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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 ready to turn out to be a significant participant in the “extremely profitable” satellite tv for pc navigation market, as it seeks to compete with the U.S. government-owned Global Positioning System (GPS), an analyst mentioned Monday.

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

“China has marked a significant step in its race to enhance market share on this extremely profitable sector,” Singleton instructed CNBC’s “Squawk Box Asia.”

“The completion of the system additionally reaffirms China’s standing as a world energy. It represents a significant declaration about its technical independence from the West, which carries wide-ranging geopolitical implications,” mentioned Singleton.

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

Andrew Harrer | Bloomberg | Getty Images

More than 120 international locations — together with Pakistan and Thailand — are utilizing China’s Beidou system for functions akin to monitoring site visitors at ports or guiding rescue operations, the analyst mentioned.

And Beijing is relying on its huge Belt and Road Initiative to “persuade” extra international locations to use Beidou, he added.

The Beidou system was completed in June last year. Chinese state media Xinhua said last week that the worth of Beidou-related industries will exceed 1 trillion yuan ($157.1 billion) by 2025.

‘Bifurcated world’

Singleton mentioned Beidou’s completion has rekindled considerations amongst some in the West about the privateness and safety of Chinese know-how. He defined that some individuals concern Beijing may use its know-how to monitor people, akin to dissidents or democracy activists.

Such considerations have come as U.S.-China competitors heats up in the know-how area. The U.S. underneath former President Donald Trump launched export controls on a number of Chinese tech corporations, together with telecommunications tools maker Huawei and high chipmaker SMIC, or Semiconductor Manufacturing International Corp.

President Joe Biden has kept many Trump-era restrictions on Chinese corporations. Biden is in search of to enhance investments in U.S. analysis and improvement in order that his nation can construct tech capabilities to compete with China.

Read extra about China from CNBC Pro

For now, China’s Beidou system would not seem to threaten the dominance of GPS, mentioned Singleton.

“At this level, it would not look as if Beidou goes to overcome GPS, but it’s actually potential that we’ll see a bifurcated system, bifurcated world between GPS and Beidou in the future,” the analyst mentioned.

— CNBC’s Arjun Kharpal contributed to this report.

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