Source: Deep Web Tencent News
Author: Xue Fang

On November 20, Musk's heavy rocket Starship successfully completed its sixth test flight, just one month after the fifth Starship launch, which was characterized as the "chopsticks holding a rocket".

Such a high launch frequency is hard to imagine, even during the Cold War era of the USA and the Soviet Union's space race. For the vast number of space enthusiasts in China, this is undoubtedly a significant advancement, bringing humanity a step closer to the era of interstellar navigation.

As early as 1990, an animated series called "Space Fortress" was introduced in China, marking the first encounter for Chinese audiences with Japanese anime on cosmic themes.

Unlike today's stereotype of "aliens = invincible," the earth civilization in the show could actually engage in back-and-forth battles with alien fleets, with a comparable level of technology.

As Asia's first country to successfully launch a geostationary satellite, Japan's aerospace efforts at that time were far ahead of other Asian countries. The small details in these films reflect a period of civilization expansion, with ordinary people exuding great confidence in exploring the outside world and their own future from within.

That was the most vibrant era of Japan's economy, a golden age filled with enthusiasm and ambition.

However, 40 years later, this former 'enlightening teacher' has completely laid flat, and the public's focus has shifted from 'expansion' to 'survival,' with artistic works also transitioning from optimism to pessimism, ultimately being thoroughly replaced by cute and腐系 styles.

‘Do not go gentle into that good night, old age should burn and rave at close of day; rage, rage against the dying of the light.’

Looking at the field of space exploration today, there are only two players left globally, China and the USA, carrying the fate of humanity forward.

Objectively speaking, there is still a significant gap between China's commercial space ventures and those of the USA, with reusable rockets, which are the hallmark of SpaceX, being an essential hurdle to overcome.

On the journey of gazing at the stars and advancing into the universe, there is still a long way to go; but encouragingly, today China's private commercial space sector is also accelerating its pace.

Deep Space invited Zheng Ze, the Deputy General Manager of the reusable rocket company Deep Blue Aerospace, and Yang Runxin, Vice President of their angel round investor, to chat about commercial space and the space industry behind it.

The following is the transcript of this conversation, edited and selected:

On breakthrough technologies: Why must rockets be reusable?

Deep Web: Why is everyone so focused on Musk's "Chopsticks Holding Rockets" this year?

Zheng Ze: Because the recycling method of "Chopsticks Holding Rockets" is becoming increasingly mature. Now, the interval between each launch of the Starship is getting shorter, and next, it is entirely possible for it to return from space, undergo maintenance, and then fly back to space, similar to how our airplanes shuttle between airports.

The epoch-making significance of this is that the Starship would turn into a real space transportation tool, and Musk is developing the Starship as a genuine means of transportation, which is something we pay a lot of attention to.

Yang Runxin: Previously, rockets needed four legs to land, but now those have been removed, allowing for better attitude control during recovery, and reducing some weight; furthermore, without the need for four legs, the rocket can be made larger. Ultimately, the Starship is a means of transportation; just like bus fares will always be cheaper than taxi fares, the larger it gets, the lower the cost.

From this perspective, "Chopsticks Holding" is a significant advancement. This is Musk's greatest strength; he proposes many new concepts and can bring them to fruition. I believe that as an aerospace professional, the success of the Starship gives everyone hope, proving that the combination of large rockets and reusability is the right path, and as long as we continue down this route, new breakthroughs will occur; as an Investment Institution, we are also quite excited because it signifies a new wave of investment opportunities.

Deep Web: Previously, there were very few companies in China focused on reusable rockets. Why did you choose to invest in Deep Blue at that time?

Yang Runxin: Around 2015/2016, the domestic satellite market began to open up for commercialization, and by 2017/2018, rockets were slowly being opened as well. At that time, Musk's Falcon 9 had achieved commercial success, inspiring many experts in the system to emerge. Thus, in a very short time, a large number of rocket startups appeared domestically, and it was during this time I got to know Deep Blue's CEO Huo Liang and Zheng Ze.

However, in terms of technology routes, everyone's choices are quite different: Buffett said people should do difficult but correct things. In my view, pursuing reusability is undoubtedly the most correct approach because only in this way can a substantial reduction in costs be achieved. Musk is doing just that, and he has succeeded; it is not a secret. But it is indeed very challenging; thus, some companies say they want to first develop solid rockets because solids are relatively easier and can generate income quickly. However, at that time, Deep Blue was determined to develop liquid reusable rockets, which really impressed me.

