Is China’s BeiDou satellite navigation system a challenge to US GPS?

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With a launch this week, China has completed the build-out of a satellite system called BeiDou (Big Dipper in English), which will be used for navigation and synchronization.

If you’ve read the headlines, you might think this system is a “rival” or “challenge” to GPS, the US Global Positioning System. This framing doesn’t really capture what it means for China—or Russia (Glonass), or the European Union (Galileo), or Japan (Quasi-Zenith)—to operate its own sat nav system.

These services are vital to the modern economy. Beyond providing guidance to planes, cars, robots, and people, the signals are also used to provide precise timing for financial transactions and communication networks. And they are provided free of charge, using public protocols.

So why spend the billions required to launch a sat nav system if you can use them for free? The answer is geopolitics and national security. Military forces rely on sat nav most of all, and the original network was developed and is still operated by the US Air Force.

The creation of BeiDou was reportedly spurred by a 1996 incident when Chinese missiles, which at the time were guided by American GPS, went awry after being fired near Taiwan as warning shots. Chinese officials suspected US interference, and vowed to abandon their reliance on the American system.

There are similar, if more limited, concerns on a commercial level. Heiko Gerstung, an executive at Meinberg, a German manufacturer of precision timing devices, notes that GPS signals in Europe have been disrupted when American presidents visit. This is presumably an intentional action for security purposes, but a problem for anyone who relies on sat nav to do business.

“We sense a growing concern from our worldwide customers regarding their dependency on a US controlled infrastructure that could be switched off regionally at any point in time when it serves the interest of the operators of that system,” Gerstung says. “That has been and continues to be a very strong motivation for other nations to create or renovate their own GNSS constellations.”

That competition at least creates an incentive to improve what are effectively public utilities. But despite nationalistic rhetoric around these systems, non-military users are unlikely to be forced to choose among them. Apple’s iPhones already support Glonass, Galileo, and GPS services, and Qualcomm already makes chips that can use those services and BeiDou as well.

In the long term, the main economic question is who will make the lion’s share of the devices that use these systems. A US-China Economic and Security Review Commission report argues (pdf) that in the near term, more sat nav constellations will benefit American companies who already dominate the international market. But the authors believe China’s government is likely to use the same subsidies and favoritism lavished on other domestic industries to win market share at home and eventually around the world.

Davof Xu, an official at the European Union Chamber of Commerce in China who works on satellite navigation issues, is quoted in the report observing that market access in China is a “general not a particular problem.” In other words, BeiDou isn’t a challenge to GPS; China’s economic system is a challenge to American hegemony. But you already knew that.

A version of this story was first published in Quartz’s Space Business newsletter.