Showdown 2026: It’s Time for China’s Private Rocket Companies to Deliver Results

Since November 2014—when China’s State Council issued the policy widely known in the industry as “Document No. 60,” explicitly encouraging private capital to participate in building national civil space infrastructure—China’s commercial space sector has been on an 11-year run. Now, it has reached what many in the industry are calling a true “moment of reckoning.”

January 17, 2026, became a date that will be hard to forget in China’s spaceflight history.

At 00:55, a Long March 3B lifted off from the Xichang Satellite Launch Center. During the mission, the country’s flagship workhorse rocket encountered an anomaly, and the launch ended in failure. Just 11 hours later, at 12:08, bad news arrived again—this time from Jiuquan Satellite Launch Center. Xinghe Power (Galactic Energy), one of the leading private rocket companies, saw its “Ceres-2” launch vehicle suffer an abnormal flight condition on its maiden voyage, resulting in another failed mission.

In a single day, both the national team and the private sector took serious hits.

Looking back a little over 40 days earlier, the industry had already been rattled. On December 3, 2025, LandSpace launched its self-developed Zhuque-3 Yao-1 from Jiuquan. The official statement said the flight proceeded “according to plan,” with the second stage entering the intended orbit, and it also carried out a first-stage vertical recovery validation. Yet the first stage experienced an anomaly after ignition during the landing phase, and debris fell at the edge of the recovery zone.

And still, even a string of setbacks has not cooled the capital market’s enthusiasm for commercial space.

On January 22, 2026, the Shanghai Stock Exchange website showed that LandSpace’s STAR Market IPO review status had moved to “inquiry issued.” From acceptance on December 31, 2025 to entering the inquiry stage, the process took just 22 days. That same day, iSpace released its 22nd IPO counseling progress report, while CAS Space had passed its counseling acceptance review shortly before, on January 17.

Since the beginning of 2026, “commercial space” has also become one of the most feverish themes in China’s A-share market. Momentum-driven rallies and repeated “limit-up streaks” have been common—even when some listed companies clarified multiple times that they had little or no relevant revenue, investors’ appetite for the narrative hardly softened.

The bigger picture is clear: after 11 years of policy tailwinds, China’s commercial space industry is now entering its decisive phase.

The Customer Can’t Wait

On January 10, 2026, information published on the International Telecommunication Union (ITU) website showed that China submitted a new frequency and orbital resource filing involving as many as 203,000 satellites across 14 constellations.

This is not China’s first large-scale filing. China SatNet’s “GW constellation” and Shanghai Spacecom Satellite Technology’s “Qianfan constellation” have already mapped out plans involving tens of thousands of satellites. But the sheer scale of 203,000 quickly turned into “dream valuation math” in the market, triggering another sharp surge in the commercial space sector—dragging up even companies whose core businesses were only marginally related to aerospace.

To investors, 203,000 satellites implies enormous manufacturing orders. To people inside the industry, the consensus is more grounded: with China’s industrial base, “building satellites” has never been the real bottleneck. Expanding production capacity is comparatively straightforward.

On January 23, GalaxySpace’s Head of Public Affairs Xu Ying told Economic Observer that the company’s Nantong smart satellite factory, using a “pulsed takt production” model, had shortened the development cycle of a single satellite by 80%.

“We’ve built a complete ecosystem from components to full-satellite integration, with stable annual capacity of 100 to 150 medium-class satellites,” Xu said. This model has effectively pushed satellite manufacturing from a “workshop era” into a “production line era,” where engineers no longer spend hours crouched on the floor manually routing cables—automation tackles heat dissipation and assembly challenges at scale.

Yet, even if satellites can be produced faster, getting them into orbit is still a different story.

On January 19, at the Hainan Commercial Space Launch Site, a Long March 12 sent 19 GalaxySpace satellites into orbit. For satellites waiting in line to fly, however, that cadence and lift capability remains far from enough.

Zhang Chi, Chairman of Beijing Newding Capital, has tracked the sector for years. He noted in an interview that in the first half of 2025, one of the largest commercial space customers—Shanghai Spacecom Satellite Technology (the Qianfan constellation operator)—saw its launch plan stall.

“The reason is simple: Long March rockets were reassigned,” Zhang said. To prioritize national-level constellation buildout tasks and other missions, the national team’s core launch capacity was pulled first, shrinking the window available to the commercial market.

In theory, private commercial launch providers should have stepped in to fill the gap. But if you look back at 2025, the private sector’s results were, at best, awkward.

