September 18, 2025
In a significant move that intensifies the burgeoning commercial space race within the nation, Beijing-based launch startup iSpace has successfully closed a substantial Series C funding round. The announcement, made from the company’s headquarters in the bustling Zhongguancun district, comes precisely as its engineering teams are conducting a critical series of hot fire tests for the powerful variable-thrust rocket engines destined for its reusable Hyperbola-2 (SQX-2Y) rocket. This confluence of financial backing and technical progress signals a pivotal moment, not just for iSpace, but for the entire landscape of China’s private aerospace sector, which is rapidly pivoting towards the reusable launch vehicle paradigm pioneered by SpaceX but now fiercely contested on a global stage.
The funding round, reportedly totaling $100 million, was led by a consortium of state-affiliated investment funds and private venture capital firms with a keen interest in strategic technologies. While iSpace declined to disclose the exact valuation, industry analysts suggest this injection of capital pushes the company’s total raised capital well past the $500 million mark, solidifying its position as one of China’s best-funded private aerospace entities. A spokesperson for the lead investor, China Aerospace Capital, stated that the decision was driven by “exceptional confidence in iSpace’s technical roadmap and its demonstrated execution capabilities, particularly in the complex domain of liquid-propellant rocket engines.” This substantial financial vote of confidence is earmarked explicitly for accelerating the final development, testing, and inaugural launch campaigns for the Hyperbola-2 program.
The urgency of this funding is underscored by the live-fire drama currently unfolding at iSpace’s dedicated engine test facility in the Gobi Desert. There, engineers are putting the company’s 80-tonthrust JD-1 (Jingdi-1) methalox (methane-liquid oxygen) engine through its paces. The JD-1 is the technological heart of the Hyperbola-2, and its successful development is the single greatest determinant of the project’s success. The current test campaign is focused on one of the engine’s most challenging and essential features: deep throttling. For a rocket to make a controlled, propulsive landing, its engines must be capable of drastically reducing their thrust to slow the vehicle’s descent just before touchdown. This requires a level of mechanical and combustion stability that has eluded many established aerospace entities for years.
Dr. Liang Wei, iSpace’s Chief Propulsion Engineer, provided a cautiously optimistic update from the test site. “The hot fire tests are proceeding according to a very rigorous schedule. We have successfully demonstrated multiple long-duration burns and are now deep into the throttling sequence validation. The data we are gathering on the performance of the turbopumps and the injector plate under variable flow conditions is invaluable. Each test, whether it runs for the full planned duration or we identify an anomaly to address, is a step forward. The combustion stability at low throttle settings remains a formidable challenge, but our modeling is proving accurate and our design resilient.” This focus on rapid iteration—testing, learning, and improving—is a core tenet of the new space philosophy that iSpace and its competitors are embracing.
The success of the Hyperbola-2 is paramount for iSpace, which, despite being the first Chinese private company to achieve orbit with its solid-fuel Hyperbola-1 rocket in 2019, has since faced setbacks, including launch failures that highlighted the volatility of the launch industry. The pivot to a reusable, liquid-fueled medium-lift rocket is a strategic necessity to achieve the low-cost, high-frequency launch cadence demanded by the booming market for satellite constellations, particularly for Earth observation and IoT communications. iSpace is not alone in this pursuit. The Chinese commercial space arena has become a cauldron of competition, with half a dozen firms vying for supremacy.
Most notably, iSpace finds itself in a direct and very public race with its chief rival, Landspace. Just last month, Landspace’s Zhuque-3 rocket, also powered by methalox engines, completed a successful 100-second full-duration static fire test of its first stage. The Zhuque-3, with a slightly larger payload capacity than Hyperbola-2, is also designed for full reusability and is targeting its maiden flight in 2026. The parallel progress of these two companies is creating a dynamic similar to the Boeing-SpaceX competition in the United States, driving innovation and pace. Other players like Galactic Energy, which is developing the reusable Pallas-1 kerolox rocket, and Deep Blue Aerospace, focused on its Nebula-1 vehicle, are also making significant strides, ensuring the “reusable rocket race” in China is a multi-lane sprint.
This intense domestic competition is unfolding against a backdrop of strong, albeit complex, government support. The Chinese national strategy, as outlined in its latest five-year plans, explicitly encourages “the healthy development of the commercial aerospace sector” as a complement to the state-run programs of China Aerospace Science and Technology Corporation (CASC). The government’s goals are multifaceted: to stimulate technological innovation, capture a significant share of the global commercial launch market, and create a resilient and redundant space infrastructure. This state-level endorsement provides private companies like iSpace with not only potential investment but also access to infrastructure, expertise, and, crucially, a pipeline of domestic customers needing to launch satellites.
Professor Ai Ming, a space policy analyst at the Chinese Academy of Sciences, observes that this model is uniquely Chinese. “What we are witnessing is a carefully orchestrated, state-guided capitalist approach to space technology. The government sets the strategic direction and provides the foundational support, but then allows—and even encourages—private enterprises to compete fiercely on the technical and operational execution. This competition is a powerful catalyst. It is forcing companies to innovate at a breathtaking pace, to adopt agile manufacturing techniques, and to aggressively pursue cost-reduction measures that were previously not a priority for the state sector. The hot fire tests we see from iSpace and Landspace are not just about engine performance; they are the visible manifestations of this new, competitive ecosystem.”
The ultimate prize for the winner of this race is staggering. The global demand for launch services is projected to grow exponentially over the next decade, and reusability is seen as the only way to meet this demand cost-effectively. Beyond commercial launches, a proven, reusable medium-lift rocket would have profound implications for national projects, including the deployment and maintenance of China’s planned Guowang low-Earth orbit broadband megaconstellation, a direct competitor to SpaceX’s Starlink. Furthermore, the technology demonstrated on Hyperbola-2 and its competitors—particularly the methalox engines—provides a direct technological pathway to larger, reusable rockets capable of supporting lunar and deep-space ambitions.
For iSpace, the path forward is clear but fraught with challenge. The new funding provides a longer runway, but the technical hurdles remain immense. Following the completion of the JD-1 engine tests, the company must integrate a cluster of these engines onto a flight-ready first stage, conduct full-stage static fire tests, and finally, execute the high-stakes dance of the launch and landing attempt. A successful first launch and vertical landing will instantly catapult iSpace into an elite global club and validate its years of investment and effort. A failure, while a setback, is now viewed within the industry as an inevitable part of the learning process, thanks to the new space playbook.
As the sun sets over the Gobi Desert on September 18, 2025, the glow from another JD-1 engine test fire illuminates the stark landscape. It is a symbol of the heat and light generated by China’s reusable rocket race. With fresh capital in the bank and fire in its engines, iSpace is charging forward, betting that its technology and timing will allow it to not just compete, but to lead in the new era of space access. The coming months, filled with more tests, data, and ultimately, flight, will determine if that bet pays off, shaping the future of China’s presence in space for decades to come.
