China’s Scaling Prowess Comes For Fusion

The “China model” of energy technology development, to the extent there is one, has largely rested on marrying state capital with iterative and process innovation in the private sector. Since the country has spent decades honing its manufacturing prowess—and has an enormous domestic market for deployment—Chinese companies now excel at taking something that exists and scaling it 10x or 100x. In other words, the Chinese economy today is optimized for commercializing technologies and driving down their cost in the process.

This pattern is prominently exhibited in cleantech, from solar and wind to batteries and nuclear. China did not invent any of these technologies (0 to 1 innovation), but it is now the largest single producer and consumer of all such products (1 to 2 innovation). It is this rapid convergence on manufactured technologies that has generated much consternation across advanced economies over how to compete with China.

Still, China has yet to demonstrate whether its model can succeed in frontier energy technologies, particularly the holy grail of nuclear fusion. The fusion story has a familiar arc: the United States has led the way since the 1950s, and China has been quietly catching up. Indeed, over the last couple decades, China’s state-driven investments in fusion research have borne fruit—it has arguably eked ahead of the United States in some aspects of fusion technology, such as tokamak magnetic confinement.

Now that fusion energy appears to be nearing an inflection point, the race to commercializing it is either country’s to lose. While the United States has put most of its eggs in the private sector basket when it comes to fusion, China will clearly double down on its state-driven model to support the nascent industry.

Few countries can meaningfully tackle fusion because it is exceptionally challenging and very expensive, requires concentration of the right talent pool, and lacks commercial viability. No surprise, then, that it is the world’s two energy superpowers that are giving it their best shot. Here we briefly lay out the state of play in commercializing fusion.

Enduring Commitment Behind Fusion

Once strategic industries find their way into one of China’s five-year plans (FYP), state money and support will flow towards them. Fusion is no exception. It has been a national priority for at least 20 years, and in the current FYP, Beijing targeted 2040 for achieving power generation from its first experimental fusion reactor.

As a result, China’s public funding has flowed to fusion R&D to the tune of $1-$1.5 billion annually in recent years. While that may not be a massive aggregate sum, it far exceeds the $900 million in total annual public funding for the rest of the world. In contrast, US private funding towards fusion has fluctuated significantly, averaging $200–$500 million per year, with a one-off spike to above $2.5 billion in 2021. That this Chinese public funding is relatively stable helps to insulate fusion R&D from market pressures and short-term volatility like budget cuts.

The state’s direct involvement serves another important function: it signals to local governments and the private sector to start investing in this arena. For instance, Chinese fusion private equity investment surpassed that of the United States in 2023, reaching over $1 billion. Moreover, take China’s top two private fusion companies—Xi’an Startorus Fusion and Neo Fusion—both are backed by substantial provincial support (see Figure 1). That support usually comes in the standard triple package of cheap financing, cheap land, and cheap regulatory cost.

Figure 1. Beijing’s Fusion Drive Spurs Funding from Private Investors and Local Governments
Note: SME = small and medium enterprise.
Source: Integral, Aiqicha.

While this public and private sector symbiosis is common in strategic sectors, Chinese companies have also been competing in the patent filing race. Whether it is Huawei, BYD, or pretty much any leading company, they’ve all diligently filed thousands of patents.

This is also true in fusion. Not only has Tokyo-based Astamuse ranked China first based on patent volume, feasibility, and exclusivity, China accounted for over a quarter of the 1,133 fusion-related patents filed between 2011 and 2022 —the most of any country—a sharp increase from less than 10% during 2001 to 2010 (see Figure 2).

Figure 2. China Saw a Sharp Increase in Fusion Patents Filed over the Past Decade
Note: The graph shows the number of new patents filed in each year.
Source: Astamuse.

Converging or Leading in Fusion?

Making fusion energy a reality requires both technological breakthroughs and commercialization. On the former, both the United States and China have had significant technological breakthroughs, while China’s state-led model may have a leg up on the latter.

In December 2022, the US National Ignition Facility (NIF) achieved net positive energy from laser-based fusion. Although the energy generated was only enough to power a 100-watt bulb for two hours, the milestone nonetheless marked the first time fusion produced a net energy gain. Shortly thereafter, in 2023, China’s Experimental Advanced Superconducting Tokamak (EAST) in Hefei, Anhui sustained plasma at 70 million °C—the temperature of the core of the sun—for over 17 minutes. It also maintained a 1,066-second run in high confinement mode, representing a huge leap forward from its previous 403-second record just a year ago.

When it comes to commercialization, China’s state-private symbiosis could prove advantageous in several respects. The country’s private sector is focused on iterative and manufacturing innovation. Shanghai’s Energy Singularity, for example, has already managed to halve the size of its Honghuang 70 reactor—the world’s first fully high-temperature superconducting tokamak. A smaller design can cut construction timelines significantly from decades to years, thereby lowering per unit cost over time (similar to the concept of small modular reactors).

Meanwhile, the Chinese state will do what it does best: corral resources and create domestic demand. To consolidate resources, the Chinese government has already established state-owned China Fusion Energy Inc., as well as a consortium led by China National Nuclear Corporation, largely composed of government-backed industrial giants such as China Baowu Steel Group, China Aerospace Science and Industry Corporation, and the State Grid Corporation.

China Fusion Energy Inc. is tasked with managing and supervising fusion-related projects. Meanwhile, the consortium is already active in solving some of the most pressing technical challenges with fusion, including coordinating an integrated supply chain that spans raw material production, reactor assembly, and grid integration (see Figure 3).

Figure 3. Fusion Consortium Integrates Resources to Build Supply Chain
Source: Chinese media and company press releases.

Such an approach recognizes that commercializing fusion relies on tackling diverse and interconnected challenges that no single player can address alone. Steel giants like Baowu Steel will be critical in manufacturing advanced stainless-steel cladding that prevents tritium leakage into reactor coolant—a key hurdle in fusion safety. The involvement of aerospace companies is likely for lending their expertise in composite materials that can withstand extreme heat, a similar challenge in designing rockets.

When it comes to creating demand, Beijing has few qualms about mandating domestic deployment of fusion and purchases by utilities. If fusion remains more expensive than other options, the government will likely offer subsidies. It would be similar to Beijing requiring its state-owned airlines to procure the COMAC commercial jet. Instead of the “last mile,” the Chinese state is in the business of creating that “first mile” of a market where none exists— because profit is not its underlying goal.

Commercializing fusion—which requires highly skilled talent, advanced materials engineering, and scalable infrastructure—takes coordination and delegation. In China, the state will be the conductor and first chair of this strategic symphony. Though fusion is no less strategic for the United States, its private-sector driven and fragmented approach brings its own set of bottlenecks. We will look at challenges in US fusion commercialization in the future.

Amy Ouyang is a research associate at MacroPolo. You can find her work on the global energy transition and its intersection with the economy, technology and industrial policy here.