US-China rivalry boosts investment in space tech

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SpaceX rockets are being used to carry private astronauts to the International Space Station/ GETTY IMAGES

The US is “in a space race with China to go back to the moon”, says Nasa chief Bill Nelson.

In a BBC interview, Mr Nelson says he wants to make sure “we get there first”.

His remarks bring back memories of NASA’s space competition with the Soviet Union in the 1960s and 1970s. However, a half-century later, a lot more work is being done by private enterprises for NASA.

According to Mr. Nelson, they are essential because they enable Nasa to tap into “the creativity of entrepreneurs in the private sector” and to share the enormous expenditures.

He brings up Elon Musk’s SpaceX, which was given a $3 billion (£2.4 billion) contract in 2021 to construct a lunar lander in addition to creating the most potent rocket ever created.

The benefits of the space race are also being felt by other private companies. The NASA and Jeff Bezos’ Blue Origin inked a $3.4 billion deal earlier this year to build a lander for future moon landings.

These two businesses are only two that profit from government assistance totaling billions of dollars. The money is being spent, at least in part, in an effort to stay ahead of China in the face of much larger tensions between the two largest economies in the world.

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The head of NASA, Bill Nelson, says the US is racing against China to get back to the moon

India was the first country to reach the lunar south pole region and the fourth country overall to accomplish a soft landing on the moon in late August.

NASA keeps a watchful eye on China’s space program despite its achievements.

China is the only nation with a space station of its own; it has returned moon samples to Earth and wants to travel as far as the polar regions of the moon.

“I’m concerned that we find water on the south pole of the moon, China gets there, and China says this is our area,” expresses Mr. Nelson’s fear. Here is our property; you are not welcome.”

Mr. Nelson contends that his concerns are validated by China’s construction of artificial islands as a means of asserting sovereignty over a portion of the South China Sea.

The US-led Artemis Accords, which serve as a framework for best practices in space and on the Moon, are another item Mr. Nelson brings up. China has not ratified these accords.

China has previously dismissed US concerns about its space program as “a smear campaign against China’s normal and reasonable outer space endeavours” and asserted that it is dedicated to the peaceful exploration of space.

Due to the competition, NASA is investing more. According to the agency, its spending to the US economy in the year ending in September 2021 was worth $71.2 billion, representing a 10.7% rise from the previous year.

Although well-known companies like SpaceX may get the media attention, NASA spends significantly more in the economy.

“A quarter of our spending is going to small businesses,” says Mr Nelson.

According to Harvard Business School space economist and former NASA engineer Sinead O’Sullivan, such money can spur the expansion of small businesses, especially start-ups.

According to her, start-up companies frequently have contracts with the government as their first client, which can help them approach private investors and raise even more money.

“A lot of the time we talk about venture capital and private equity, however, governments are equally if not more important,” Ms O’Sullivan says.

Despite its high prominence, the race to return to the moon has contributed to a surge of other space activities that have the potential to be much more profitable.

As it engaged in the first space race with the US, Russia launched its first satellite into orbit in 1957. The European Space Agency reports that there are currently little over 10,500 satellites in orbit around the planet.

The founder of Space Capital, Chad Andersen, believes that SpaceX has fueled the sector during the past ten years.

“The only reason that we’re speaking about space as an investment category today is because of SpaceX,” he says. “A little over 10 years ago, before their first commercial flight, the entire market was really government dominated.”

As to the analytics firm BryceTech, about 50% of the satellites in orbit were launched during the last three years.

That’s primarily because of One Web and Elon Musk’s Starlink, two businesses.

“The space economy is much broader than just rockets and satellite hardware. It is the invisible backbone that powers our global economy,” according to Mr Anderson.

He claims that as the number of satellites in orbit rises, more businesses are discovering new applications for the data they give, such as in the marine, insurance, and agricultural sectors.

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RocketLab founder Peter Beck sees a space industry worth hundreds of billions of dollars/ GETTY IMAGES

Based in New Zealand. Another significant participant in the space industry is RocketLab.

It is a competitor of SpaceX and has already carried out 40 launches for clients like as NASA and other US government organizations.

The company’s founder, Peter Beck, claims that the financial potential that exist beyond Earth are just the tip of the iceberg. He went from working as a dishwasher engineer to launching rockets into space.

“Launch is about a $10bn opportunity. Then there’s infrastructure, like building the satellites, it’s about a $30bn opportunity. And then there’s applications and that’s about an $830bn opportunity.”

It’s not just him who makes bold assertions. According to US investment bank Morgan Stanley, the space business might reach a valuation of more than $1 trillion annually by 2040.

What is ahead for private space companies?

Regarding potential on the moon, especially in mining, Mr. Beck is apprehensive.

“At the moment, it’s not economically viable to go to the moon, mine and bring it back to Earth.”

Bill Nelson of NASA sees potential in medical research. He cites research on crystal formation that the pharmaceutical company Merck undertook in 2019 on the International Space Station, which was helpful in the development of a cancer medication.

He adds that producing fiber optics in zero gravity might be more efficient.

“What you will see eventually is lot of business activity in low Earth orbit.”

Credits: BBC

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