According to data from the recently released Blue Book of China’s Space Science and Technology Activities, China conducted 92 launches in 2025, including 50 commercial launches. While the total number set a new high, large-lift private liquid-fueled rockets—the kind essential for high-frequency constellation deployment—were almost entirely absent.

A review of the publicly disclosed launch missions of leading private rocket companies such as Xinghe Power and CAS Space shows that most were still carried by solid-fueled launch vehicles. Solid rockets are relatively mature, but their upper limits on payload and their lack of reusability make them difficult to match the economics and cadence required for mega-constellation deployment.

This structural mismatch in supply has pushed satellite operators into a passive position.

For example, Spacecom Satellite Technology—builder of the Qianfan constellation—entered 2025 with plans and funding in hand. Yet beyond the national team, the market offered very few mature private launch options capable of reliably taking on its orders.

Spacecom tried to procure capacity through public tenders. In 2025, it launched launch-capacity bids for the Qianfan constellation, but the tenders failed twice because fewer than three suppliers submitted bids. Ultimately, the buyer had to revise the rules to allow “futures” into the process: bidders only needed to commit to completing a maiden flight by the end of 2025. LandSpace, Space Pioneer (Tianbing), and CAS Space were admitted under these revised conditions.

As of February 2026, the reality remained challenging. Space Pioneer’s “Tianlong-3” had not yet made its first flight. LandSpace’s Zhuque-3 reached orbit but failed in recovery. CAS Space’s “Lijian-2” was still in a final sprint.

Launch capacity constraints have now reached a point where some customers feel compelled to build their own solutions.

Multiple industry sources told reporters that, disappointed by current commercial launch capacity, Spacecom has begun incubating a related rocket company in Chengdu—“Xinghuo Spacetime.”

Formally registered as Xinghuo Spacetime (Chengdu) Technology Co., Ltd., the company was established in November 2024 with registered capital exceeding RMB 200 million. In a local industrial list released by Chengdu, Xinghuo Spacetime is described as a “leading enterprise” focusing on medium-to-large liquid oxygen/kerosene rockets, with an intended payload capability above 10 tons to sun-synchronous orbit, targeting a first flight in 2027.

Publicly, Xinghuo Spacetime does not show a direct equity link to Spacecom. But the capital structures behind them overlap heavily. Corporate records indicate that one of Xinghuo’s indirect shareholders, Shanghai Alliance Investment, is Spacecom’s founding major shareholder. Another shareholder, Chongqing Xinwei Chengyu Fund, also appears as an investor in Gesi Aerospace, a satellite manufacturer backed by Spacecom.

In 2025, Xinghuo Spacetime completed two fundraising rounds: an angel round in March involving Sichuan Development Fund and Xinwei Capital, and a Pre-A round on November 13 bringing in Ceyuan Capital, Chengdu Hi-Tech Investment, Newding Capital, and others.

As one industry insider put it: “The customer can’t wait anymore—so they’ve decided to build rockets themselves.”

The Launch Site Is Also a Bottleneck

Beyond rockets, launch infrastructure is another constraint.

Although Phase II pads at the Hainan Commercial Space Launch Site began construction earlier this year, the cost structure has deterred many commercial space players. “In Hainan, just the pad fee can cost tens of millions of RMB per launch,” one investor said. For commercial rocket companies hungry to reduce costs, that’s difficult to swallow.

This also explains why some companies would rather build their own infrastructure than move into commercial spaceports: the profit margin on a single launch may not even cover “rent.”

To avoid long queues and high costs at land-based sites, “going offshore” has emerged as another option. On January 16, in waters near Haiyang, Shandong, Xinghe Power successfully launched its sea-based Ceres-1 variant from an offshore platform.

Arrow Tech founder Wei Yi has argued that sea launch does not consume scarce land pads and offers better downrange safety, making it a critical path toward solving the high-frequency launch challenge of “hundreds of rockets and thousands of satellites.” In his view, China enjoys unique geographic advantages for offshore launches.

Still, no matter how you frame it, the absence of large-lift private liquid rockets in 2025 has become a hard fact. To support the sweeping vision implied by “203,000 satellites,” the industry must fill a massive launch-capacity deficit—and 2026 is where private liquid rockets are expected to “turn in their homework.”

Based on incomplete public disclosures, 2026 is shaping up to be a concentrated delivery year for private liquid rockets:

LandSpace aims to achieve reusable first-stage recovery and reflight for Zhuque-3 within the year.

Space Pioneer’s Tianlong-3, after test-stand setbacks, still treats a successful maiden flight as a core 2026 goal.

Deep Blue Aerospace’s Nebula-1, iSpace’s Hyperbola-3, and Arrow Tech’s Yuanxingzhe-1 have all set targets around full-process validation: orbital insertion plus recovery.

