Space Sector in China: Commercial Space Law and Investment

The space sector in China at a glance

The space sector in China has moved from a state programme with a handful of commercial spin-offs to a crowded market of launch companies, satellite manufacturers, constellation operators, ground-segment suppliers and downstream data businesses. Industry research cited by Xinhua counts more than 600 commercial space companies, and in November 2025 the China National Space Administration (CNSA) published an action plan for the high-quality and safe development of commercial space for 2025 to 2027 and set up a dedicated commercial space department. For investors and counterparties, the opportunity is real, but so is the regulatory complexity.

That complexity has a specific cause. China does not yet have a comprehensive national Space Law. Drafting has been under way for years and the government has told the UN Committee on the Peaceful Uses of Outer Space that preparatory work is advanced, but day-to-day regulation still rests on departmental measures, notices and licensing practice, layered with telecoms, export control, data, surveying and national security rules. Anyone doing business in this market needs to map which of those regimes touches each part of the value chain, and to recognise that the rules are still being written.

This page gives a general overview of that framework for foreign companies, investors and Chinese space businesses going abroad. It is not legal advice, and PRC law questions on specific projects should be answered by a licensed PRC law firm.

How the space sector in China is regulated

Several authorities share responsibility. CNSA, which sits within the State Administration of Science, Technology and Industry for National Defence (SASTIND), handles civil space policy, launch project licensing, space object registration and international cooperation. The Ministry of Industry and Information Technology (MIIT) controls radio frequencies and satellite orbit filings and licenses satellite telecommunications services. Military authorities retain a role in launch safety and airspace. The National Development and Reform Commission and local governments drive industrial policy and funding, while the Ministry of Commerce administers export controls and foreign investment.

The core legal instruments are older than the commercial industry they now govern. Measures on the registration of space objects date from 2001 and interim measures on licensing civil space launch projects from 2002. Later notices tightened launch licensing, set rules for the orderly development of commercial launch vehicles and addressed micro-satellites, covering development, launch, data management, on-orbit safety and debris mitigation. China has also described work on satellite frequency and orbit resource regulations, satellite navigation regulations and a market-access negative list for commercial space.

The practical consequence is that a single transaction, such as an investment in a constellation operator, can involve four or five regulators. The sequence in which approvals are obtained, and who bears the risk if one is delayed, should be built into the deal documents from the outset.

Policy direction for 2025 to 2027

CNSA's commercial space action plan sets out five areas and 22 measures: strengthening innovation, using capabilities and resources efficiently, growing the industry, improving management and services, and strengthening full-chain safety supervision. Among the headline measures are a national commercial space development fund, with local governments, financial institutions and private capital encouraged to co-invest, and the opening of national science programmes to commercial entities. The plan also names new fields to support, including in-orbit servicing, space resource use, space manufacturing, debris monitoring and mitigation, space tourism and space biopharmaceuticals.

Capital markets policy points the same way. In June 2025 the China Securities Regulatory Commission announced a growth tier on the Shanghai STAR Market and restarted the fifth listing standard, which allows certain pre-profit technology companies to list, extending it to artificial intelligence, commercial aerospace and the low-altitude economy. For space companies that are years from profitability, that change matters as much as any licensing rule, and it is reshaping pre-IPO financing terms. Our page on STAR Market, ChiNext and Beijing Stock Exchange listings explains the listing route.

Three features of this policy push deserve attention from investors. First, much of the money is local: provincial and municipal funds compete to host launch sites, satellite factories and constellation headquarters, and their investment terms often include relocation, tax and employment commitments. Second, the action plan stresses safety supervision alongside growth, so licensing and quality oversight are likely to tighten rather than loosen as launch cadence rises. Third, the creation of a dedicated commercial space department within CNSA suggests that more detailed rules on market access, licensing and supervision will follow, and transaction documents should anticipate change in law during their term.

Satellite communications are also opening, though mainly to domestic private capital. In August 2025 MIIT published guidance on the satellite communications industry that aims to expand access for private enterprises, pilot satellite internet-of-things services, support direct-to-device connectivity and reach more than ten million satellite communications users by 2030. Foreign investors should not read this as general opening: satellite services remain within the regulated telecoms space discussed below.

Foreign investment and market access

Foreign participation in the space sector in China is possible but must be designed around three filters. The first is the Foreign Investment Negative List. Manufacturing has largely been removed from it, but basic telecommunications services, which include satellite communications, remain subject to Chinese control requirements, and certain surveying and mapping activities and news or broadcasting services remain restricted or prohibited. A foreign investor in an operator that will hold telecoms or mapping licences therefore needs to model the licence position before agreeing ownership percentages.

The second filter is the foreign investment security review regime. Investments in important technology, important infrastructure and defence-related fields, including those that may affect military facilities, can require a filing with the review office before closing, even if the investor takes only a minority stake where it gains significant influence. Space assets are a natural fit for these categories. Our page on foreign investment security review explains the process.

The third filter is practical rather than legal. Launch services, range access and government customers are dominated by state-owned groups, and many commercial companies rely on government contracts and local subsidies. Foreign investors should check how revenue depends on state customers, what confidentiality or security clearances apply, and whether the company has any defence-related work that could later restrict exit routes or trigger foreign sanctions exposure.

