Full coverage: China Tiangong-2 Space Lab Launch

Changes are happening in China's state-run space industry: private firms are hoping to see their businesses skyrocket. But the challenge is how to find the right business model that meets both the private and the public sectors' interests. So I tried to find out what China needs to ignite its space economy.

China’s space industry is currently dominated by state-run programs. But its private spaceflight industry already shows promise despite being in its infancy. 

The central Chinese city of Wuhan has transformed from an auto production hub to a commercial rocket business center. The city claims that it will be capable of launching 50 rockets and manufacutring 140 commercial satillites a year by 2020, bringing 30 billion yuan annual economic output. 

"I think their emerging new stream of power. market of space x and blue origin, they lower the cost for satellite. In China also could happen in the future. We’ve already have China versions of space x, called one space, startup, VC backed. direction for them is to research lower cost sector. Another possible impact is more application. Such as satellite imaging, local firms own their own satiliiites. Downstream businesses do lots of R&D, that could be a new stream for the power," said Jeff Yu, principal, Roland Berger.

The firm Yu just mentioned, hopes to fly its flagship launch rocket in 2018, a rocket that weighs 59 ton with 500 kilogram payload. 

On social development, the interests of both China and the Silicon Valley coincide.

"70% of the area on earth is not covered by internet signals as comunications fibers cannot reach those regions. We are now working on a project to allow smartphones to receive wifi signals from communications satillites in deserted and wild areas," said Zhang Di, Dept Director, China Aerospace Science & Industry Corp.

It’s vital for private firms to partner with the public sector. NASA is a good example. 

For China, with another Chinese space lab set to go into orbit this year, it would make sense for China to get its private companies more directly involved in the spacecraft’s maintenance.

With companies, governments and investors all involved, are we expecting another Alibaba... in the space industry?

"When will we see alibaba for space? some firm are doing that. basically connect aerospace and defence startup, regional govt and investors. gather them together, share…." said Jeff Yu.

Analysts say it is still unclear how much market share the Chinese government would give to private companies. What is clear is that the space industry will be one of the most sought after sector for investment in the next decade.