CAS Space’s Lijian-2 has entered a first-flight countdown.

For the industrial chain, rapidly completing the closed-loop validation of reusable technology is more urgent than IPO milestones. An IPO can buy time; a successful, repeatable recovery changes the economics.

The “Old Topic” That Won’t Go Away: Why Reusability Matters

Why does everyone keep obsessing over liquid-rocket recovery?

Deep Blue Aerospace founder Huo Liang offered a simple cost comparison: “Right now, domestic private launch quotes are generally around RMB 30,000 to RMB 40,000 per kilogram, while the national team is around RMB 70,000 per kilogram.” If there is no recovery, relying on expendable liquid rockets makes it extremely difficult for private players to push costs below RMB 30,000 per kilogram—because they are essentially repeating what the national team already does well, without building true commercial advantage.

“If costs can’t come down, the so-called trillion-RMB satellite internet market is a false proposition,” one long-time commercial space investor argued. Under the current pricing structure, building constellations of tens of thousands of satellites cannot easily close a commercial loop.

That is why reusability is widely viewed as the only viable key to breaking the cost deadlock.

A veteran rocket technology expert explained that in a launch vehicle’s cost structure, the first stage (including engines) can account for 60% to 70% of total cost. “In theory, if the first stage can be recovered and reused, launch cost drops dramatically,” the expert said.

Model estimates suggest that when a rocket is reused six times, the cost per launch may fall to around 60% of the first-flight cost—an economic “sweet spot.” As reuse counts continue to rise, however, aging sensors and electronics replacement costs increase, leading to diminishing marginal returns.

Geng Jiashuai, Managing Director at Wanchuang Investment Bank, noted that China’s reusable tech is currently transitioning from “engineering validation” toward “small-scale reuse,” but has not yet achieved scale-driven cost reductions. In theory, reusing the stage and engines can cut costs by 40% to 60%, yet hidden variables—like refurbishment inspection costs and the wear rate of thermal protection materials—remain difficult to control.

In other words, even after recovery is technically achieved, making the business model reliably pencil out still takes time.

Wei Yi also highlighted the core technical hurdles for first-stage return: high-altitude engine restart, high-precision guidance, and variable-thrust hovering during landing. That requires engines capable of stable relight under extreme thermal and structural conditions, and control algorithms that respond in milliseconds—adjusting thrust against shifting gravity and atmospheric disturbances so that a massive stage can land with feather-like precision.

For recovery, engines must ignite multiple times across different flight environments, and at touchdown, thrust must be tuned precisely to balance the stage’s weight.

Two Paths Are Emerging

China’s private rocket companies are now showing clear divergence in technical routes.

Industry discussions tend to focus on two propulsion options: liquid oxygen/kerosene (LOX/RP-1) and liquid oxygen/methane (LOX/CH4).

LOX/kerosene’s advantages include a mature supply chain, lower technical risk, and strong proof of engineering feasibility—SpaceX’s Falcon 9 is the textbook example. Its drawback is carbon buildup from kerosene combustion, which can make post-recovery cleaning and maintenance more complex.

LOX/methane, on the other hand, burns cleaner with little carbon deposition, making it a strong candidate for high-frequency reuse. Methane can also be cheaper, and when combined with high-temperature-tolerant, low-cost stainless-steel structures, it could theoretically reduce both manufacturing and maintenance costs—similar to the path SpaceX is exploring with Starship.

LandSpace and Arrow Tech have chosen a “LOX/methane + stainless steel” route. Wei Yi argues that the cryogenic environment created by LOX/methane can increase the strength of stainless steel by 2 to 3 times, enabling thinner materials that offset stainless steel’s weight disadvantage.

More importantly, he says, stainless steel’s heat tolerance means returning stages may not need expensive thermal coatings like aluminum-alloy structures do, significantly reducing reuse maintenance costs. He describes this “build rockets like cars” material logic as central to low-cost mass production.

Deep Blue Aerospace and Space Pioneer have chosen the LOX/kerosene route. Huo Liang argues that SpaceX has already proven the maturity of LOX/kerosene recovery for low Earth orbit, and that “following the winner’s path is the lowest-risk innovation.” Deep Blue is building mass production lines for its Thunder-RS engines, aiming to control cost through vertical integration of core components.

Meanwhile, even as liquid recovery remains a hard frontier, solid rockets have continued to launch frequently through 2025 and early 2026. The “Ceres-2” that failed on January 17 was itself a medium-class solid launch vehicle.