From 2018 to now, almost all rocket companies are working on reusability, and the understanding of this matter has become similar among everyone. However, at that time, there were not many who could firmly pursue this path, and Deep Blue chose a difficult but correct route from day one.

Deep Web: What are the difficulties of reusable rockets?

Yang Runxin: If you look at SpaceX's development history, from the company's establishment in 2002 to the first successful recovery of a Falcon rocket in 2015, it experienced 13 years in between, which shows how challenging it was to achieve this engineering feat. Even Musk himself mentioned in his book that he carried immense expectations with each launch, yet faced disappointment each time. He was already a billionaire, using his own money, and it was extremely difficult to keep going. As a Venture, Deep Blue started from a few hundred meters, to 1 kilometer, a few kilometers, and ultimately achieved stable reusability, while constantly seeking financing along the way, which was not easy at all.

Zheng Ze: Discussing this topic fills me with emotions. First, I would like to thank Mr. Yang for his recognition and support, and I am also very grateful for all the help we received from Xianfeng along the way.

Looking back at that point in time, we also thoroughly studied SpaceX's technological path. Additionally, we collaborated with a Publishing house to translate a book called "Going to Mars", which describes Elon Musk's development of the Falcon rocket, and how he faced near bankruptcy several times. In fact, SpaceX has always been engaged in difficult but correct endeavors, choosing a path that wasn’t favored by the majority. If Musk had taken shortcuts or catered to the market, SpaceX might have been a fleeting success, ultimately disproved by time.

We started planning our Venture in 2016. At that time, Mr. Huo spent over a year researching the entire industry, and by 2018, we decided to pursue reusability. We indeed experienced many challenging moments along the way, but since we came out of the system, we definitely wanted to do something different. Essentially, the core of commercial space travel is how to reduce costs. In the past, everyone supported this by strengthening management and squeezing prices from suppliers, but these are not breakthrough technologies. So-called breakthrough technology means that I used to sell something for ten dollars, and now I sell it for just one dollar; previously, only ten people could afford it, but now a thousand or even ten thousand can.

Traditionally, rockets are a niche transportation tool; their only function used to be to launch and then disappear. However, in the future, they will become a high-frequency mode of transportation, like cars and airplanes, both inexpensive and reliable. Just like today, no one would take a one-time-use airplane because no one can afford it; only through reusability can everyone afford it. Such technology will truly change the lives of ordinary people, instead of just allowing a few wealthy individuals to take a trip to space.

Deep Web: Compared to reusable rockets, how expensive are disposable rockets? What is the gap between China and the USA?

Zheng Ze: If they are all disposable rockets, China is likely 20% to 30% cheaper than the USA because we have a more developed manufacturing industry, cheaper labor, and raw materials.

However, if it's a reusable rocket—assuming the cost of a single launch is 100 yuan, where the first stage rocket accounts for about 80 yuan. Now that Musk has made the first stage rocket reusable, it means that the 80 yuan can be reused 10 times, making the cost 8 yuan; if reused 20 times, it would be 4 yuan. Adding the remaining 20 yuan means it only costs 24 yuan, which is at least 60-70% cheaper than a disposable rocket, making its cost lower than ours.

Therefore, China must have its own reusable technology, which is like a martial arts secret book; if you have it, I must have it too. Currently, Musk's Falcon rocket is equivalent to version 2.0, while we are still at 1.0. However, we will soon reach 2.0. In the future, by combining our manufacturing advantages and talent advantages, and using more economical new materials, China's reusable rocket cost can definitely be lower than that of the USA.

But what makes Musk impressive is that he doesn't stop either. The Starship can be understood as version 3.0. This successful launch represents a significant step from 2.0 to 3.0. Therefore, Deep Blue is also laying out its future plans. Our new generation Cloud II rocket will adopt a similar recovery method as the Starship and hopes to achieve even lower costs.

Deep Web: Just now you mentioned that you will soon reach level 2.0. What is the current progress?

Zheng Ze: We have now completed the design and verification of all key systems. You can understand that rocket recovery is an ultimate goal; this ultimate goal includes many small goals, each of which requires many key technologies, such as recovery landing, engine power system variable thrust and depth adjustment, as well as software recovery guidance and control, etc.

