Morgan Stanley Research Report Analysis: China's Rocket Recovery Technology Successfully Debuts, SpaceX Faces Biggest Long-Term Competitive Threat
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Morgan Stanley Research Report Analysis: China's Rocket Recovery Technology Successfully Debuts, SpaceX Faces Biggest Long-Term Competitive Threat
For SpaceX investors, China's catch-up is a long-term variable requiring continuous tracking.
Navigating Web3 tides with focused insightsBy: Rita
TechFlow Guide
On July 10, China's Long March 10B rocket successfully achieved orbital-level sea recovery, becoming the third entity globally to master this technology after SpaceX and Blue Origin. Morgan Stanley released a report immediately, with a straightforward and powerful title: "China Catching Up with Long March Series, Do Not Underestimate." Morgan Stanley believes SpaceX's biggest long-term competitive threat comes from China, rather than domestic US competitors. China has planned over 38,000 LEO satellites (Guowang 12,992, Qianfan 15,000, Honghu 10,000), orbital calculation is written into the 15th Five-Year Plan, and a 2,800-satellite "Star Computing" orbital supercomputing network has been launched. This is not a distant plan, but a reality being advanced.
Long March 10B Recovers on Maiden Flight, China Aerospace Catch-up Progress Exceeds Expectations
On July 10, China Aerospace Science and Technology Corporation successfully launched the Long March 10B rocket, completing its first orbital flight, and for the first time recovered the first stage rocket at sea using a floating net hook system. This test marks China's first controlled recovery of an orbital-level rocket, a key step towards routine rocket reuse. China becomes the third country to successfully recover an orbital-level rocket after SpaceX and Blue Origin.
The Long March 10B is the reusable single-core version of China's Long March 10 rocket family, designed for LEO missions, with a payload capacity of about 16 tons in reusable configuration, while also serving to validate technology for China's future manned moon landing and larger launch vehicle systems.
Morgan Stanley believes the technical significance of this recovery was underestimated by the market. US Space Force officials estimated early this year that China would need about 3.5 years to master rocket reuse technology; today's Long March 10B may accelerate this timeline. China has not yet demonstrated routine reuse or re-flight capabilities, but the technical path has been cleared.
China Aerospace Ecosystem: Government-Led + Commercial Companies, Unfathomable
China possesses an aerospace ecosystem seriously underestimated by the market. The government-led Long March rocket family supports the national goal of manned moon landing by 2030, while commercial rocket companies like LandSpace, i-Space, and Galactic Energy are also catching up quickly. In 2025, China conducted 90 orbital launches, making it the second-largest launching country globally after SpaceX, far exceeding Rocket Lab's 18 launches.
LandSpace's Zhuque-3 successfully reached orbit in 2025; the next flight will attempt first-stage recovery again, followed by reuse and re-flight missions. Reusable models of Long March 9, Long March 10, and Long March 12 are all in development.
Morgan Stanley believes China's manufacturing foundation capabilities can form comprehensive acceleration in launch frequency, rocket production, satellite deployment, and infrastructure construction; this is the biggest long-term competitive threat faced by SpaceX's launch business.
China LEO Constellations and Orbital Computing: From Plan to Reality
China's LEO satellite constellations have moved from planning to actual deployment phase. Guowang (GW) constellation plans 12,992 satellites, needing to complete 1,299 deployments before 2029; Qianfan (G60/SpaceSail) plans 15,000 satellites, targeting completion of 1,296 by end of 2027; Honghu constellation plans 10,000 satellites. By end of 2025, Chinese operators submitted spectrum applications for over 190,000 non-geostationary orbit satellites to the International Telecommunication Union, essentially strategic orbital resource positioning.
More worthy of attention is orbital computing. China has included space computing in the 15th Five-Year Plan, aiming to advance aerospace, satellite internet, AI computing, and space-ground integrated digital infrastructure. China Aerospace Science and Technology Corporation has planned a five-year space data center plan, integrating cloud-edge-end capabilities. In May 2025, ADA Space and Zhejiang Lab launched the first batch of 12 satellites, aiming to build a 2,800-satellite "Star Computing" orbital supercomputing network.
Morgan Stanley views China as the most important long-term competitor in the field of orbital computing, due to state support, domestic launch capabilities, satellite manufacturing scale, and continuous policy focus.
TechFlow Perspective
The core judgment of this Morgan Stanley report is that China is becoming SpaceX's biggest long-term competitive threat. Catching up requires SpaceX to stand still, while becoming a threat requires SpaceX to continue progressing but China progresses faster. The gap in launch frequency is narrowing rapidly; in 2025 SpaceX launched 165 times, China 90 times, while Chinese commercial rocket companies' reusable models will be intensively put into operation between 2026 and 2027.
For SpaceX investors, China's catch-up is a long-term variable that needs continuous tracking. China's rocket reuse technology has proven feasibility; the next step is proving economics. Once China achieves launch costs close to SpaceX's level, the pricing power and share landscape of the global launch market will face revaluation.
For A-share investors focusing on China's aerospace industry chain, the breakthrough in rocket recovery technology means the logic of declining launch costs is being realized; downstream satellite internet and orbital computing business models will benefit accordingly. If launch costs truly come down, the deployment speed of China's LEO constellations may be faster than market expectations.
Disclaimer
This article is a compilation and interpretation by TechFlow Research of a third-party broker research report (Morgan Stanley, July 10, 2026). The ratings, target prices, earnings forecasts, and related judgments cited in the text are the views of the broker's analysts, representing only the position of their affiliated institution, not representing the views of TechFlow Research, nor constituting any investment advice.
The market carries risks; decisions must be independent. This article should not serve as the basis for buying or selling any securities.
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