China to Launch Satellite for France's Eutelsat China's rocket industry has scored a commercial coup with its first deal in more than a decade to launch a private communications satellite for a major Western operator, according to U.S. and European industry officials.

The agreement to put a five-ton satellite for France's Eutelsat Communications into orbit, apparently wrapped up in the past few days, represents a high-water mark for Beijing's campaign to expand the scope and global influence of Chinese space technology. Coupled with Beijing's ambitious satellite-construction program and aggressive space-exploration efforts, the latest move is likely to heighten concerns inside the Pentagon and on Capitol Hill about China's ascendancy as a space power.

It comes as President Barack Obama's administration is re-examining U.S.-Chinese relations across the board, and U.S. lawmakers are gearing up for another debate about possibly loosening American export-control restrictions affecting space hardware. Eutelsat's gambit is especially controversial because the company is a major supplier of commercial satellite capacity to the Pentagon and other U.S. agencies in the Mideast.

A Eutelsat spokeswoman declined to comment. Saying he wasn't aware of any specifics, a spokesman for the Chinese Embassy in Washington said "my government believes it's mutually beneficial for Chinese enterprises and their counterparts to engage in such ventures." The Pentagon has said it is studying the issue.

Since the late 1990s, U.S. policy restricting China from launching satellites made with U.S. parts has effectively barred it from launching mainstream Western commercial satellites, restricting it to dealing with second-tier operators linked to governments in Nigeria, Venezuela and parts of Asia.

But the example of the Eutelsat satellite -- which has no U.S. parts -- slated to be launched by a latest-generation Long March rocket in the second half of 2010, could prompt owners of other large commercial satellite fleets to enter similar arrangements with Chinese launch providers. It is significantly less expensive in most cases to use a Long March, versus comparable European, Russian or U.S. rockets. Depending on the size of the satellite, China's price can be 40% less than the $100 million for the most expensive launches on European rockets, according to industry officials.

In Eutelsat's case, officials said, the company also picked the Chinese because it needed to line up a launch quickly to compensate for the recent loss of another of its high-Earth orbit satellites in a malfunction.

The last launch of a big Western satellite with U.S. parts on a Chinese rocket was in 1998, when a Lockheed Martin Corp.-built satellite was launched for the Chinese company ChinaStar.

But since then, U.S. restrictions were tightened. During President Bill Clinton's administration, lawmakers conducted investigations prompted by allegations that some U.S. companies illegally passed satellite-related technology to Chinese entities.

Recently, the joint venture between France's Thales Groupe SA and Italy's Finmeccanica SpA -- Europe's leading satellite manufacturer and the company that made the Eutelsat satellite -- has developed a family of satellites without any U.S. content. Called Thales Alenia Space, the venture has sought to parlay launch contracts into a broader strategic partnership with the Chinese.

A Thales spokesman said Tuesday that "depending on a customer's choice," the satellite under construction "can be launched by any commercial launcher."

China's policy makers and space officials for years have talked about their desire to expand commercial offerings. But the escalating U.S. policy debate entails risks for Thales, an aerospace supplier also hoping to increase business as a subcontractor on Pentagon programs.

With roughly $16 billion in annual revenue world-wide, Thales supplies parts for such things as Pentagon satellites and military radios, and is part of a team picked to provide a new air-traffic control system for the U.S. But there is sentiment in Congress to punish the French company for promoting Chinese space interests, which some lawmakers worry could hurt Boeing Co., Lockheed Martin Corp. and other U.S. aerospace companies.