In the past few years, our work has been to solve these small goals one by one; it's like playing a game, where each level passed lights up the corresponding technology tree. Now, all the technology trees have been fully lit up, and we are just one step away—the carp jumping over the dragon gate; once we jump over, we succeed.

Talking about entrepreneurship: How to maintain an 'ideal sense of rhythm'?

Deep Web: Why did you leave the Venture at that time?

Zheng Ze: I started working in 2011 and left in 2016. The previous job certainly had its advantages, such as engaging in national-level tasks, contributing to the country, and having very clear daily work responsibilities. One just needed to do their job well, and there was room for promotion. I might be someone who enjoys challenges or is restless, so I wanted to take a look at the outside world, do something different, or have more space for innovation.

Yang Runxin: I resonate deeply with this point. Usually, we investors communicate with many entrepreneurs. Specifically in the rocket industry, the aerospace talents cultivated over many years in our country, the reason they can come out and start businesses is all rooted in past accumulations.

For example, one must at least obtain a master's or doctoral degree and after graduation, enter the major aerospace groups, participating in the research and development of China's most important rocket models, which may take 20 years. However, at the same time, deep inside, they want to create something new. Due to various reasons in the past, it was difficult for their ideas to be realized, but now the timing is right, with favorable conditions, and thus they come out. You can clearly sense the feeling of a shift in the era, inheriting the past while opening up the future.

Deep Web: Compared to SpaceX, what stage are we currently in?

Zheng Ze: We are at a level equivalent to Musk's 2015, which is just before the Falcon 9 rocket's launch and recovery. If our Xingyun-1 rocket can successfully complete its orbit and recovery in the first half of next year, it can basically be considered that China has mastered the technology of reusable rockets in commercial aerospace, and the next step will be to take Orders in bulk to support our country's Starlink launch missions. Currently, among all Chinese rocket companies, Deep Blue's progress is the fastest.

Yang Runxin: I would like to add that as an investor, investing in rockets is quite interesting. Many times, the information you have is incomplete, somewhat like opening a Blind Box.

From the time you invest your money until the rocket eventually takes off, it goes through a very long time. Although there will be some milestone events in between, even if you are a professional investor, it is very difficult to fully understand the significance of these milestones; it's like a child learning the language. They may sit there every day, seeming to read and do homework, but whether they are truly studying well is not obvious. You can only know clearly on the day of the college entrance exam when the scores are released.

Over the past few years, the investment community's view on commercial space has also changed with external circumstances. As mentioned earlier, it is essential to do the difficult but correct things, but another saying goes, it is important to do things correctly. For instance, regarding liquid rockets, the engine is a very high core technology barrier; if the engine is well-made, the rocket is at least halfway successful. Since the beginning, Deep Blue has insisted on self-developing rocket engines, progressing from hundreds of meters to several kilometers, continuously doing the right things. Now, it has finally reached the moment of taking the college entrance exam, and the results are about to be revealed.

Looking back, SpaceX spent 13 years achieving the reusability of the Falcon rocket, while our Chinese entrepreneurial teams achieved this in just six or seven years. Of course, we also have to acknowledge that SpaceX has accomplished many more things since Falcon 9, with Elon Musk in 2024 being significantly more advanced than in 2015. However, through the example of Deep Blue, it can be shown that Chinese technology entrepreneurs are indeed very impressive and hardworking. We have already reached this stage today, and together with China's overall production advantages, many exciting developments will emerge in the future, which everyone will gradually see. We are also full of expectations for this.

Deep Web: What qualities do investors generally value in space entrepreneurs?

Yang Runxin: This is a good question. First, we very much respect the experts within the aerospace system; they have made significant contributions to the country's aerospace endeavors. It is precisely because of their accumulated technical knowledge that we have the opportunity today to commercialize aerospace. Specifically, we pay close attention to the individual's continuous learning and iteration capabilities. The talent characteristics within the aerospace system are very specialized and diligent, but once you decide to venture into entrepreneurship, the game rules you face are different.

In the past, your work might have focused solely on scientific research, striving to excel technically, which reflects a longboard mentality. However, today, in order to turn that into a product, you must consider beyond technology, including cost, quality, durability, and customer demands, which transforms it into a barrel mentality. You cannot afford to have a weak point; if you have a weak point, customers may choose not to buy your products.

