China’s Beidou Gains Market Share and Challenges US GPS

China will become a major player in the “highly lucrative” satellite navigation market as it seeks to compete with the US government’s Global Positioning System (GPS), an analyst said Monday.

But China’s homegrown Beidou system is unlikely to outperform the GPS system for now, said Craig Singleton, deputy member of the Foundation for Defense of Democracies.

“China has marked an important step in his career to increase market share in this lucrative sector,” Singleton told CNBC’s “Squawk Box Asia.”

“The completion of the system also reaffirms China’s status as a world power. It represents an important statement about its technical independence from the West, which has far-reaching geopolitical implications, ”Singleton said.

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

Andrew Harrer | Bloomberg | fake images

More than 120 countries, including Pakistan and Thailand, are using China’s Beidou system for purposes such as monitoring port traffic 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.

‘Forked world’

Singleton said the completion of Beidou has rekindled concerns among some 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 have arisen as competition between the United States and China intensifies in the tech space. The United States under former President Donald Trump introduced export controls on several Chinese tech companies, including telecommunications equipment maker Huawei and major chipmaker SMIC, or Semiconductor Manufacturing International Corp.

President Joe Biden has maintained many Trump-era restrictions on Chinese companies. Biden seeks to boost investments in research and development by the United States so that his country can develop technological capabilities to compete with China.

For now, China’s Beidou system does not appear to threaten the dominance of GPS, Singleton said.

“At this point, it doesn’t look like Beidou is going to outgrow 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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