US-China orbital arms race is forging a trillion-dollar space economy

If the years 2020 to 2025 were defined by the artificial intelligence (AI) revolution – a period where algorithms helped create tech titans such as Nvidia, OpenAI and Oracle – then 2026 represents a far more exciting and expansive paradigm shift.

We are now pivoting from the digitisation of the Earth to the capitalisation and domination of low-orbit space. The golden age of the space economy has arrived, signalled by last month’s announcement that SpaceX is preparing for a June initial public offering, with a projected US$1.5 trillion valuation and a record-breaking US$50 billion in raised capital. An alliance of Wall Street giants is readying what could be the largest public offering in human history.

Still, beyond the ticker symbols lies a new reality executed by the fusion of SpaceX and the AI start-up xAI. This new ecosystem represents the ultimate frontier, where the boundaries between orbital connectivity and AI infrastructure and application merge into a single trillion-dollar future.

This is no longer merely a race for market share; it is a dual-track competition where private innovation and military strategy have become inextricably linked. While the private sector builds the infrastructure for an emerging orbital economy, national governments increasingly view these commercial networks as the digital high ground.

In this new era, the space race is fought on two fronts. One is by CEOs and venture capitalists seeking the next trillion-dollar breakthrough, and the other is by defence departments securing the orbital assets that now underpin modern deterrence.

In the 20th century, the space race was a duel between the United States and the Soviet Union, with their space programmes serving as instruments of national prestige and military deterrence. It was a contest measured in flag-planting milestones, funded largely by the public purse and justified by the Cold War ideological struggle.

South China Morning Post