The second point is to have the ability to respond to changes in complex external environments. In the past, within the system, your funding was allocated by the state, and the core tasks were assigned by superiors. Now, you must solve the goals and financial issues on your own. I believe when CEO Zheng and CEO Huo first started their ventures, they could not have anticipated the industry's development curve in the following years; in 2018, commercial space was very hot, and everyone raised a lot of money. But by 2019-2020, the industry saw a sharp decline in interest, and after a few years, perhaps Musk launched a new rocket, attracting investors back again.

When faced with such complex changes, you are always in an environment with insufficient resources, always short of money, and always needing to do more. You must continually try new things because only new technologies can reduce costs, but new technologies also come with risks; balancing these becomes crucial, and a sense of rhythm is very important. Additionally, the founder's philosophy and integrity must be upright, as this is the one area where there can be no compromise. An excellent core founding team can attract talented individuals, users, and partners, allowing for a longer journey.

Deep Web: How to maintain an ideal sense of rhythm?

Zheng Ze: First, you need to maintain the correct sense of direction. This is not obvious when the environment is good, but when the environment is poor, difficulties treat everyone equally. For example, around 2020, many early-stage rocket companies struggled, and some simply could not continue operating. However, as we just mentioned, one must do the right things. If you are on the correct path and continuously achieving results, investors will always discover and recognize the matching value with you. Although financing is difficult, it can still be done to some extent. For us, it means spending money more carefully, but progress must continue.

Yang Runxin: In some industries like the Internet, even though there may be financial struggles, it can quickly generate cash flow. However, in commercial space, raising 1 billion or 2 billion might not yield any positive income in between. Therefore, we often communicate with entrepreneurs, saying that financing is the first core skill you need to learn after starting a business. Financing is never the goal; it is merely a means. When the market is good, many people will pay attention to you. You need to stockpile resources to go further. If the market turns bad tomorrow, you must tighten your belt, do more with less money, but the direction cannot change.

So the best situation is that you choose the correct things and execute them properly; generally, there won’t be any issues. However, many times, entrepreneurs get involved in things they shouldn’t, wasting money in the process. At this point, the founding team’s ability to determine the industry, assess development trends, and evaluate their own capabilities is severely tested.

Discussing financing: Why has commercial space become popular again in 2024?

Deep Network: Mr. Zheng, how did you get through the investment downturn period?

Zheng Ze: I can totally relate to what Mr. Yang just mentioned. 2018 was indeed a small peak where investors were eager to break down doors, followed by a very long downturn. Now, it has heated up again.

I believe the fundamental logic of entrepreneurship is whether what you are doing is truly right. Many trends that seemed correct at the time were later debunked. If you are in such an industry, you should certainly adjust your strategy. Therefore, during downturns, we also ask ourselves if the commercial demand for the commercial space industry is real. Is the business logic genuine? If the answer is affirmative, then the difficulties are temporary.

Moreover, as Mr. Yang said, sense of rhythm: you need to form a business closed loop. How far do you have to go? How much more money or time is needed? Entrepreneurs must have clarity and plan ahead; you cannot just spend the large amount of money Mr. Yang provided today and then find out you have no money tomorrow. Financing indeed comes in waves, but the work is systematic. A long-term layout and phased implementation of this capability is very important.

Deep Web: But this year, commercial aviation has become popular again. What do the two of you think the reasons are?

Zheng Ze: It is indeed popular. In the second half of the year, we continuously raised 3 B+ rounds of funding, and many investment institutions are contacting us. Previously, commercial aviation was very niche and hardly anyone paid attention, but this year even relatives and friends around me are asking when we will have our maiden flight. Leaders from various levels of local government are also very concerned about our progress. It suddenly feels like stepping into the spotlight, which makes us feel honored but also under pressure.

I think it is primarily due to the strong advocacy and support from the government, which has included commercial aviation as new productive forces; secondly, it stems from a shift in social consensus. As General Yang mentioned earlier, most people are beginning to recognize that this path is the right one and can indeed be profitable. Suddenly, everyone has discovered, oh, there's such a company as Deep Blue, which has been quietly working on this. This year, we have completed all the research and development of Nebula One and have successfully conducted the recovery experiment of the first-stage rocket. It can be said that we are poised to take off, and next year will be a crucial year.

Yang Runxin: Over the years, market sentiment has experienced cyclical fluctuations. In fact, entrepreneurship is very much like surfing. This year, commercial aviation has become popular, and I think there are several reasons for this.

