China’s own Elon Musks are racing to catch up to SpaceX

At least six Chinese rockets designed with reusability in mind are planned to have their maiden flights this year. In November, the country’s first commercial launch site began operating. Beijing and local governments are giving private-sector companies cash injections of billions of dollars.

The rise of these companies is the latest stage in Beijing’s longstanding effort to build up an indigenous space industry that isn’t dependent on Western technology. For years, the government has held up the space industry as a success story of high-tech businesses that have developed largely without foreign help.

Technological self-sufficiency, from semiconductors to artificial intelligence, has taken on greater urgency as Beijing aims to build “fortress China" to steel itself in its growing rivalry with the U.S.

Chinese leader Xi Jinping, at a rare meeting with tech CEOs and other executives in February, said he wanted a competitive private sector that drives growth and innovation—a formula that is now being applied in the space industry. The boss of GalaxySpace, a satellite manufacturer, was among the corporate chiefs who met Xi.

China opened up the space industry to private companies in 2014 and mentioned the commercial space business for the first time last year in the government’s annual report on its priorities.

Lincoln Hines, an assistant professor at Georgia Tech, said Beijing was concerned that it couldn’t keep up with the U.S. if it relied solely on state-owned companies.

“If China continues to have this bloated state-driven industry, it can do these enormous feats like going to the far side of the moon or placing humans in space, but can it innovate and compete with the United States?" he said.

The undisputed rocket leader is Musk’s SpaceX, which single-handedly accounted for more than half of the world’s orbital launches last year. Its workhorse Falcon 9 rockets have a reusable first stage, which lowers costs and allows SpaceX to charge customers less. Its most-reused rocket booster has flown 26 times.

The company has more than 7,000 Starlink satellites in operation and in October succeeded in catching the huge booster it uses for its Starship vehicle on the first attempt, although it lost the Starship spacecraft in its latest test flight in March.

SpaceX’s successes have helped convince potential investors that the industry has a viable future, said Lan Tianyi, founder of the Beijing consulting firm Ultimate Blue Nebula.

“That’s very, very important because the funding environment in China is more conservative than in the U.S.," said Lan. “It’s also served to bring people from other industries to work on space-related businesses."

Once a predominantly military and scientific domain, space plays a growing role for commercial businesses. Makers of smartphones have begun to offer satellite communications services, such as an SOS function on Apple’s iPhone for emergencies when outside normal cellphone signal range.

LandSpace Technology, co-founded by a former banker, is a leading Chinese private reusable-rocket company. It notched a world’s first in 2023 when it launched a rocket fueled by liquid oxygen and methane, the same propellant later used in SpaceX’s Starship. Another company is Orienspace, which was founded by Yao Song, who sold his first company—a chip startup—for about $250 million while in his mid-20s.

Huo Liang, the founder of Deep Blue Aerospace, had a stable job building rockets at the state-owned CASC when SpaceX successfully landed one of its boosters for the first time in 2015. That feat prompted him to quit and found his company, which builds reusable rockets.

A decade on, the company is planning later this year to test whether it can recover the booster of its Nebula-1 rocket after an orbital flight, said Huo. It aims to operate a suborbital flight for space tourists in 2027 and has already sold tickets at more than $100,000 apiece.

Huo said he believed Chinese companies could catch up to SpaceX by 2030.

Blaine Curcio, founder of Orbital Gateway Consulting, said catching up was likely to take longer for Chinese companies because SpaceX is itself constantly innovating. On top of that, private space companies in China “are fully aware that most government business will go to state-owned enterprises, so they will have to hustle," he said.

Chinese companies, led by state-owned enterprises, have already begun competing for international launches. In November, a commercial rocket developed by CAS Space launched a remote-sensing satellite for Oman, its first international payload. Curcio said he expected Chinese private-sector companies would be competing with SpaceX for launches by the end of this decade.

After SpaceX, the company with the most launches last year was the state-owned CASC. It undertook 51 launches, compared with SpaceX’s 134, according to the companies, although the Chinese rockets weren’t reusable. China had its share of launch failures last year, including a rocket developed by the private company Space Pioneer that mistakenly launched and exploded on a hillside, causing damage to some nearby homes but no casualties.

China has at least two competitors to SpaceX’s Starlink called Guowang and Thousand Sails. The latter is backed by the Shanghai government and has signed deals to offer satellite communications in Malaysia, Kazakhstan and Brazil.

Huo, the Deep Blue Aerospace chief executive, described SpaceX as a mentor for the industry. “There’s still a lot of work for us to do to catch up with the world’s leading edge," he said.

Write to Clarence Leong at clarence.leong@wsj.com