Space Economy

Access to low Earth orbit has undergone a structural transformation over the past fifteen years, shifting from a sovereign undertaking financed by the budgets of major states into a logistics service bought and sold by the kilogram. The global space economy reached roughly $626 billion in 2025, with commercial activity accounting for close to 78% of that total, and projections place it between $1 trillion and $1.8 trillion by 2035 — even though launch services on their own amount to no more than $14 billion. That disparity points to a basic truth: launch is not the market being contested. It is the gateway whose price determines the nature and the scale of everything that can be built beyond the atmosphere.   This structural shift rests on a single pivotal engineering innovation: recovering the first stage of the rocket and flying it again rather than discarding it after every mission. Recovery allows the capital cost of manufacturing to be distributed across multiple flights, and it demolished the price floor that had governed the market for decades. The consequence has been to narrow the technological contest over low-orbit reusability to two principal powers: the United States, which operates a mature fleet flying at an intensive and near-routine cadence, and China, which since mid-2024 has been conducting an accelerated, high-risk test campaign in pursuit of the same capability. The threshold of reaching orbit has therefore ceased to function as the technological dividing line between the two; the real remaining challenge lies in mastering precision guidance through the final metres before a safe landing.   Therefore, this analysis aims to unpack the economics of reusability and locate the true bottleneck within the cost structure; to then measure the gap between Washington and Beijing through two distinct indicators, namely the number of launches and the mass delivered to orbit; and finally to estimate the technical and temporal distance separating China from its first successful recovery, together with what its completion would mean for global launch pricing and for the budgets of the megaconstellations on which satellite internet services depend.

The global space economy is currently undergoing a profound structural transformation. Whereas the sector has historically been characterised by its heavy reliance on rocket propulsion capabilities and the vast capital investments required to deploy physical hardware into orbit, the focus is now shifting toward an economic model in which value creation is increasingly decoupled from material mass.   In this context, the contours of what may be described as a “software-defined space economy” are becoming increasingly evident. This shift is driven by the convergence of two core digital infrastructures: digital twins and space-based edge computing. At the same time, declining launch costs, resulting from advances in reusable launch vehicles, have shifted the primary determinant of economic efficiency. Rather than centring on mere access to space, value is now anchored in the operational efficiency of on-orbit assets, their embedded intelligence, and the length of their functional lifespan.   This paper argues that the sector’s future economic value—estimated to reach USD 1.8 trillion by 2035—will not be realised solely through an increase in the number of satellites launched, but rather through the digitisation of their life cycles and the processing of data at the source.   This analysis provides a comprehensive economic deconstruction of these technologies. It examines how “virtual modelling” is reshaping cost structures in space manufacturing, enabling companies such as Varda Space Industries and SpaceX to accelerate development cycles at software speed. It also highlights the roles of artificial intelligence and the Internet of Things (IoT) in establishing space systems capable of autonomous fault processing, thereby maximising returns by extending assets’ operational lifetimes. The analysis concludes by linking gains in operational efficiency to the sector’s overall growth, demonstrating how digital infrastructure forms the material foundation for emerging in-space manufacturing (ISM) markets and next-generation Earth observation services.