The first point is, of course, the policies. In the past, Americans referred to aerospace as 'rocket science,' which represents the pinnacle of technology. Now, as China's overall national strength continues to grow and we are in a long-term competitive cooperative relationship with the USA, we certainly hope that our aerospace technology can maintain significant competitiveness. Currently, the system primarily addresses major topics like moon landing and deep space exploration; commercialization is more about solving cost issues, how to use market vitality to get more players involved; and the division of labor between the two is becoming increasingly clear in policy direction.

The second point is market space. It is crucial to see whether the industry leader can push the ceiling a bit higher, which can be simplified to observing what SpaceX has done, as it is indeed the leader in the aerospace sector. For instance, when Musk's Starship succeeded this year, market sentiment rose, and people felt that the possibilities for rockets in the commercial realm were expanding.

For example, if in 2018 someone told you that they were going to Mars, you would think they were joking, and you wouldn't take them seriously. But today, if someone says they intend to go to Mars, even if you don't know whether it can be achieved, it sounds plausible that they might be serious. So the situation remains the same, but public perception has changed.

The third point is about whether our batch of rocket companies in China has met their milestones on time. For example, has their own engine been developed? Have they placed satellites into orbit? Is the recovery experiment achieving success time after time, with each launch going further? These three aspects collectively affect market sentiment, so it can be said that China's development of commercial aviation is always the right direction, but sentiment is continuously climbing in a spiral.

Talking about space tourism: Can ticket prices really drop below 1.5 million?

Deep Web: Just now mentioned that Musk has raised the industry's ceiling. What are the possibilities specifically for China's Commercial Space Industry?

Zheng Ze: Commercialization has two aspects. The first is to the B-end. For example, next year, after our Nebula-1 rocket completes its orbital recovery, it can accept market-based Orders. For this task, we will build a larger rocket, namely the Nebula-2. Here I would also like to introduce that the Nebula-2 is the next-generation reusable large rocket, with a diameter of 5 meters and a launch scale of 1,000 tons, heavier than the current Long March 5 rocket; its low Earth orbit payload capacity is 25 tons, which is higher than that of the Falcon 9.

The second is to the C-end. Recently, we made an attempt during the Tmall Singles' Day Sales, where we live-streamed selling two suborbital tourism spacecraft tickets. The response was beyond imagination, and that night our colleagues' phones were bombarded with calls, all asking if there were still tickets available. We also realized that among China’s 1.4 billion people, there is a large number of space enthusiasts, and the market prospects for space travel are surprisingly vast.

So for the next test flight, our recovery rocket will add two more engines; originally, flying 10 kilometers required 3 engines, now it will be 5, which will enable executing 100 kilometers of suborbital tourism flights. After each recovery, it can fly again, thus allowing ticket prices to be tremendously affordable. In the past, only the wealthy could afford it; in the future, prices could drop to 1 million, or even a few hundred thousand RMB, allowing ordinary people to experience something completely different from life on the ground, enjoying the technological dividends brought by commercial space.

Tencent Deep Web: So, what is the question investors asked you the most this year?

Zheng Ze: The most asked question is when this rocket can fly, the second most is regarding these space travel tickets, can we be given one, and when can we also have a chance to experience it. I said no problem, once the technology matures, everyone will surely be invited to experience it. This time will come quickly, as our recovery rocket technology has made significant breakthroughs, and the remaining tasks are just to verify reusability and finally conduct manned tests.

Deep Web: Specifically, when will that be?

Zheng Ze: This live broadcast is selling tickets for our first flight in 2027, on a spacecraft that can accommodate six crew members, two of whom are our staff responsible for piloting the spacecraft, while the remaining four are passengers. This time, we are selling two of those seats first.

Tencent Deep Network: What is the background of these two passengers, have there been any user surveys conducted?

Zheng Ze: Both are young people, one is an Internet engineer from Hangzhou, and the other is a seasoned space enthusiast who is very passionate about commercial space travel and has been closely following domestic developments; he saw it and booked immediately.

Deep Network: Previously, it seems that Europe and the USA also had similar space tourism projects? But the tourists seemed to mostly be wealthy individuals?

Zheng Ze: Yes, previously, Bezos's Blue Origin sent a group of wealthy individuals on space tourism, but their costs are still too high, we will offer services cheaper than theirs. Ultimately, it's because we have fully mastered the reusable technology that we confidently say we can still make a profit selling tickets for 1 million; in the future, as application scenarios increase, costs will further decline.

