While the U.S. and China compete fiercely across multiple sectors, commercial space has been one area where Washington has maintained an edge over Beijing. But a new report from the Center for Strategic and International Studies (CSIS) warns that China's commercial space industry boom could change that.

According to the report published Wednesday, the number of Chinese space firms has grown from a few dozen to some 600 today, since Beijing opened the industry to private investment. The report highlights two Chinese firms, Guowang and Thousand Sails, that plan to deploy 10,000 satellites to compete with Starlink.

The report was led by Kari Bingen, a former Principal Deputy Under Secretary of Defense for Intelligence under the Trump administration from 2017 to 2020. Bingen's team says that "commercial launch and satellite broadband have emerged as the clearest examples of Beijing’s ambitions." The report notes the establishment of at least 10 startups as direct competitors to the state-run Long March rocket program.

"U.S. policymakers must understand these dynamics now, before the United States finds itself outpaced in sheer industrial capacity and output," the report warns. It adds that Chinese companies are capable of producing 4,100–5,000 satellites via "gigafactories" and "smart factories."

The report points to Elon Musk's SpaceX as both a benchmark and a catalyst. SpaceX has "become both a benchmark and catalyst for China’s launch startups and satellite broadband ventures, with entrepreneurs emulating the Falcon 9 and Starlink playbook," the report says.

Chinese firms are already expanding globally. Thousand Sails has pursued agreements with Brazilian and Indonesian companies to "expand rural satellite internet." Another Chinese firm, GalaxySpace, has "positioned Thailand as a regional hub providing integrated networking solutions and secured agreements in more than 10 countries."

The report also highlights China's Belt and Road Initiative, which consolidates "market-oriented space services such as broadband, imagery, and broadcasting to partner nations" via the "Space Silk Road" or the "Spatial Information Corridor."

Notably, NASA Administrator Jared Isaacman has said the U.S. is in a space race with China, with Beijing targeting a moon landing by 2029.