China’s commercial rocket industry officially began to take shape in 2015, when three government ministries jointly issued guidelines encouraging its development.
Looking back from where the industry stands today, it took a decade for China to largely complete its policy framework and develop a basic supply chain. That period also saw the arrival of market orders represented by China SatNet and, at the end of 2025, the extension of the fifth set of listing standards on the Shanghai Stock Exchange’s STAR Market to commercial rocket companies—a move that helped forge a consensus among investors.
The first decade was, broadly speaking, about laying the groundwork. With much of that foundation now in place, China’s commercial rocket industry is poised to enter a new phase of rapid growth over the next 10 years.
Several rocket companies established an early-mover advantage during the industry’s first decade. Rather than examining those companies individually, this article focuses on the opportunities that remain for the industry’s second generation of players.
In early 2023, the operator of an unnamed low-Earth-orbit satellite internet constellation held a bid evaluation meeting for prospective rocket orders. Participants included both state-owned aerospace organizations and commercial rocket companies such as i-Space, LandSpace, Space Pioneer, Space Epoch and Galactic Energy.
The establishment of the constellation operator reshaped the development of China’s satellite internet industry to some extent, while the bidding exercise itself marked an important milestone in the evolution of the country’s commercial rocket sector.
For the purposes of this article, companies founded before that event will be described as “first-generation commercial rocket companies,” while those established afterward will be referred to as “second-generation commercial rocket companies.”
Objectively speaking, China’s first-generation rocket companies made progress during the past decade, but the advances were limited. China conducted 92 rocket launches in 2025, 16 of them by private companies. Private launches therefore accounted for nearly 20% of the total, indicating that the government had allocated a considerable share of launch opportunities to the private sector.
Yet those 16 privately operated rockets carried less than 10 metric tons of payload in total, representing less than 3% of China’s aggregate launch capacity. By international comparison, 10 tons is less than half the payload capacity of a single Falcon 9 mission. Overall, the results have fallen short of expectations.
The relatively short development history of the sector is one reason. But the figures also suggest that first-generation commercial rocket companies have room to improve in the way they build and operate their businesses. That, in turn, creates opportunities for the second generation in three main areas.
1. Building stronger institutions and attracting top talent
First-generation commercial rocket companies have shortcomings in organizational and institutional development.
Compared with their second-generation counterparts, these companies began operating in a much more difficult environment. The external conditions left them with little time, energy or preparation for forward-looking strategic planning. Once their businesses had developed along a particular path, changing direction became difficult.
First-generation companies invested heavily in building their own supply chains and, in some cases, in developing solid-propellant rockets. These efforts consumed substantial time and resources. Once a company committed early resources to such areas—including equity, staffing, management positions and decision-making authority—it inevitably had fewer resources available when the time came to develop high-capacity and reusable rockets.
Developing large reusable launch vehicles requires more highly skilled personnel. The result has been a mismatch between existing resource allocations and emerging technological needs, making it difficult for some first-generation companies to recruit enough top-tier talent.
This is precisely where second-generation rocket companies may find an opening.
Rockets differ significantly from products in many other industries. They are highly complex systems characterized by a pronounced “weakest-link” effect: limitations in any single discipline can reduce the performance of the entire vehicle or even cause a mission to fail.
China had virtually no foundation for privately owned rocket companies before 2015. Consequently, most of the country’s leading aerospace professionals were trained by state-owned institutions. Private businesses generally recruited people who had already acquired their expertise within the state system.
Many professionals who joined major state-owned aerospace academies and research institutes after graduation have spent decades in that environment. Most value stability and prefer to work on a dependable platform. When commercial space was still immature—and its policies, markets, supply chains and financing prospects remained unclear—top experts had little incentive to leave the state sector in large numbers.
The industry has now entered its 2.0 era. A broad consensus has formed around its development prospects, and professionals are both more enthusiastic about joining commercial ventures and more accepting of that career choice than before.
Although state-owned institutions have introduced some restrictions on the movement of personnel, leading experts now have greater confidence in the commercial space sector. Companies capable of attracting and retaining these people could reap significant benefits.
