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Chinese commercial sector investment lagging in 2021

HELSINKI — China’s commercial space sector has been expanding rapidly ever since the central government opened space to private capital, but activity appears to be slowing.

Bryce Space and Technology, a Washington consulting firm, found that China surpassed all countries besides the United States in 2019 in the number of space startups receiving financing, the amount invested, the number of deals made and participating investors. All told, 22 Chinese ventures received a cumulative $314 million of the $5.7 billion invested globally in space startups in 2019. 

Chinese authorities have recently been publishing guidance for actors in the nascent launch and small satellite sectors, and establishing policies to support a national project to develop satellite internet infrastructure. Yet, investment may be slowing while also concentrating on fewer firms, according to an Aug. 9 report from Chinese Business Network (CBN).

The number of funding rounds fell from a high of 62 in 2018 to 42 in 2020 even as total investment grew to nearly $1.5 billion in 2020, according to CBN. So far in 2021, both investment rounds and amounts raised appear to be down, with 17 completed by late July. 

January saw reusable methane engine maker Jiuzhou Yunjian secure funding, followed by Commsat, a private technology company targeting 5G satellites, receiving hundreds of millions of yuan in strategic funding.

Qiansheng Exploration Tech, a microsatellite developer and operator, raised over $15 million in Series A funding round in March with methane engine maker, Aerospace Propulsion, raising $15.2 million in April.

CAS Space, a Chinese Academy of Sciences spinoff, raised $31 million in funding in May. Launch startup Oriental Space announced itself in June with $62 million in angel round funding while rocket and spacecraft developer Rocket Pi then raised tens of millions of yuan in July. 

Reusable launch vehicle Space Pioneer raised at least $30 million and Yunyao Yuhan, specialized in space weather data, secured tens of millions of yuan in late July. Additionally, in August, Space Transportation raised more than $46.3 million for commercial hypersonic spaceplane plans. 

Most of these have concentrated on launch vehicle and satellite developers. Nearly half of these were also early rounds, echoing an Institute for Defense Analyses report from 2019 that found Chinese companies were still in the early stages and searching for their business cases. Historically, around half of all rounds have gone to firms based in Beijing, according to CBN.

Notably, funding in 2021 has not reached the levels of the largest rounds from 2020, which included large rounds for remote sensing firm Changguang Satellite ($375 million) and launch companies Landspace ($175 million), iSpace ($173 million). 

It is unclear how the COVID-19 pandemic has affected activity. At the same time, multiple launches, hop tests for reusable rockets, and satellite tests from newer firms including Galactic Energy, Deep Blue Aerospace, Spacety and Origin Space and more could spur more investment in the second half of the year.

Furthermore, cities including Beijing, Tianjin, Guangzhou and Shenzhen have announced policies to support Satellite Internet-related projects — the local implementation of national strategy — and aerospace more broadly. This has seen Guangzhou, which is not a traditional space hub, move to attract companies to form a new space cluster. More private investment could follow into these new areas.

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