Space is becoming an industrial economy

Shortly after space week in October, investment firm JP Morgan announced a $10 billion investment plan targeting industries critical for United States national security. In addition to things like nanomaterials, autonomous robotics and solar power, the announcement also focused on funding spacecraft and space launches.

JP Morgan’s emphasis on space-related “frontier” technologies is significant, because it signals an acknowledgment that space is becoming an investable sector. What remains unclear is whether capital markets have fully priced in what the shift implies.

There is now significant hype around emerging technologies such as artificial intelligence, quantum computing and nuclear fusion. But despite their promise, many of these will take years to mature. Meanwhile, it’s increasingly obvious that space has already become a mature arena, with a steady drumbeat of space-related innovations and a space-based economy projected to grow from over $600 billion to $1.8 trillion annually within a decade. 

But, as Donald Moore, CEO of the Space Finance Company and a space policy lecturer at the University of Michigan, puts it, “for the U.S. space market to prosper and grow to that full potential, it needs to have an equally mature capital structure, including the full range of venture capital, private equity, streamlined government contracts, debt capital and structured finance.”

The recently issued Executive Order on Ensuring U.S. Space Superiority reinforces that assessment. The administration plans to prioritize “growing a vibrant commercial space economy through the power of American free enterprise,” including attracting over $50 billion in private investment in space markets by 2028. The order underscores a widening gap between policy ambition and capital deployment.

That gap remains evident in the U.S. However, in China, the space industry is treated very differently. Unlike Western-based consulting firms and banks, which still lag in their recognition of the potential of space, Beijing now believes that the space economy could reach as high as $10 trillion by 2050. 

China’s optimism is grounded in observable trends. After years of stagnation, reusable rockets have become the key to unlocking the space economy. While entrepreneur Elon Musk’s SpaceX still has a near-monopoly on the launch market (with roughly 86% of all launches annually), China is quickly catching up with their own reusable rocket programs, and their current rockets are almost equally reliable. 

Beijing likewise understands that space is the new industrial base. China has landed on the far side of the Moon (to date, still the only nation to do so), launched an AI “supercomputing” satellite constellation, landed and communicated with a rover on Mars (only the second nation to do so), and launched its own crewed space station. A decade of steady execution, combined with newer rockets providing low-cost access, allows China to forecast commercial opportunities from space refineries and factories.

China also sees space as a resource hub, and for good reason. The Lunar surface contains helium-3, nearly unavailable on Earth, and is often discussed as a potential future input for nuclear fusion and quantum computing. Moreover, asteroid mining and space refineries offer a near-boundless supply of natural resources. Some near-Earth asteroids contain commercially significant concentrations of platinum-group metals and rare Earth elements. The Chinese understand this potential and are working toward large scale resource extraction — something that, if successful, would expand China’s current, commanding position relating to strategic minerals still further. 

Mining, however, is only the first step. The real prize is in-space manufacturing. Accordingly, China is now prototyping inflatable Lunar factories potentially capable of large-scale manufacturing, intending to leverage in-space service assembly and manufacturing capabilities to produce better semiconductors, purer pharmaceuticals, and structures far larger than anything we can launch into orbit. American firms such as Redwire, Varda and Axiom are already securing early-stage ISAM contracts, demonstrating that the U.S. has meaningful players in this field.

The stakes are enormous. In our book, Space Shock: 18 Threats that Will Define Space Power, we explore several alternative futures that are likely to occur if the U.S. is slow to invest in space. The analysis shows that investing $335-620 billion over the next decade would be enough to secure U.S. leadership in the emerging space economy. Achieving that scale, however, will require alignment on a coherent space vision from U.S. capital markets, investors and policymakers. 

Moreover, if space is becoming industrial infrastructure, then it will need to be financed the same way as industrial infrastructure. That means moving beyond venture capital toward debt finance, insurance markets, and long-duration contracts that are enabled by policymakers. 

Early aviation and rail transportation offer a model worth repeating. Those sectors benefited from government anchor customers, and financeable assets were built at scale through private capital. Similarly, space advancement will require public–private capital vehicles capable of scaling factories, power systems, and logistics beyond Earth. 

If U.S. capital markets fail to adapt, that high ground will inevitably be captured by China, which already understands the value of space as an economic domain of competition. 

Over the past half-century, limited progress in space led many investors to look elsewhere. Not so now. The space economy has doubled over the last decade and will be worth trillions by mid-century. Either American companies will capture that value — or Chinese state enterprises will.

Richard M. Harrison is Vice President of the American Foreign Policy Council in Washington, DC. Peter A. Garretson is a Senior Fellow in Defense Studies at the Council. The two are co-authors of the recently published Space Shock: 18 Threats that Will Define Space Power (Armin Lear Press, October 2025).

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