China’s Beidou gains market share, challenges U.S.’ GPS

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

But China’s indigenous Beidou system is unlikely to overtake the GPS system for the time being, said Craig Singleton, an associate fellow with the Hawkish Foundation for Defense of Democracies.

“China has taken an important step in its race to increase market share in this extremely lucrative sector,” Singleton told CNBC’s Squawk Box Asia.

“The completion of the system also confirms China’s status as a world power. It is an important declaration of its technical independence from the West that 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 | Getty Images

More than 120 countries – including Pakistan and Thailand – use China’s beidou system to monitor traffic in ports or guide 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.

“Divided World”

Singleton said the completion of Beidou raised concerns about the privacy and security of Chinese technology among some in the West. He said that some people fear that Beijing could use its technology to track down people like dissidents or democracy activists.

Such concerns arose as technology competition intensified between the US and China. The US under former President Donald Trump introduced export controls for several Chinese technology companies, including telecommunications equipment maker Huawei and top chip maker SMIC and Semiconductor Manufacturing International Corp.

President Joe Biden has retained many of the Trump-era restrictions on Chinese companies. Biden seeks to increase investment in U.S. research and development so his country can build technology capacity to compete with China.

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Right now, China’s beidou system doesn’t appear to threaten GPS dominance, Singleton said.

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

– CNBC’s Arjun Kharpal contributed to this report.

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