“Solid rockets can’t scale big, and they can’t be recovered,” Zhang Chi said. In his view, solid rockets have often functioned as a “ticket to enter the market.” During earlier fundraising booms, many companies built a solid rocket first to prove they could “get to space.” That made sense in fundraising logic—even if it never worked in strict commercial economics.

By 2026, the fundraising logic is starting to weaken. As national constellation buildouts demand higher cadence and lower costs, solid rockets—unable to drive extreme cost reduction through reuse—are gradually losing room to tell a compelling story.

Capital Can’t Wait Either

Reusable success has not yet arrived at full scale, but capital is already pressing forward.

On January 22, LandSpace’s STAR Market IPO status shifted to “inquiry issued.” From acceptance to inquiry, it took only 22 working days. According to the prospectus, LandSpace plans to raise RMB 7.5 billion.

LandSpace is not alone. Alongside Space Pioneer, CAS Space, Xinghe Power, iSpace, and Orienspace, these six companies—often dubbed the “Six Little Dragons” of commercial rockets—are all crowding around the IPO gate.

On January 17, CAS Space passed the IPO counseling acceptance review with the Guangdong regulator. On January 15, Space Pioneer published its first counseling progress update. iSpace and Xinghe Power are also in counseling, while Spacety has recently started A-share IPO counseling as well, aiming at becoming the “first commercial SAR satellite stock.”

Policy support has been explicit. In June 2025, the CSRC released the “Sci-Tech Eight Measures,” clearly supporting “hard tech” sectors like commercial space to use the STAR Market’s fifth listing standard. In December 2025, the Shanghai Stock Exchange’s Guideline No. 9 further refined thresholds, requiring issuers to achieve “a first successful orbital insertion of payload by a medium-to-large launch vehicle employing reusable technology.”

Notably, the threshold emphasizes “orbital insertion,” not “successful recovery.” That rule enabled LandSpace to meet listing compliance even after Zhuque-3’s recovery failure—because its second stage successfully achieved orbit.

In the industry, this has been widely interpreted as an encouraging signal from regulators.

“Because rockets are the weakest link, the capital market opened a time window for rocket companies to go public, and everyone is sprinting to fit through it,” Zhang Chi said. “After rockets, money will surely flow into satellites—rockets are limited in number, and once you’ve funded them, there’s not much else to fund.”

According to the China Commercial Space Industry Development Report (2025), total industry financing in 2025 reached RMB 18.6 billion. With the sheer number of commercial space companies in China, that pool still feels tight. If capital concentrates only on a handful of top players, it may sustain their R&D timelines—but for the broader industry, funding at current levels struggles to cover the universally high cost of development.

A look at what top companies are building shows that heavy-asset investment has become standard:

Space Pioneer is constructing a smart manufacturing base in Zhangjiagang designed for 50 rockets per year, and a satellite test-and-launch technology facility in Jiuquan.

iSpace is building a super factory in Chengdu targeting 20 liquid rockets per year, and an engine production line in Mianyang targeting 100 engines annually.

Deep Blue is investing in a liquid engine test facility in Jinan Steel’s industrial area.

LandSpace has established manufacturing bases in Jiaxing and Wuxi.

“To ensure engine delivery, we’ve strengthened engine production and testing capabilities, fully building Mianyang’s hundred-ton test stand and manufacturing capacity for engines and key components,” an iSpace representative said.

Investment needs to grow further—but early investors’ exit pressure is reaching a breaking point.

Public information shows that Country Garden Venture Capital, which invested RMB 500 million in LandSpace’s Series C round in 2019, transferred all its shares in April 2025 and exited. Another individual shareholder, Jiang Dong, cashed out more than RMB 66.7 million through six equity transfers since 2022, fully exiting before the IPO application was accepted. LandSpace’s prospectus disclosed that more than 10 early shareholders completed full exits during the reporting period.

For early capital that has run alongside these companies for years, liquidity at the IPO gate can look more attractive than waiting for a complete technical and commercial closed loop. Interviews also indicate that most commercial space funds have a lifespan of five to seven years. Many companies founded around 2015 now must deliver answers to LPs (limited partners).

In that context, a public listing becomes the most direct route to relieve liquidity pressure—and, in effect, to keep private rocket companies alive.

“2026 is the decisive year,” an iSpace representative said, describing it as the crucial period when reusable technology must move from experimental validation toward real engineering application.

If IPOs are the capital market’s “advance credit card” extended to China’s commercial space industry, then every launch in 2026 is a repayment installment.

And if, by the end of 2026, the market still cannot witness a private liquid rocket standing intact on a recovery pad, it may force a hard reassessment of the valuation logic behind China’s commercial space boom.