Chinese Beidou gains market share and challenges American GPS

Chinese Beidou gains market share and challenges American GPS

China is poised to become a major player in the “very lucrative” satellite navigation market as it seeks to compete with the US government-owned global positioning system (GPS), an analyst said on Monday.

But China’s Beidou system is not expected to overtake GPS just yet, said Craig Singleton, associate with the Falcon Foundation for Defense of Democracies.

“China has marked a major milestone in its race to increase its market share in this very lucrative sector,” Singleton told CNBC. “Squawk Box Asia”.

“The completion of the system also reaffirms China’s status as a world power. It represents a major declaration of its technical independence from the West, which has broad geopolitical implications,” Singleton said.

The flags of the United States and China fly along Pennsylvania Avenue in Washington, DC on January 17, 2011.

Andrew Harrer | Bloomberg | Getty Images

More than 120 countries – including Pakistan and Thailand – use China’s Beidou system for purposes such as monitoring traffic in ports or guiding rescue operations, the analyst said.

And Beijing is counting on its massive Belt and Road initiative to “convince” more countries to use Beidou, he added.

The Beidou system was completed in June of last year. Chinese State Media Xinhua said last week that the value of Beidou-related industries will exceed 1 trillion yuan ($ 157.1 billion) by 2025.

“ Bifurcated world ”

Singleton said the Beidou completion rekindled concerns in the West about the privacy and security of Chinese technology. He explained that some people fear that Beijing could use its technology to track individuals, such as dissidents or democracy activists.

Such concerns arose as US-Chinese competition intensified in the tech space. The United States under the former president Donald trump introduced export controls on several Chinese tech companies, including telecommunications equipment maker Huawei and big chipmaker SMIC, or Semiconductor Manufacturing International Corp.

President Joe biden possesses kept many restrictions from the Trump era on Chinese companies. Biden seeks to boost investment in research and development in the United States so that his country can develop technological capabilities to compete with China.

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As of yet, China’s Beidou system does not appear to threaten GPS dominance, Singleton said.

“At this point, it doesn’t look like Beidou is going to beat GPS, but it’s certainly possible that we will see a forked system, a forked world between GPS and Beidou in the future,” the analyst said.

– CNBC’s Arjun Kharpal contributed to this report.

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