Deep Network: Besides launching satellites and space tourism, what other scenarios are there for reusable rockets?

For example, in a warfare environment, there may be a need to deliver supplies to the front line; if drones can't transport them and sending people has risks, in the future, rockets can be used for Transportation, reaching any location in the world within one to two hours, and they can fly back afterwards, the cost is lower than Air Transportation—similar demands objectively exist; when your price is sufficiently low, many scenarios will arise.

Deep Network: When can positive cash flow be achieved?

Zheng Ze: In the first half of 2025, we will carry out rocket orbital recovery, and starting in 2026, we will begin accepting bulk orders, which will generate a significant amount of cash revenue; in 2027, we will launch suborbital tourism business, at that time we will basically achieve break-even.

Shen Wang: General Yang, have you mentioned this requirement? Let General Zheng also give you a ticket.

Zheng Ze: No problem, we strive to make it possible for General Huo to personally operate the ship that day.

Talking about the future: "Elon Musk is a lion, but our Chinese companies are a pack of wolves."

Shen Wang: To be honest, how big is the gap between Chinese companies and SpaceX? What conditions are needed to catch up with them, and how long will it take?

Zheng Ze: Musk is indeed very impressive; he is like the pioneer at the front of the team, leading everyone to run wildly. If we chase from behind, there is no need to argue about which path is correct, which can save a lot of manpower and time. If I have to compare the two, I think Musk is a lion, while our Chinese companies are a pack of wolves.

In fact, the USA can't find a second commercial space company that can compete with SpaceX, which may relate to their culture: a savior or an outsider leading a group of people to accomplish what seems impossible, a very American personal heroism story. Our culture emphasizes unity and the importance of teamwork; we fight like a wolf pack. So although there is still a significant technical gap, from a national and social level, everyone has already recognized the issues, and if we chase, our time will be shorter than theirs.

A simple example is car manufacturing; in the past, the gap in China's traditional auto industry was significant, but in the era of new energy, our new forces can catch up in a very short time.$Tesla (TSLA.US)$Forming a balance without falling behind, so when new things emerge, the response of China's startup companies will be quicker and their actions more agile.

The same is true in the field of rockets; although Musk is leading us, once there is a consensus in Chinese society, our acceleration will be higher. With the wisdom and hard work of the Chinese people, it will not be an issue to reach or even surpass him one day in the future.

Yang Runxin: This topic is also very interesting. SpaceX was born in 2002, and Tesla was born in 2003. The two companies were almost established at the same time. By 2012, Tesla had produced the Model S, which was equivalent to the iPhone moment for electric vehicles. So around 2016, new car-making forces from China began to enter the market. Up to today, the USA still has Tesla as the dominant player, but China has too many strong new brands.

Xiaomi, Huawei, and BYD have all become cheaper than Tesla in terms of cost. Therefore, I believe that the future of commercial space travel will follow a similar process. The difference is that Musk could only rely on 'internal circulation' at that time, sustaining Starlink on his own. But today, China is ready to use national strength to build a star network. In addition to the increasing demand for military and civilian launches, we will actually remain in a market environment of 'more stars and fewer arrows' for a long time in the future. If we can combine this with the vitality of commercialization, we will be able to catch up faster than electric vehicles. Ultimately, the two curves will definitely intersect, and everyone can look forward to it.

Deep Web: It was just mentioned about Starlink. I remember a few years ago there were many doubts about Starlink, considering it as 'creating demand when there is none.' How is the industry viewing Starlink now?

Zheng Ze: Early on, there were indeed many skeptical voices. At that time, it was impossible to falsify this matter because no one knew what Musk was really thinking. However, objectively speaking, I believe his actions are undoubtedly very wise.

On one hand, he has completed his commercial closed loop; Starlink has already started to be profitable last year, and this year profits will exceed 1.5 million dollars. On the other hand, Starlink has also gained recognition and support from NASA and the US government, because it can achieve communication in any part of the Earth, and can be used for commercial purposes at ordinary times. Once a war breaks out, it can switch to military use immediately, which is very frightening. For example, in the recent Russia-Ukraine war, Ukraine was able to maintain smooth military communications due to the use of Starlink, while Russia might not have been able to.

