The United States and China are locked in a high-stakes race to pioneer grid-scale nuclear fusion energy. After decades of leading the charge, the US is being challenged by China, which is now investing twice as much and building projects at an unprecedented pace.
Nuclear fusion, often hailed as the ‘holy grail’ of clean energy, offers the potential to generate four times more energy per kilogram of fuel than traditional nuclear fission methods. Moreover, fusion produces four million times more energy than burning coal, with zero greenhouse gas emissions and no long-term radioactive waste. Ignition Research projects that this market could be worth at least $1 trillion by 2050 if all goes according to plan.
However, as Dennis Whyte, a nuclear science and engineering professor at MIT, points out, “The only working fusion power plants right now in the universe are stars.”
The U.S. took an early lead using fusion technology with a hydrogen bomb test conducted back in 1952. Since then, scientists worldwide have been desperately trying to harness fusion reactions to generate power. Fusion reactions occur when hydrogen atoms reach extreme temperatures and fuse, forming a super-heated gas called plasma. The resulting mass shed in the process, theoretically, can be turned into significant amounts of energy. The main challenge lies in controlling the plasma. The two most popular methods involve using powerful magnets to suspend and control the plasma inside a tokamak, a metal donut-shaped device. Another strategy involves using high-energy lasers to compress a peppercorn-sized fuel pellet rapidly, causing it to implode. The US achieved a historic milestone in 2022 at Lawrence Livermore National Ignition Facility (NIF), producing net positive energy.
Private investment in U.S. fusion startups has skyrocketed since then, reaching over $8 billion compared to $1.2 billion in 2021, according to the Fusion Industry Association (FIA). The FIA has 40 member companies, with 25 based in the U.S.
Meanwhile, traditional nuclear power, which relies on fission rather than fusion, is also seeing a surge in investment. This trend is driven by the increasing power demands of AI data centers, with industry giants like Amazon, Google, and Meta pledging to triple nuclear energy worldwide by 2050. “If you care about AI, if you care about energy leadership … you have to make investments into fusion,” said Andrew Holland, CEO of the FIA. “This is something that if the United States doesn’t lead on, then China will.”
While the U.S. currently has the most working nuclear power plants, China leads when it comes to new projects. Though China started building its first reactor four decades after the U.S., it now builds far more fission power plants than any other country.
China joined the fusion race in the early 2000s, around 50 years after the U.S., by participating with over 30 other countries in the International Thermonuclear Experimental Reactor (ITER) fusion megaproject in France. However, ITER has faced substantial delays.
The competition is not only between nations but also in the private sector of the U.S. Of the $8 billion in global private fusion investment, $6 billion is in the U.S., according to the FIA. Commonwealth Fusion Systems, a startup originating from MIT, has raised the most capital, nearly $2 billion, from investors like Bill Gates, Jeff Bezos, and Google. Washington-based Helion has secured $1 billion from investors, including OpenAI’s Sam Altman, and has a highly ambitious deal with Microsoft to supply fusion power to the grid by 2028. Google-backed TAE Technologies has raised $1.2 billion.
Michl Binderbauer, CEO of TAE Technologies, stated, “Whoever has essentially abundant limitless energy … can impact everything you think of. That is a scary thought if that’s in the wrong hands.”
When looking at public funding, China is significantly ahead. China invests an estimated $1.5 billion annually in fusion research, while U.S. federal funding has averaged around $800 million per year for the last few years, according to the Energy Department’s Office of Fusion Energy Sciences.
President Donald Trump increased support for nuclear energy, including fusion, during his first term, and this continued under former President Joe Biden. The funding for fusion in Trump’s second term is uncertain, particularly given the massive federal downsizing already underway. A February report by U.S. senators and fusion experts called for $10 billion in federal funding to help the U.S. maintain its lead. However, the US may have already lost its edge when it comes to reactor size. Generally, the bigger the footprint, the more efficiently a reactor can heat and confine the plasma, increasing the chances for net positive energy output.
Planet Labs satellite images show a massive nuclear project in Mianyang, China, that includes four laser bays pointing at a containment dome, roughly twice as big as the U.S. National Ignition Fusion Facility, the U.S. laser-fusion project.
This Chinese site appears to be a fusion-fission hybrid, according to FIA’s Holland. “A fusion-fission hybrid essentially is like replicating a bomb, but as a power plant. It would never work, never fly in a place like the United States, where you have a regulatory regime that determines safety,” Holland said. “But in a regime like China, where it doesn’t matter what the people who live next door say, if the government says we want to do it, we’re going to do it.”
China’s existing national tokamak project, EAST, has been breaking records, competing with France’s WEST project in the last few months for the longest-ever containment of plasma inside a reactor, though this is not as significant as generating net positive energy.
Another large, state-funded Chinese project, CRAFT, is scheduled to be completed this year. This $700 million, 100-acre fusion campus in eastern China will also have a new tokamak, called BEST, expected to be completed in 2027.
Holland says that the Chinese CRAFT seems to follow a U.S. plan published by hundreds of scientists in 2020. “Congress has not done anything to spend the money to put this into action,” he said. “We published this thing, and the Chinese then went and built it.”
David Kirtley, founder and CEO of Helion, has said that some Chinese projects are even copying the company’s patented designs. “China, specifically, we’re seeing investment from the state agencies to invest in companies to then replicate U.S. companies’ designs.”
China is now rapidly rolling out new fusion projects at a time when the U.S. is mostly upgrading older machines, some of which are over 30 years old. “Nobody wants to work on old dinosaurs,” says TAE’s Binderbauer, adding that new projects attract more talent. “There’s a bit of a brain drain.”
In the early 2000s, budget cuts to U.S. fusion research forced universities to stop building new machines and send researchers abroad. “Instead of building new ones, we went to China and helped them build theirs, thinking, ‘Oh, that’d be great. They’ll have the facility. We’ll be really smart,'” said Bob Mumgaard, co-founder and CEO of Commonwealth Fusion Systems. “Well, that was a big mistake.” As a result, China now holds more fusion patents and has ten times the number of doctorates in fusion science and engineering compared to the U.S., according to a report in Nikkei Asia.
Binderbauer noted that the problem is that, “There’s a finite labor pool in the West that all the companies compete for. That is a fundamental constraint.”
Beyond manpower, fusion projects depend heavily on materials such as high-power magnets, specific metals, capacitors, and power semiconductors. Helion’s Kirtley says that the schedule of their latest prototype, Polaris, was entirely determined by the availability of semiconductors.
China is now trying to control the supply chain for many of these materials, a strategy that echoes their dominance in solar and EV batteries.
“China is investing ten times the rate that the United States is in advanced material development,” Kirtley said. “That’s something we have got to change.”
Energy Singularity, a Shanghai-based fusion company, told CNBC in a statement that they “undoubtedly” benefit from China’s “efficient supply chain.” The company announced in June that it had successfully created plasma in a record time, just two years after starting their tokamak design.
However, that still remains a long way from achieving commercial-scale fusion power. Helion aims to be at the forefront of grid-scale fusion by 2028. Commonwealth plans to establish its first fusion power plant, ARC, in Virginia by the early 2030s.
“Even though the first ones might be in the U.S., I don’t think we should take comfort in that,” said MIT’s Whyte. “The finish line is actually a mature fusion industry that’s producing products for use around the world, including in AI centers.”