Licensing, spectrum and data

A launch provider needs a launch project licence for each mission or campaign, and the satellite owner must register the space object so that China can meet its obligations under the Registration Convention. Commercial launch vehicle developers must also follow notices on standardised development, which address issues such as testing, safety and the handling of launch debris. Third-party liability and insurance arrangements deserve close attention, because China, as the launching state, bears international liability under the UN Liability Convention and is likely to expect operators to manage and insure that risk.

Spectrum is the second gate. Satellite frequency and orbit resources are allocated through MIIT and coordinated internationally through ITU filings. For constellations, the timing of ITU milestones and the allocation of filing rights between shareholders are commercially significant. Joint venture agreements should state who holds filings, what happens to them on exit and how coordination costs are shared.

The third gate is data. Remote sensing imagery, precise positioning data and geographic information can be classified as important data or even state secrets under the Data Security Law and surveying and mapping rules. Providing such data to foreign customers, storing it offshore or allowing foreign shareholders to access it may trigger cross-border data transfer procedures or be prohibited outright. See our guide to important data and data security for how classification works.

Export controls, sanctions and geopolitics

Space technology is dual-use almost by definition. China's Export Control Law and the dual-use items list cover many launch, propulsion, guidance and satellite items, and the Catalogue of Technologies Prohibited or Restricted from Export covers related know-how. A Chinese company selling satellites, components or launch services abroad, or licensing technology to a foreign partner, should classify each item and technology early and build licence timelines into its delivery schedule.

Foreign rules cut the other way. US export controls, including the International Traffic in Arms Regulations and the Export Administration Regulations, sharply limit US-origin satellite content in Chinese launches and transfers of space technology to Chinese parties. Several Chinese aerospace groups appear on US entity and military end-user lists. European and other suppliers face their own licensing requirements. Counterparties outside China should check whether components, software or engineering services fall under these rules before engaging Chinese partners, and Chinese companies going abroad should expect detailed screening by customers and insurers.

China's countermeasure tools add another layer. The Anti-Foreign Sanctions Law, its 2025 implementing regulations and the unreliable entity list allow Chinese authorities to respond to foreign measures, which can put international companies between conflicting obligations. Our export controls and sanctions practice page covers how to manage that conflict.

Deals and disputes in the space sector in China

Transactions in the space sector in China typically take one of four forms: venture and growth investment in launch or satellite companies, often with local government funds as co-investors; joint ventures between commercial and state-owned groups; supply, launch services and data agreements; and outbound deals in which Chinese companies sell satellites or launch capacity to customers in Asia, the Middle East, Africa and Latin America. Each raises distinctive issues.

1. Investment rounds. Valuation is often tied to launch or constellation milestones. Investors should test milestone definitions, government subsidy clawbacks, local funds' rights and the realism of a STAR Market or Hong Kong exit.
2. Launch services agreements. Key terms include launch windows, rebooking rights after failure, inter-party waivers of liability, insurance, export licences and force majeure tied to regulatory holds.
3. Satellite procurement and data offtake. Buyers need clear acceptance tests, in-orbit performance warranties, data ownership and licensing terms, and compliance with data export rules.
4. Outbound projects. Sales to foreign governments involve local procurement law, financing by Chinese policy banks, sanctions screening and, often, technology transfer obligations.

Disputes in the space sector in China commonly concern launch failures, delays, payment under milestone contracts and the allocation of insurance proceeds. Because many counterparties are state-linked, international arbitration seated in Hong Kong or Singapore is a common choice for cross-border contracts. Drafting dispute clauses with enforcement in mind, including assets and sovereign immunity issues where government customers are involved, can save years later. China's Foreign State Immunity Law, in force since January 2024, adopted a restrictive approach that is relevant where foreign state entities are counterparties.

A short due diligence checklist for an investment or joint venture usually covers: the licence map; frequency and orbit filings and their holder; space object registration history; launch and in-orbit failure history and insurance claims; government subsidy and land agreements with clawback terms; export control classifications and any foreign-list exposure of shareholders, suppliers and customers; data classification; and key technical staff, their non-compete obligations and ownership of inventions.

Common mistakes and how to avoid them

• Treating a frequency filing as an asset of the operating company without checking who actually holds it. Filings may sit with a state entity or a different group company.
• Assuming manufacturing opening means services opening. A foreign-invested satellite maker may be fine; a foreign-invested satellite services provider may not.
• Ignoring data classification until the first foreign customer asks for imagery. Classification should be part of product design.
• Underestimating foreign export controls. A single controlled component can disqualify a Chinese launch for a foreign customer.
• Relying on policy documents as enforceable rights. Action plans and subsidies signal direction but are not guarantees, and local incentives often carry performance and clawback conditions.

For companies working across the wider technology sector, our pages on telecoms and value-added telecom services and semiconductors and critical technologies explain adjacent regimes, and the technology, media and telecoms overview links them together.

How TRW & Co helps

We help international investors, space companies and Chinese aerospace businesses going abroad structure and negotiate transactions in the space sector in China and beyond. Our work includes cross-border investment and joint venture structuring, launch services, satellite procurement and data agreements governed by English, Hong Kong or other non-PRC law, export control and sanctions analysis under international and foreign regimes, and arbitration strategy. We provide information on how the Chinese regulatory environment affects each project, manage multi-jurisdiction workstreams, and coordinate with licensed PRC law firms for PRC legal opinions, licensing filings and proceedings in China. To discuss a project, please contact us.