Third, the Earth's orbital resources are first-come, first-served. For example, at altitudes between 300 to 400 kilometers, Starlink has essentially occupied this layer already. If we want to launch again, there are no more positions available; we can only launch to altitudes of 500 kilometers or higher. This realization was one of the reasons why our country recognized the necessity of establishing a Chinese version of Starlink.

Deep Web: Is there a real demand for the Chinese version of Starlink? Why has no one tackled this before?

Zheng Ze: There is indeed a real demand. Firstly, it is not entirely a civilian product; it also carries national will. The country has now recognized its importance, so it will definitely be realized. Secondly, no one has attempted to create a Chinese version of Starlink before because Chinese commercial companies did not have the capacity for such overall coordination. Even if they knew that building it would bring significant economic benefits, they would not proceed, and this matter can only be led by the state.

Previously, we did not have commercial spaceflight; we only had state-owned space endeavors. This is a process of going from nothing to something. Therefore, in the early stages, the state must provide a significant amount of Orders and funding to stimulate market demand, allowing the market-driven parts to start operating, such as commercial rocket companies, commercial satellite companies, and various supporting Industry Chains. Once these enterprises develop self-sustaining capabilities, the state will no longer need to intervene.

Thirdly, there is also the cost aspect. In the future, China Star Network will definitely compete commercially with Elon Musk's Starlink and engage in price wars, but a price war cannot rely solely on burning money. One-time rockets are too expensive, and no amount of money will last forever, so it’s only possible to develop reusable technology while making larger rockets to lower costs.

Yang Runxin: The opposition to Starlink previously mainly stated that our country has very developed infrastructure, and even remote areas have mobile signals, making phone calls very convenient. There is no need to spend a lot of money to establish a communication satellite network. The USA requires technology like Starlink because of its poor infrastructure.

However, as CEO Zheng just mentioned, the significance of 'maintaining frequency and occupying orbit.' Satellite orbits are essentially strategic assets. If one party has something that the other does not, it may fall behind in national competition. Economically speaking, although our country has excellent communication infrastructure, other countries, for example, in Africa, the Middle East, and Southeast Asia, actually have similar demands. Right now, they only have Starlink as an option. If our Star Network can be established in the future, there’s also a complete opportunity to go abroad and provide services to these overseas users.

Deep Web: Besides reusable rockets, what other investment opportunities are there in commercial spaceflight?

Yang Runxin: Rockets are at the top of the chain, and the downstream includes various Satellite companies. For example, there are companies that specialize in manufacturing Satellites, responsible for creating the Satellites; there are also companies that specialize in operating Satellites, for instance, I buy a few Satellites and then provide data services to others. This type of company is slowly emerging, as the cost of Satellite data is becoming increasingly cheaper. Once data is available, the next step is to create a large number of applications; for example, meteorology, Agriculture, Insurance, and hydrological monitoring – these used to be managed by national ministries, but now they are gradually commercializing their services.

A single Satellite cannot accomplish much; it requires a dozen or even dozens of Satellites to surround the Earth to take real-time photos or provide stable navigation and communication services. The cost increases linearly with the launch of each Satellite, but once a certain number of Satellites are in orbit, the revenue growth is exponential. Therefore, in recent years, we have seen that some Satellite companies have slowly started to break even and even make profits, which means they no longer require further funding or government support. We, at Xianfeng, have been paying attention to this sector since 2018, and we have made relevant investments in the aforementioned areas. We are very Bullish about the development of China's commercial space industry.

Zheng Ze: In the future, Satellites can do many things. For example, the emerging SAR Satellites can penetrate cloud layers and use Radar waves to see the situation beneath the clouds. Suppose in a battlefield, a building is hiding people, which cannot be observed from outside, but the human body emits infrared rays. Infrared rays are long waves that can easily refract, which can be simply understood as being able to bend. Once it bends, it can be detected by Satellites in orbit, and the next step could involve using Missiles to destroy the building, which is a military application. For civilian use, for example, if a mudslide occurs somewhere, rescue workers need to locate where people are buried in the shortest possible time to perform urgent rescues.

There is also urban management; for example, if you add another floor to your building without notifying the authorities, someone from the Housing Construction Bureau will come knocking on your door, saying this is considered illegal construction. This is because Satellites scan the ground every day, including identifying illegal mining operations that were previously difficult to manage but can now be quickly detected. These are new scenarios for Satellite applications.

Editor/rice