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It is only at top of LEO to MEO reusable launches.
It is still trying to catch up the same engine performance in class of SSME or RD-0120 that were made decades ago.
It is still trying to catch up the same payload class of rockets such as Saturn V and N-1 decades ago.
You are dead wrong about that. The Raptor engine is the first full-flow staged combustion engine that has flown. That *is* a big thing. It was attempted in the past both in the Soviet Union and the USA but it never went past bench testing because of its design complexity. In some cases the prototypes exploded on the test stand in other cases they never went past subscale tests. It also works on LOX/Methane and is actually the first launcher engine using that fuel combination. Which again has been talked about for decades but never actually been used. It is futile to compare it with the SSME or RD-0120 on specific impulse because it will never have the same specific impulse because of the fuel combination they chose. The fuel was specifically chosen to have a combination of higher storage density than hydrogen and higher Isp than kerosene. So it will have Isp between both fuels. No it is not less advanced, it is in fact more advanced than the SSME. It uses a more advanced engine cycle, it uses channel wall nozzle, it doesn't need those stupid resonance chambers, it is superior overall. You could argue that the RD-0120 has some design advantages in that it is lighter weight because it is a single shaft engine. But it still uses a less advanced combustion cycle.
The RD-0120 was in fact more advanced than the SSME because of the single shaft-design, no resonance chambers, and channel wall nozzle. Which proves some people on Youtube who say the Soviet Union never could do LOX/LH2 engines properly are in fact totally incorrect. The Soviets were late at the game but they in fact did it better than the USA.
The Soviets basically did an engine better than the SSME and did an oxygen rich LOX/Kerosene staged combustion engine for the same vehicle (Energia). Each a much greater achievement in propulsion technology than the Shuttle SSME design. But also part of the reason why they went bankrupt I guess. USA after the oil crisis and Nixon taking the dollar off the gold standard and getting into fiat currency had to nerf the Shuttle program so it used solids instead of LOX/Kerosene first stage. The Shuttle is a case study on how not to do cost cutting. The design changes in fact cost lives and made the program uneconomic against expendables setting the space launch industry back by at least three decades.
There is no trouble to China because US and China does not share the same market. US will never allow China to launch satellite made in US. Nor will China allow SpaceX or any American launchers to touch China's satellite. The countries outside of the two who is not able to make their own satellite or rocket will make choice based on geopolitical consideration rather than price. It is NOT free market like cars and smartphones.
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Well, sure, but the ability to launch larger payloads more cheaply, by at least an order of magnitude, is strategically and militarily significant. It means all sorts of things you wouldn't launch can be launched. Like a high resolution satellite constellation which covers the entire Earth, or a space based long wave radar network, or even programs like Brilliant Pebbles ABM might return to the table.
China is not exactly out of the race though. The YF-100 engine technology is quite advanced and on par with the RD-171 family of engines. It if it is used in the 921 rocket as an expendable it has got great potential as a cheaper launcher than Long March 5. It would not be surprised if it cost like 1:2 or 1:3. To decrease cost further they need to make it reusable. I think they have enough design expertise right now where they could design a multiple reusable LOX/Methane rocket with staged combustion (not full-flow staged combustion) and get it to work. Make it deeply throttleable and you can make a nice reusable rocket.
I still think Starship is too large for its own good and reusing the second stage in the way they want to do it will be uneconomic but at least SpaceX are trying something new for a change.