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China is infiltrating US space industry with investments


Recent actions by China illuminate growing concerns regarding their influence in the technology industry and the national security implications for the U.S. Echoed by reports from the national security community regarding Chinese investments in U.S. emerging and critical technologies, concerns indicate the political landscape is shifting towards a more aggressive posture with respect to China. Increasingly, U.S. policymakers are dedicating attention and resources to this issue, creating a rift between regulators and industry that the space industry will not be immune from.

The most recent act of Chinese aggression, announced last week by the U.S. Department of Justice, charged hackers who allegedly stole data from over 45 technology companies and government agencies, including NASA.

{mosads}Months of trade tensions between the U.S. and China culminated in a 90-day standstill agreement struck between President Trump and People’s Republic of China’s Xi Jinping at the 2018 G-20 Summit in December. But even with the temporary truce, the U.S. is unafraid to show strength, as was the case in the arrest of Huawei CFO Meng Wanzhou earlier this month.

Huawei has played a major role in China’s strategy for global telecommunications supremacy and is considered a national security risk by U.S. officials. Beijing has undertaken a similarly aggressive approach in the space industry, actions that could eventually prompt equally confrontational responses from U.S. officials.

China’s interactions with the U.S. space industry include commercial investment in U.S. startups, civil and commercial competition, and hostile cyberattacks. On Dec. 6, Boeing announced that it would be canceling a satellite order with Global IP, a Los Angeles-based startup, following The Wall Street Journal investigation that shed light on a $200 million investment by a Chinese company into the startup. Boeing acted swiftly once the report was released, citing payment concerns as the primary reason for abandoning the project. 

While Global IP is the most recent U.S.-based space company caught in between the two rival powers, it is not the only one. China’s Tencent Holdings has invested in Moon Express, a commercial lunar exploration company. Moon Express has worked closely with NASA, a relationship that recently paid off when NASA announced that it had been selected for the agency’s new Commercial Lunar Payload Services (CLPS), a program that partners with commercial entities on delivering payloads to the Moon.

Tencent Holdings has also invested in U.S.-based Planetary Resources and World View Enterprises. Similarly, in March 2018 Shenzhen-based Kuang-Chi initiated a “commercial partnership” with U.S.-based Nanoracks on a helium fueled spacecraft.

In January, a Defense Department white paper assessed the economic and national security implications of China’s investments in the U.S. tech industry and expressed concerns about the U.S.’s ability to respond effectively. The report stated that “Chinese participation in venture-backed startups is at a record level of 10-16% of all venture deals (2015-2017).”

Tensions between the U.S. and China over tech have also led to recent Department of Commerce and Treasury regulations devised to monitor and deter foreign investment and restrict the flow of high-tech exports across borders. In October, Vice President Mike Pence referenced China’s influence in U.S. technology as a key concern during remarks on the administration’s China policy at Hudson Institute.

Chinese access points into the U.S. space industry do not end with investments and commercial partnerships. In 2018, China-based hackers infiltrated U.S. defense contractors, satellite operators, and telecommunications companies, infecting satellite operating systems that controlled positioning and data transfers. A similar attack in 2014 hacked U.S. satellite weather systems. 

{mossecondads}China’s space ambitions fit in well with their broader goal of becoming a global technology leader. Earlier this month the country launched its Chang’e-4 spacecraft with the intention of becoming the first nation to land on the far side of the Moon. China is also building up its Beidou system, a satellite network that recently launched its 42nd and 43rd satellites. With Beidou, China intends to compete globally with the U.S. GPS system. Beijing has a number of other space-related goals on its agenda that will require advanced technologies in areas such as launch vehicles and robotics.

China is flexing its financial muscle to become a global technology leader, resulting in increased attention from U.S. policymakers. In the wake of The Wall Street Journal investigation into Global IP and the fallout that has resulted from the recent arrest of Huawei Technologies’ CFO, U.S. space companies should be cautious about their interactions with China. And participating, when appropriate, in policy conversations regarding the future of U.S.-Sino relations couldn’t hurt.

Sean Kelly is the manager of Public Programming & Special Projects at Hudson Institute, and has written on space and foreign policy for several publications. 

Tags China Donald Trump Mike Pence Moon Express NASA Sean Kelly Space Space exploration SpaceX Technology

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