China races to rival the U.S. with its own GPS system — but one analyst says it won't overtake the U.S. yet


China is set to become a major player in the “highly lucrative” satellite navigation market, as it seeks to compete with the U.S. government-owned Global Positioning System (GPS), an analyst said Monday.

But China’s homegrown Beidou system is not likely to overtake the GPS system for now, said Craig Singleton, adjunct fellow at the hawkish Foundation for Defense of Democracies.

“China has marked a major step in its race to increase market share in this highly 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 a major declaration about its technical independence from the West, which carries wide-ranging geopolitical implications,” said Singleton.

Flags of the U.S. and China fly along Pennsylvania Avenue in Washington, D.C., on Jan. 17, 2011.

Andrew Harrer | Bloomberg | Getty Images

More than 120 countries — including Pakistan and Thailand — are using China’s Beidou system for purposes such as monitoring traffic at 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 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 Beidou’s completion has rekindled concerns among some in the West about the privacy and security of Chinese technology. He explained that some people fear Beijing could use its technology to track individuals, such as dissidents or democracy activists.

Such concerns have come as U.S.-China competition heats up in the technology space. The U.S. under former President Donald Trump introduced export controls on several Chinese tech companies, including telecommunications equipment maker Huawei and top chipmaker SMIC, or Semiconductor Manufacturing International Corp.

President Joe Biden has kept many Trump-era restrictions on Chinese companies. Biden is seeking to boost investments in U.S. research and development so that his country can build tech capabilities to compete with China.

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

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

— CNBC’s Arjun Kharpal contributed to this report.



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