China's space ambitions are expanding, commensurate with its strategic and economic interests. One such ambition is to grasp significant shares of the international satellite manufacturing, launch and services markets, particularly communications. China has evolved a formula for this purpose by bundling indigenous satellite bus Dong Fang Hong 4 (DFH-4) and Long March 3B (LM-3B) rocket services.
An analysis of this formula and foreign satellite contracts revealed that LM-3B is the strongest component compared to defects observed on DFH-4 based satellites. Despite possessing a decent launch record, LM-3B failed yet again recently while launching an Indonesian satellite Palapa-N1. The launch failure and ongoing experiments of advanced satellite and rocket designs indicate the possibility of China replacing DFH-4 and LM-3B combination for foreign contracts.
China had been successful in landing communications satellite manufacturing and launch contracts across the Global South. The customers include Laos and Indonesia from South East Asia; Pakistan and Sri Lanka from South Asia, Nigeria and Algeria from Africa; and Venezuela and Bolivia from South America. The entire supply chain involving building the satellite and launching it, setting up the ground stations and training the local personnel is contracted to China. The China Great Wall Industry Corporation (CGWIC) is China’s government entity authorized to negotiate and execute these international contracts. Moreover, the Export-Import Bank of China is the sole financing agency for these satellite projects.
Over the course of these satellite missions, China begins to acquire stake in companies set up by these countries for managing and distributing their satellite services. The stake is bought either as an exchange for the existing satellite loan or infusing of new funds for follow-on space projects. Becoming a majority stakeholder in these entities allows China to steer the demand for satellite services in the Global South and profit from them. Chinese profits come at the expense of Western space companies that enjoyed traditional advantages of being the first movers, supported by technical know-how and financial resources. In addition, China gained political leverage in these countries, using them to expand its economic interests.
For example, China is a majority stakeholder in the Nigerian Communications Satellite Ltd. (NIGCOMSAT) set up by the Nigerian government for managing NigComSat-1R satellite built and launched by China in 2011. NIGCOMSAT won a bid to provide in-orbit testing and spectrum management services for Belarus’ Belintersat-1 satellite, also funded and launched by China in 2015. Chinese entities hold 55 percent stake in LaoSat-1 Joint Venture floated for managing Laos’ first communications satellite LaoSat-1. The Venezuelan (VeneSat-1) and Bolivian (TKSat-1) satellite contracts increased Chinese political influence in South America allowing it to expand natural resources exploitation projects.
Similar situation exists in South Asia. Sri Lanka touted SupremeSat-1 as its first, independent communications satellite designed indigenously. In reality, the company SupremeSat managing this satellite merely leased a few transponders on a Chinese satellite registered as ChinsaSat-12. China allowed this political gambit to India’s vexation. Meanwhile, China-Pakistan political and economic nexus expanded into outer space. China launched Pakistan’s first communications satellite PakSat-1R in 2011. It will be followed by PakSat Multi-Mission Satellite (PakSat-MM1) to be developed for commercial purposes and operated jointly by China and Pakistan.
Before PakSat-1R could be launched, another satellite originally launched by Western space company Hughes in 1996 for Indonesia and later owned by Turkish operators had been designated as PakSat-1. This arrangement allowed China and Pakistan to preserve the orbital slot until PakSat-1R could be launched.
Indonesia used to be a long-term customer for Hughes for realizing the Palapa series of communications satellites. This also ensured business opportunities for American launch companies. China and Hughes too had a business partnership in the 1990s until the United States Congress investigation revealed that China misused technical analysis provided by Hughes for improving its missile designs. Consequently, satellites with American components were barred from being launched on Chinese rockets.
In this context, Indonesia contracted an European space company Alcatel, now owned by Thales Alenia Space, to manufacture Palapa-D. Alcatel assured that satellites built on its Spacebus 4000 platform were free from American components and therefore eligible to be launched on Chinese rockets. This made way for Palapa-D to be launched on LM-3B. However, LM-3B failed to deliver Palapa-D launched in 2009 into the intended orbit, forcing mission engineers to use onboard fuel to correct the orbit. This reduced the lifespan of Palapa-D from 15 years to 10. Consequently, Palapa-N1(Nusantara 2) was designed by China to replace Palapa-D. The LM-3B failed again with no salvage of Palapa-N1 possible.
Although rocket failures are normal, recent experiences were troublesome for Chinese space programme. China had been pressing hard to revalidate its heaviest rocket Long March 5 (LM-5) undergoing major modifications. China’s space station and interplanetary space missions depend on the success of LM-5. However, failure of legacy rockets such as LM-3B with successful launch records, where basic designs are frozen and protocols firmly established, point to obsolescence.
For foreign customers, depending on legacy LM-3B adds to the existing risk of DFH-4 satellites. China bases international satellite designs on its home-grown DFH-4 communications satellite bus, considered to be free of American components. However, multiple foreign satellites such as Nigeria’s NigComSat-1 launched in 2007 and Venezuela’s VeneSat-1 launched in 2008 failed in orbit. Palapa-N1 and future Indonesian contract PSN-7 satellites are also based on DFH-4 satellite bus.
In this context, China’s scramble for High Throughput Satellite (HTS) services becomes interesting. HTS satellites provide data output many times the capacity of a standard communications satellite. The escalating demand for higher data rates by various industries, particularly satellite internet, could be satisfied with these satellites.
Algeria’s AlComSat-1 (DFH-4 based) launched in 2017 by LM-3B was China’s first international HTS contract. Indonesian Palapa-N1 (10 Giga bits per second (Gbps)) and PSN-7 (100 Gbps) satellites are also designed for HTS purposes. China and Indonesia have a framework agreement for PSN-7, but it remains to be seen if Indonesia follows through, given its experience with Palapa-D and Palapa-N1. CGWIC’s contract with Thailand’s Thaicom for an HTS could also be impacted. This contract allows Thaicom to become a shareholder in one of the Chinese companies that will be sub-contracted by CGWIC. Earlier, Thaicom reached an agreement to sell bandwidth on its Thaicom-4/IPSTAR-1 HTS to Chinese mainland.
Incidentally, China is racing to validate DFH-5, an advanced version of DFH-4, intended for domestic HTS customers. The first experimental DFH-5 based HTS Shijian-18 failed to reach orbit in 2017 as LM-5 developed a critical error. The Shijian-20 HTS launched in 2019 was a success, however. The Shijian-18 was designed to test 70 Gbps output and Shijian-20 was capable of 300 Gbps output. China is aiming to provide 1 Tera bits per second (1 Tbps) ultimately with the DFH-5 platform. The DFH-5 and LM-5 combination could therefore eventually replace DFH-4 and LM-3B for international satellite contracts, if China could establish a better success rate based on domestic launch orders.
The CGWIC successfully emulated the broader Belt and Road strategy in the Global South that is leading some nations into debt traps. The crucial difference is that satellites are insured and therefore some of the financial losses could be recovered if the missions fail. However, the gap in service expectancy and the need to protect critical orbital slots in the competitive geostationary orbit are riddled with economic and legal issues that are burdensome for Chinese customers. Whether China can retain its international customers for increasing its global space revenue now depends on it overcoming the technical issues.
Disclaimer: The views expressed in the article are personal.
Vidya Sagar Reddy is a Research Analyst at Jane’s Aerospace and Defence concentrating on South East Asia.
