Our destiny beyond the Earth is not only a matter of national identity but a matter of national security—Donald Trump
Perhaps in a classic case of the Sputnik Syndrome, president Trump appears deadset on ‘Making America Great Again’ by regaining its space leadership. The president has just reiterated his space ambitions and no, this was not through his usual pompous ad-libbing-- the C-in-C of the United States Armed Forces has just directed the Pentagon to draft legislation that Congress can use to create a Space Force as part of the U.S. Air Force.
On Tuesday, Trump signed a directive ordering the Department of Defense to create Space Force as the country’s sixth military branch. Space Policy Directive 4 (SPD-4) orders the Pentagon to draft legislation for Congress that will enable the creation of Space Force, a good 72 years since the Air Force was added to the nation’s military shortly after WWII.
"America must be fully equipped to defend our vital interests. Our adversaries are training forces and developing technology to undermine our security in space, and they're working very hard at that," declared the president during the signing of the directive.
The president said that by investing in new space capabilities to project military power was a necessary step in safeguarding the nation’s interests especially as far as safety and defense are concerned.
Ever since Russia launched the first artificial Earth satellite, Sputnik 1, in October 1957, beating the US to the punch, Americans have become hypervigilant that their economy would one day be eclipsed by some other country. Soviet leader Nikita Khrushchev famously promised to bury the US economically during the height of the powers of the USSR. Obviously, that did not happen. In other cases, the fear has been well-grounded—such as when the country worried that Japan would crush its steel, automobile, semiconductors, and supercomputers in the 1980s. That, too, did not materialize.
Now, China has stolen the spotlight. Or so it seems. Just how much of a threat has China become? Related: Major Gold Analysts Predict A Good Year For Precious Metals
The Sputnik Syndrome is frequently used as an antidote to complacency. But is Trump’s, and Americans,’ fear of the country’s space dominance being eclipsed misplaced? To answer that question, let’s look at the world’s space leaders. The big five space agencies (in alphabetical order) are:
• The Chinese National Space Agency (CNSA)
• The European Space Agency (ESA)
• The Indian Space Research Organization (ISRO)
• The Japanese Space Agency (JAXA)
• The American Space Agency (NASA)
NASA remains the planet’s largest space agency with an annual budget (2017) of $19.5 billion, or 0.47% percent of US GDP. Interestingly, China’s space agency, CNSA, has emerged from relative obscurity (created in 1993) to second largest with a 2017 budget of $11 billion, good for 0.9 % of the country’s gross domestic product.
It’s worth noting that the gap between American and Chinese incomes remain huge with the World Bank citing 2016 figures of $57,600 per capita for the U.S. vs. $8,123 for China. Still, it would be preposterous to discount the threat by China. The sheer size of its economy is only second to the U.S.’ while the country boasts a massive domestic market that makes it easier to launch new industries.
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The heightened spending by CNSA is not accidental. Chinese strategists now regard the ability to use space-based systems as an integral part of modern warfare. According to the U.S. Defense Department, China has been stepping up the militarization of space—the 2018 edition by the DoD came to the same conclusion. Some of its key goals include the development of a:
“real-time surveillance, reconnaissance, and warning system and is increasing the number and capabilities of its space systems, including various communications and intelligence satellites and the Beidou navigation satellite system.”
China has been aggressively pursuing advanced tech like AI and has the potential to become a very real military adversary to the U.S. The irony might be palpable, if a bit exaggerated, yet the Sputnik Syndrome remains a useful antidote to U.S. complacency to the Chinese threat.
For investors who would be like to follow Trump’s lead and gain exposure to the space economy, some of these companies or the SPDR Kensho Final Frontiers ETF(XKFF) would be a good place to start.
By Alex Kimani for Safehaven.com