Globalisation: China...step by step...playing chess

Blocked by U.S., China finds it own way to space


BEIJING: For years, China has chafed at efforts by the United States to exclude it from full membership in the world's elite space club. So, lately, China seems to have hit on a solution: create a new club.

Beijing is trying to position itself as a space benefactor to the developing world - the same countries, in some cases, whose natural resources China covets here on Earth. The latest, and most prominent, example came last week when China launched a communications satellite for Nigeria in a project that serves as a tidy case study of how space has become another arena where China is trying to exert its soft power.

Not only did China design, build and launch the satellite for oil-rich Nigeria - it also provided a huge loan to help pay the bill. China has also signed a satellite contract with another major oil supplier, Venezuela. It is developing an earth observation satellite system with Bangladesh, Indonesia, Iran, Mongolia, Pakistan, Peru and Thailand. And it has organized a satellite association in Asia.

For China, the strategy is a blend of self-interest, broader diplomacy and, from a business standpoint, an effective way to break into the satellite market. Satellites have become status symbols and technological necessities for many countries that want an ownership stake in the digital world dominated by the West, analysts say.

"There's clearly a sense that countries like Nigeria want to have a stronger presence in space," said Peter Brown, a journalist who specializes in satellite technology and writes frequently about the satellite market in Asia. "As you look around the map, more and more countries are moving to get satellites up."

The more grandiose Chinese space goals, which include building a Mars probe and, eventually, putting an astronaut on the Moon, are based on a blueprint in which space exploration enhances national prestige and advances technological development. But Beijing also is focused on competing in the lucrative $100 billion commercial satellite industry.

In recent years, China has managed to attract customers with its less expensive satellite launching services. Yet it had never demonstrated the technical expertise to compete for international contracts to build satellites.

The Nigeria deal has changed that. Chinese engineers designed and constructed the geostationary communications satellite, called the Nigcomsat-1. A Chinese state-owned aerospace company, Great Wall Industry, will monitor the satellite from a ground station in northwestern China. It will also train Nigerian engineers to operate a tracking station in Abuja, the Nigerian capital.

Last week, a day after the launching, Ahmed Rufai, the Nigerian project manager for the satellite, was exultant as he paused between appointments at his Beijing hotel. Nigeria may be rich in oil, he said, but it lacks many of the basic building blocks of a modern, information-based economy.

"We want to be part of the digital economy," Rufai said, noting that Africa suffers more than any other continent from the so-called digital divide. "We are trying to diversify the economic base of the country."

Rufai predicted the satellite would pay for itself within seven years as Nigeria sold bandwidth to different commercial users. He also predicted major improvements for Nigeria itself: "distance learning" educational programs for remote rural areas, online public access to government records, a video monitoring system of remote oil pipelines to allow quicker responses to spills and the establishment of an online banking system.

Nigeria is a risky customer for any satellite manufacturer. It is consistently rated one of the most corrupt nations in the world, and at least one Western aerospace company has become embroiled in business disputes there.

"Business ventures with Nigeria have been difficult, to say the least," said Roger Rusch, president of TelAstra, a satellite communications consulting firm in California.

Nigeria put the project out for bidding in April 2004. Rufai said 21 bids arrived from major aerospace companies, but that nearly all of them failed to meet a key requirement: a significant financial package.

Rufai said the Western firms saw Nigeria as a major gamble. "Their response was very cool," Rufai said of one financial institution approached about backing the deal. "They said, 'Oh, Nigeria. Don't touch it.' "

China was not so cautious. With the satellite priced at roughly $300 million, the state-owned Export-Import Bank of China, or China ExIm, granted $200 million in preferential buyer's credits to Nigeria. The bank often provides the hard currency for Chinese soft power aspirations: In Africa, China ExIm has handed out more than $7 billion in loans in recent years, according to one recent study.

Quality remains a concern. Last year, China suffered a major setback with the failure of the Sinosat-2. It was the most sophisticated satellite ever made in China, and it suffered a systems breakdown on its first launching. The Nigerian satellite was delayed for three months so that it could be retrofitted.

Joan Johnson-Freese, chairwoman of the Department of National Security Studies at the U.S. Naval War College, said China still trailed major aerospace companies in the quality and sophistication of its satellites but that the strategy was working on multiple levels.

"They want to play a leadership role for developing countries that want to get into space," Johnson-Freese said in an interview earlier this year. "It's just such a win-win for them. They are making political connections, it helps them with oil deals and they bring in hard currency to feed back into their own program to make them even more commercially competitive."

Satellites also are becoming vital to Beijing's domestic development plans. In the next several years, China could launch as many as 100 satellites to help deliver television to isolated rural areas, create a digital navigational network, facilitate scientific research and improve mapping and weather monitoring.

But the Chinese focus on satellites has also brought suspicions, particularly from the United States, since most satellites are "dual use" technologies, capable of civilian and military applications.

China is overhauling its military in a modernization drive focused, in part, on developing the capability to fight a high-tech war.

Analysts say the Chinese determination to develop its own equivalent to the Global Positioning System is partly because such a satellite system would be critical for military operations if a war were to erupt over Taiwan.

Most alarmingly to Western countries, China conducted an antisatellite test in January by firing a missile into space and destroying one of its own orbiting satellites. Four months later, Washington is still trying to parse the Chinese motivations for the test, while China has offered little in the way of explanation.

For nearly a decade, even as China has participated in different projects with Europe, Russia and Canada, the United States has sought to isolate the Chinese space program in ways large and small. Export restrictions intended to block the illegal transfer of military technology now prohibit U.S. technology from being used on satellites launched in China.

The United States also has blocked Beijing from participating in the international space station. Chinese scientists are often denied visas to attend important space conferences held in the United States.

In fact, a debate is under way in Washington and within the U.S. aerospace industry about whether the export restrictions have damaged American competitiveness. Some European companies now build satellites without any American parts in order to avoid the export ban.

Eric Hagt, a director at the World Security Institute, testified in Washington this year that China's increasing investment in space has also made it feel more vulnerable at a time when the United States is advocating missile defense programs in the name of protection against terrorist states. China seems to believe Washington is determined to dominate space, he said.

The United States is also realizing that many parts of the world are happy to help China gave a bigger role in space. When the Nigerian satellite was launched, the blast-off was televised live to Nigeria. Nigerian newspapers proclaimed the satellite as a seminal moment in efforts to modernize the Nigerian economy.

Source: The International Herald Tribune, By Jim Yardley - Wednesday, May 23, 2007