from the traditional state-owned aerospace system. Each percentage point decrease in this ratio signifies increased market-based procurement and further potential for cost reduction.
Reusability: The Primary Driver for Cost Reduction
Within the cost-reduction pathway, reusable technology is the most critical component. The first-stage engine constitutes the largest portion of a rocket's cost. If the first stage can be recovered and reused, the cost curve bends sharply downward.
LandSpace achieved a milestone in rocket launch and recovery testing in the fourth quarter of 2025, with the Long March 12A completing related tests around the same time. LandSpace estimates that reusing a first stage up to five times can reduce single-launch costs by up to 45%.
The current challenge is that China's reusable technology remains in the verification phase, with some distance to go before batch commercialization. Existing launch capacity is also insufficient to support payload deployment demands exceeding 10,000 tons, and key satellite technologies—including power, thermal management, components, transmission, and orbital operations—are not yet fully mature.
Two significant milestones to watch in the second half of 2026 are the planned maiden flights and recovery attempts of Galactic Energy's Ceres-1 and i-Space's Hyperbola-3 rockets.
50,000 Satellites: Constellation Deployment is Just Beginning
As of the first quarter of 2026, China had approximately 1,333 satellites in orbit, with remote sensing comprising 46% and communications 35%.
However, according to plans for the Guo Wang (GW) and Qianfan constellations, China's long-term goal is to deploy 50,000 satellites—nearly 40 times the current number.
The leap from 1,333 to 50,000 satellites faces three major hurdles: reusable rocket technology has not completed commercial validation; existing launch capacity is insufficient for deployment needs over 10,000 tons; and core satellite technologies like power, thermal management, and payloads are not yet mature enough.
International Telecommunication Union (ITU) frequency and orbital slot rules add an implicit countdown: after filing, at least one satellite must be launched within 7 years, 10% deployed within 9 years, 50% within 12 years, and 100% within 15 years, or the filing becomes void, capping the final deployment number at the actual quantity launched.
The combined GW and Qianfan constellations imply deploying over 15,000 satellites within the next decade, making constellation construction an urgent, not gradual, endeavor.
The deployment of Qianfan's first phase (1,296 satellites) is scheduled to begin in 2027, marking a window when the supply chain will feel tangible order pressure.
Space-Based Computing: The Next Commercial Frontier, Though Cost Gaps Remain
Communications, remote sensing, and navigation are the three traditional commercial space applications, but their commercialization has been challenging. Remote sensing relies heavily on government contracts, communications face a domestic market with highly developed 5G infrastructure, and direct-to-cell (DTC) services have limited demand.
Space-based computing is seen as the next avenue. The logic is that AI's rapid development is pushing computing resources to a bottleneck, with energy as a core constraint. Satellites in sun-synchronous orbits can receive near-continuous solar energy, benefit from radiative cooling, and avoid ground-based permitting restrictions.
In May 2025, China launched its first 12 computing satellites, forming a nascent "Trinity Computing Constellation" operated by Zhejiang Lab and ADA Space, which recently partnered with Tencent Cloud.
For orbital data centers to truly replace ground-based ones, two conditions must be met simultaneously: launch costs must fall, and the cost of space-grade solar panels must decline. Current minimum launch costs are around $3,000/kg, and minimum space-grade solar panel costs are about $10,000/kW (for P-type HJT). Estimates suggest both figures need to fall by approximately 80% to achieve cost parity with terrestrial power.
This represents a medium-to-long-term pathway, not an immediate reality. More proximate commercial value lies in the "in-orbit data processing" model—directly processing satellite imagery, SAR data, etc., in orbit to reduce transmission pressure to Earth. This path relies less on major technological breakthroughs and its strategic value is relatively clearer.
Investment Opportunities Across the Supply Chain
As launch cadence accelerates and constellation deployment scales, demand will propagate through a long manufacturing chain encompassing materials, electronics, thermal management, optical communications, and power infrastructure.
Two sub-sectors are highlighted:
Space-grade solar cells represent the most certain infrastructure need. Any large-scale satellite constellation requires power, with HJT (heterojunction) currently offering the best balance of efficiency, radiation resistance, and cost. Perovskite is a long-term technological direction, but orbital lifespan validation is incomplete. Projections indicate the space solar market could reach the hundred-gigawatt level by 2035.
Laser communications are nearing the commercialization stage. Traditional RF communications face spectrum and bandwidth limitations, whereas laser communications can achieve data rates from 100 Gbps to 1 Tbps. Next-generation constellations are standardizing 100-200 Gbps, with 400 Gbps already validated in orbit, and they do not require ITU spectrum licensing.
In-Orbit Servicing: An Overlooked Cost Variable
The design lifespan for LEO satellites is typically 5 to 7 years. For computing satellites packed with hardware, this poses a serious economic problem—the cost of computing racks could be 10 times the launch cost.
If satellite lifespan is capped at 7 years, the investment return model becomes difficult to justify.
In-orbit refueling and maintenance offer a potential solution. Chinese commercial company Emposat recently completed a test using a robotic arm for refueling in low Earth orbit. U.S.-based Starfish Space also plans to perform its first commercial service on an Intelsat satellite in 2026.
This direction is still in its early stages, but its significance lies in fundamentally altering the business model for computing satellites if orbital lifespan can be extended beyond 7 years.
Parallels with Humanoid Robots: A Volatile, Multi-Wave Growth Trajectory
Commercial space and humanoid robots share a common trait: an enormous potential addressable market, but a significant distance from mass commercialization, with high dependence on policy support. Visionary projections involve tens of thousands of annual launches and millions of satellites for massive orbital data centers.
Compared to such scale, the current industry size is negligible.
The historical pattern is that when the addressable market is sufficiently large and technical feasibility remains credible, industry development often experiences multiple waves of growth, characterized by high volatility but a long-term upward trend.
However, China's commercial space sector has its unique aspects. China's mature 5G infrastructure reduces the urgency for direct-to-cell services, and power consumption pressures are relatively lower than in the U.S., resulting in slightly less external urgency for commercialization push.
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