Beijing Is Biting Off a Whole Hand. China-US Rivalry Moves into Space

Spacety engineers are testing a 10-kg TY3-12 satellite.

The recent decision by Biden administration to sanction 36 Chinese tech firms and their subsidiaries proves that Washington wants to compete with Beijing in orbit. Whether it has any chance to succeed is altogether a different question.

The most notorious case involves Changsha Tianyi Space Science and Technology Research Institute, a company known commercially as Spacety. The U.S. State Department targeted the company after it shared photos and data readings from its satellites with the Russian company Terra Tech, which in turn passed them on to the Wagner Group active on the Ukrainian front.

Spacety, in a sense, got caught in the crossfire because, since Jan. 26, sanctions were supposed to target the Wagner Group, which Washington identifies as an international criminal organization. The United States, however, imposed restrictions on all entities that have supported Russian military activities in any way, including distant subcontractors.

China in Orbit

Spacety produces and operates small satellites, as do dozens of other Chinese companies. They also operate in the same way by opening subsidiaries in European or Asian countries. In this case, it was Luxembourg. The U.S. sanctions list also includes Japanese and Dutch entities. Americans fear them, but not necessarily because of the work they do. At least for now, this is not about the sheer number of Chinese satellites in orbit. What is worrying is what happens later with the data and the technology itself. In other words, just as in the case of Spacety and the Wagner Group, the White House is trying to discover who holds the ball from which a thread of small subsidiaries is unraveling. And it is not always possible to figure it out.

In many ways, China’s technological, space and military expansion remains a collection of question marks for the West. And Beijing deliberately blurs the boundaries between these three areas. In September, the White House unveiled a package of restrictions on semiconductor exports to China, calling on its allies to comply. The message was simple: Anyone who uses American technology must comply with our policies. The reason? There is no transparency in the operations of Chinese companies, they regularly refuse to submit to audits by U.S. regulators, and end users are unknown. According to The New York Times, this is the reason the sanctions included, for example, Yangtze Memory Technologies Corporation, a company listed among Apple’s potential subcontractors for the production of iPhone 14.

Ambitions beyond Space

Americans have long tried to supervise Chinese companies, but their efforts have often amounted to nothing. Congress passed a law requiring companies from the Middle Kingdom operating on U.S. territory and listed on the stock exchange to be subject to public regulator supervision in 2020. Still, it was effectively introduced only in December 2022. At the time, as reported by Reuters, the Public Company Accounting Oversight Board obtained the files of more than 200 companies threatened with delisting. However, even this didn’t clear up all the doubts, because the U.S. Department of Commerce is not always able to determine where U.S.-made technology will ultimately wind up.

That is especially true if it is exported to subsidiaries in Europe and later shipped to China, passing through a chain of smaller companies, and in the end, ending up with those seen by the U.S. as a threat. Huawei is such an example — already sanctioned by Washington. European countries have not taken a similar position. The U.K. is particularly vulnerable. In November, Prime Minister Rishi Sunak announced the end of a “golden era” in Chinese-British relations, describing Huawei’s significant contribution to the modernization of the country’s telecommunications infrastructure in recent years as being among other “challenges” (that is, still not a threat.).

Chinese ambitions don’t stop at the orbit stage. Its space program, initiated in 1986, has a clear goal: dominance in space. It started with failure — Keith Bradsher of The New York Times lists failed rocket launches in 1991, 1992, 1995 and 1996. But recently Beijing has clearly made progress as evidenced by a multimodule space station, the landing of the Chang’e 4 on the invisible side of the Earth’s lunar surface, manned flights and spacewalks, among other things. This is not science fiction; China has already become a key player in space.

Beijing Is Biting Off a Whole Hand

But will they dominate? More and more experts say yes. When? It’s hard to say. In August, U.S. Department of Defense analysts published a report in which they assume that Chinese technological and infrastructure capabilities in space will surpass the U.S. in 2045. This is, however, pure guesswork, mainly because of incomplete knowledge of what the Chinese are presently capable of achieving. Dr. Jill Stuart, a researcher from the London School of Economics, noted at a recent UCL Leaders conference in 2003 that attempts at building ties with China in the field of space technology will come to nothing, no matter their nature. Basically, Stuart explains, there are two approaches in the West. In one, Beijing is portrayed as a villain with whom we must not even shake hands. This is how Donald Trump treated China, and little has changed since Joe Biden took office. The consequences are obvious — Beijing is stomping its feet, publishing angry declarations against the West and threatening to fence itself off with an airtight wall. And the knowledge of what it is capable of remains limited.

Europeans have a much more conciliatory approach to the Chinese issue. Yet according to a well-known proverb, when Beijing is offered a finger, it bites off the whole hand. Dr. Stuart recalls many instances when British companies have tried to build partnerships with Chinese companies. This almost always ended in technology and intellectual property theft.

It is not clear what should worry the West most about the space technology race. China’s rapid progress? Uncertainty about its capabilities? The fact that we already know they are getting better at what they are doing (satellite or communication technology production) — and therefore they can become monopolists in providing technological services to the countries of the Global South? Or maybe all of it? The only thing that is certain is that China is not planning to stop or even slow down in the space marathon.