How a Chinese Rocket Failure Boosted Elon Musk's SpaceX in Indonesia

SPACE RACE

China launched a record 67 rockets last year, out of 223 globally, according to a report by Harvard professor and orbital tracker Jonathan McDowell. The vast majority were launched by CGWIC.

That put China only behind the United States, which had 109 launches, 90% of which were done by SpaceX, the report found.

Washington and Beijing are also competing over satellite-based communications networks.

SpaceX's Starlink, which owns around 60% of the roughly 7,500 satellites orbiting Earth, is dominant in the satellite internet sphere. But, last year, China began launching satellites for its rival Guowang broadband mega-constellation.

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U.S. military officials have said China wants to use satellites and space technology to spy on rivals and increase military capabilities.

China's Foreign Ministry said in a statement to Reuters the U.S. allegations were a smear and that Washington was using the concerns as a pretext to expand its influence in space.

Unlike its Chinese counterpart, NASA relies primarily on privately owned rockets from firms such as SpaceX, which has billions of dollars in U.S. government contracts.

However the U.S. government and military are concerned about their reliance on SpaceX, especially given Musk's muscular business style, according to one current and one former U.S. official working on space policy.

While legacy U.S. defense contractors like Boeing BA.N and Lockheed Martin LMT.N typically consult the State Department before making foreign deals, Musk and SpaceX dealt directly with Jakarta, the two officials said.

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In response to Reuters' questions, a Lockheed Martin spokesperson said the company "works closely with the U.S. Government, our allied nations, and international customers". Boeing declined to comment and the State Department did not respond to requests for comment.

Pentagon spokesperson Jeff Jurgensen declined to answer specific questions about SpaceX, but said the Department of Defense's "many space industry partnerships have a proven track record of success".

Nicholas Eftimiades, a former U.S. intelligence officer and expert on Chinese espionage operations at the Atlantic Council, a Washington-based think tank, said SpaceX's CEO had ruffled some feathers in the U.S. capital: "Elon Musk does things his way and some officials don't like that".

Nonetheless, Musk's deals bucked a long-running trend of Western firms losing out to Chinese businesses in Indonesia, a sprawling archipelago of over 17,000 islands that is home to more than 270 million people.

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Widodo said in October that Beijing is set to become the largest foreign direct investor in Indonesia within two years, surpassing Singapore.

Chinese companies dominate the internet and 5G market, so Beijing was the obvious partner for satellite launches until the 2020 incident, said Andry Satrio Nugroho, an economist at the Jakarta-based Institute for Development of Economics and Finance think-tank.

"Indonesia has a close relationship with China across many sectors. It's difficult to break China's dominance."