China’s highest-ranking economic body has approved plans for a multi

billion dollar commercial satellite research city, a move interpreted by Western analysts as a long-term commitment

to the

development of a commercial satellite business.

The initiative was approved by China’s National Development and Reform Commission.

The 23 square kilometer National Civil Aerospace Industrial Base will be built in Xi’an, in central China. The center “will focus on developing satellites, new materials, energies, IT and other technologies for the benefit of civil application,” according to a Jan. 21 story in

, the official Chinese news agency.

The province is already home to the Xi’an Satellite Tracking and Control Center, as well as the Xi’an Aerospace Propulsion Testing Technique Institute, which is described on its Web site as “the largest experimental centre in China for liquid propellant rocket.”

The enterprise should produce revenue

of about

20 billion yuan [$2.8 billion] in 2012, the Xinhua story claimed.

Dean Cheng of the Center for Naval Analyses, one of the top U.S. analysts

following China’s space program, said the commission is the “highest level” economic body in China, a clear indication the country expects the venture to succeed, he said.

The Xinhua account

said the new site “will jointly promote the growth of civil aerospace business, technological renovation and application of such technologies.” While this may promote such industries, several China analyst in the United States

said they believed the main focus of the new facilities

would be to encourage

downstream businesses that add value to satellite

products, just as

many businesses have taken

GPS signal and data and built large new

business sectors.


is enthusiastic about space investments, according to Joan Johnson-Freese, professor at the Naval War College, Providence, R.I., and a veteran China space watcher. “Space is a good investment for a whole number of reasons. Anything that is industrial – China is all for it. If it’s dual use they are all for it,” she said.

Cheng and Johnson-Freese note that China has declared publicly that telemedicine and other satellite applications such as distance learning are important to linking the enormous land mass of the Asian economic powerhouse.

“The idea that they are going to stay just in launch services is wrong. They have said clearly they are going to go into satellite services,” Cheng said.

But the U.S. analysts think the industrial base of such businesses – launchers and satellite operations centers – will remain largely controlled by the Peoples Liberation Army, whose 2nd Artillery Corps controls launch facilities and operations centers for space assets.

“Developing a civilian infrastructure is a different issue. First, it requires a political decision to create such a thing,” Cheng said, adding that creation of a civilian infrastructure – launch facilities, personnel and equipment – is separate from the issue of creating commercial businesses.

But the

development in Xi’an could

provide an opportunity for China to continue privatizing some more of its large industrial ventures. And that might

include some portions of the space businesses now controlled by the army, Ch


and Johnson-Freese said.

“This is part of their 10-year plus effort to break up the large state owned enterprises. The last of those are in strategic industries, which includes space,” Johnson-Freese said.

Cheng agreed this was possible but noted the enormous costs involved, “if you are going to develop parallel infrastructures, civilian and military. “In the long run, Johnson-Freese said the new development in Xi’an is a strong indication that China wants to become the premier supplier of commercial satellites to emerging economies such as Brazil and Nigeria, as well as the cash-rich Middle Eastern states.