Doing so will require both the wisdom to distribute financial rewards effectively and the ability to articulate a compelling vision. Not everyone can be won over by money. After decades of professional experience, the most technically accomplished experts are unlikely to be motivated primarily by financial need. A sufficiently ambitious mission may therefore be just as important in attracting them.
2. Improving rocket efficiency
The efficiency of launch vehicles developed by first-generation commercial rocket companies also needs to improve. There are two main reasons.
First, many of the people employed by these companies had limited relevant experience. A significant number previously worked on missiles or solid-propellant rockets. Even among those with liquid-rocket backgrounds, relatively few had participated in the complete development cycle of an entire launch vehicle. Under those circumstances, it was difficult for first-generation companies to achieve very high levels of rocket efficiency.
Second, capital markets were previously much less receptive to the industry than they are today. As a result, first-generation companies’ tolerance for risk was not substantially different from that of state-owned organizations.
The resulting inefficiency was not simply a reflection of designers’ limitations; it was also a product of the external environment. The entire industry still operated according to a “guarantee success” philosophy.
Under that approach, every team sought to ensure that a failure could not originate in the subsystem for which it was responsible. Designers therefore added ever-larger safety margins to their individual components. As these margins accumulated throughout the vehicle, they did not necessarily improve overall system reliability, but they substantially reduced system-wide efficiency.
A rocket must achieve extremely high efficiency in its expendable configuration before making it reusable can generate genuine commercial value. Otherwise, the economics will not work: the rocket will be recovered merely for the sake of demonstrating recovery.
The companies most likely to stand out in the future will be those capable of improving vehicle efficiency. Falcon 9’s payload fraction is approximately 4%. Whichever Chinese company can approach—or even surpass—that benchmark will have a stronger chance of emerging as an industry leader.
Traditional development methods alone are unlikely to solve this problem. Success will depend on the technical capabilities of a company’s core engineering team, the courage and strategic vision of its founders, and the culture of the organization as a whole. The challenge is considerable, but so is the opportunity.
3. Capitalizing on a transformed external environment
The environment surrounding supply chains, regulatory approvals and infrastructure is now fundamentally different from what first-generation companies encountered.
When those companies began operating, there was no mature commercial supply chain outside the state-owned aerospace sector. State-owned organizations were also far less receptive to private companies than they are today.
First-generation businesses therefore had little choice but to develop technologies internally or work with suppliers to construct new supply chains. This involved not only time and money, but also the challenge of establishing effective quality-management systems.
Objectively, the supply chains assembled by early commercial rocket companies offered weaker overall quality assurance—particularly during their initial stages—than those supporting state-owned aerospace programs.
The situation has since changed. As the Chinese government has attached greater importance to commercial space, state-owned aerospace organizations have adjusted their approach to the private sector.
At the end of 2025, China Aerospace Science and Technology Corporation held an important internal meeting that set the direction for using state-owned supply chains to support commercial space. This was a critical development and a major benefit for second-generation commercial rocket companies.
Access to established supply chains could spare these companies from conducting large amounts of exploratory materials and manufacturing-process testing. Such validation requires a lengthy and costly development cycle, while working with proven suppliers could also provide stronger reliability guarantees.
First-generation companies have also mapped out many of the industry’s regulatory approval procedures and solved numerous zero-to-one problems. This is highly significant. In the past, it was extremely difficult for a private rocket company to secure authorization to develop a launch vehicle and obtain a launch license.
In addition to these two advantages, accumulated infrastructure could offer second-generation companies opportunities to acquire valuable assets at attractive prices.
Over the past decade, the industry has built up a considerable stock of high-quality fixed assets. Some are held by local governments, while others belong to first-generation commercial rocket companies that are now struggling.
As the industry continues to consolidate—and as some weaker participants ultimately exit—the relevant assets are likely to appear on the market. Second-generation companies may therefore be able to acquire facilities and equipment instead of building everything from scratch.
Doing so, however, will test both their capabilities and their judgment. They must first be able to locate these assets, then possess the insight needed to identify the best ones, and finally have sufficient financial and operational strength to secure them.
Where the assets are held by local governments, officials are unlikely to entrust them to companies with weak fundamentals. The process will therefore represent both an opportunity and a silent contest in which each company must prove its own abilities.
