Fusion and the Future of American Power

Why the United States Cannot Afford to Lose the Clean Energy Race of the Century

KEY POINTS

China is outpacing the United States in the race to commercialize nuclear fusion, committing an estimated $1.5 billion annually in public funding, nearly twice the U.S. federal fusion budget. Beijing launched a $2.1 billion state-owned fusion enterprise in 2025, and at least five major fusion facilities are under construction or in late-stage planning across the country. The United States has none.
China’s fusion investments are simultaneously advancing its nuclear weapons capabilities. Secretive inertial confinement fusion facilities in China’s interior could give Beijing warhead-testing capabilities that rival or surpass America’s as its arsenal expands toward a projected 1,500 warheads by 2035.
Fusion energy is the linchpin of the AI power race. Global data center electricity demand is projected to at least double by 2030. The nation that commercializes fusion first will possess the energy supply needed to power AI infrastructure at unmatched cost and scale.

The race to commercialize nuclear fusion will define the next era of geopolitical power. By one estimate, a single glass of fusion fuel carries the energy equivalent of one million gallons of oil, enough to power a home for more than 800 years. Further, fusion yields virtually no radioactive waste, emits zero carbon, and cannot melt down—a distinct advantage over the more familiar nuclear fission process.

Recent disruptions to the Strait of Hormuz, which halted 20 million barrels per day of oil and a fifth of global LNG supplies, exposed a vulnerability that has defined energy markets for decades: dependence on fuel that must travel through geopolitical chokepoints. Fusion fuel, derived from seawater and lithium, would eliminate this vulnerability entirely. The first country to harness it at scale will reshape the global balance of economic, military, and technological power for generations.

The United States built the scientific foundations of fusion energy and led the world in research for more than half a century. That lead is eroding. China has made fusion a top-tier national priority, embedding it in its 14th and 15th Five-Year Plans and committing state resources at a scale that threatens to overtake American investment (figure 1).

FIGURE 1

What Nuclear Fusion is and Why it Matters

Nuclear fusion is the process that powers the sun. It works by forcing two lightweight hydrogen atoms—deuterium and tritium—together at extreme temperatures exceeding 100 million degrees Celsius until they merge into a single, heavier atom. That collision releases an enormous burst of energy. Deuterium is abundant in ordinary seawater, and tritium can theoretically be bred from lithium within the reactor itself, meaning fuel supply is effectively inexhaustible and geographically unconstrained.

Fusion’s unique characteristics distinguish it from other sources of energy: it produces no radioactive waste and is not at risk of a meltdown (unlike nuclear fission); it emits no greenhouse gases while in operation (unlike fossil fuels); it provides firm, baseload power independent of weather conditions (unlike most renewables).

Energy has always been the foundation of geopolitical power. The coal-powered industrial revolution made Britain a global hegemon. American mastery of petroleum underwrote the twentieth-century world order. Fusion represents the next inflection point and China is well-positioned to control it. Beijing has already cornered the global renewable energy supply chain (e.g. solar modules, solar polysilicon, wind turbines, etc.) and achieved dominant market shares in the mining and processing of critical minerals used to produce renewable technologies (figure 2). Fusion would be the crown jewel of China’s energy independence strategy, affording a zero-carbon energy source that would power industrial competitiveness and boost nuclear weapon capability.

FIGURE 2

The Divergence in Fusion Funding Strategies

China’s state-driven approach…

China’s public investment in fusion dwarfs that of the United States. Annual spending is estimated at $1.5 billion, nearly twice the U.S. federal fusion budget, according to the head of the U.S. Department of Energy’s (DOE) own Office of Fusion Energy Sciences (figure 3). China’s Fifteenth Five-Year Plan (2026–2030) promises “extraordinary measures” to secure breakthroughs in fusion energy, designating it a frontline of great-power scientific competition. In July 2025, Beijing launched China Fusion Energy Co. Ltd. with $2.1 billion in registered capital, a single entity whose initial capitalization is 2.5 times the entire annual U.S. DOE fusion budget.

FIGURE 3

The United States still leads in cumulative investment when private capital is included (as shown in figure 1), but that lead is deceptive. Private funding is spread across a handful of startups pursuing unproven approaches, while China’s public spending is building shared national infrastructure — research facilities, supply chains, workforce — that benefits its entire fusion ecosystem regardless of which design wins.

China builds fusion infrastructure at a speed the United States cannot match. The $700 million CRAFT campus in Hefei, a nearly 100-acre facility focused on industrializing fusion component manufacturing, is already substantially operational. Satellite imagery has revealed additional large-scale fusion facilities under construction in China’s interior. The Xinghuo fusion-fission hybrid reactor, budgeted at $2.8 billion, targets first-phase completion by 2031. China has at least five major fusion facilities under construction or in late-stage planning; the United States has none.

China has moved beyond replicating Western technology. In 2024, a Shanghai startup matched a critical superconducting magnet breakthrough by America’s best-funded fusion company in significantly less time, demonstrating advanced manufacturing and supply-chain integration capabilities.

…and the United States’ Private Sector Bet

The United States has largely outsourced its fusion ambitions to the private sector, and that bet is increasingly fragile. American startups have raised roughly $6 billion in private capital, with companies like Commonwealth Fusion Systems, Helion, and TAE Technologies pursuing genuinely innovative approaches. However, private capital alone cannot substitute for the coordinated national strategy, supply-chain infrastructure, and workforce development that commercialization will require.

Nor will it prove sufficient to offset the substantial cost advantages that China’s integrated industrial ecosystem confers; according to one estimate by a Shanghai-based fusion startup, its domestic production costs are half those of U.S. competitors.

Federal fusion spending compounds the problem by targeting the wrong priorities. The DOE fusion budget of $790 million has not kept pace with inflation, and a significant share is directed toward the over-budget international ITER project in France rather than domestic programs. The Biden administration requested $1 billion for fusion and did not receive it. Meanwhile, China’s public spending is going directly toward building competitive facilities and industrial capacity.

The funding gap is draining talent from the institutions that need it most. Insufficient budgets at national laboratories have pushed experienced researchers into the private sector, operating outside of any coordinated national strategy. Others have left the country entirely, drawn to China’s expanding fusion infrastructure by superior funding, state-of-the-art facilities. China’s military fusion programs alone are recruiting thousands of scientists and engineers.

Multiple assessments indicate China could surpass U.S. and European magnetic fusion capabilities within three to four years at current trajectories. Each year of inaction widens gaps in infrastructure, workforce, and industrial capacity that become exponentially more expensive to close.

China Leads in Fusion Supply Chains

China’s state-directed model has secured leadership positions across three of the six supply chains critical to fusion technologies (figure 4). In particular, China’s industrial strength in thin-film processing, large metal-alloy structures, and power electronics confers direct benefits to the upstream value chain for a commercial fusion industry:

FIGURE 4

Thin-Film Processing (REBCO Superconductors): High-temperature superconducting magnets are essential to the most promising tokamak designs. China is the world leader in high-volume thin-film manufacturing, with infrastructure, workforce, and tooling developed through its dominance of solar panel and flat-panel display production.
Large Metal-Alloy Structures: Tokamak electromagnets stand as tall as three-story buildings and require radiation-tolerant, cryogenic-resistant alloys. China’s manufacturing capacity in shipbuilding, aerospace, and heavy industrial fabrication positions it to outcompete Western suppliers.
Power Electronics: Fusion reactors require advanced power conditioning systems similar to those used in high-speed rail and renewable energy microgrids. China has deployed over 48,000 kilometers of high-speed rail—three times Europe’s network and fifty-five times longer than Amtrak’s Acela corridor—building deep expertise in exactly these systems.

Competing with China will require U.S. and key partners to invest heavily in both fusion technology and its adjacent technologies.

Encouragingly, industry supply-chain spending grew 73% from $250 million in 2023 to $434 million in 2024 according to a Fusion Industry Association survey (figure 5). However, 63% of fusion companies reported concerns about supplier availability as they scale toward commercial plants, and 81% of suppliers cited uncertainty as a barrier to capacity expansion.

FIGURE 5

Why the United States Must Win the Fusion Race

Falling behind China in fusion would carry cascading consequences for American economic and national security. The same technologies that promise limitless clean power enable advanced nuclear weapons design, and China is pursuing both simultaneously. A Chinese lead in fusion would also give Beijing the capacity to power AI infrastructure at costs and scales the United States cannot match, compounding an advantage that already spans manufacturing, critical minerals, and clean energy.

Fusion and National Security

China’s fusion investments carry national security implications that extend well beyond energy. Fusion technology is inherently dual-use, and Beijing is pursuing military applications alongside commercial ones.

Inertial Confinement Fusion and Warhead Design

Secretive military nuclear-weapons laboratories in China’s western interior have received close to $10 billion in investment for inertial confinement fusion (ICF) research and development. ICF compresses fuel pellets using high-energy lasers or pulsed-power systems. It is the same technology the United States uses at the National Ignition Facility (NIF) to maintain its nuclear stockpile without explosive testing. The critical difference: China is building multiple new ICF facilities while the United States has funded no new systems since the early 2000s.

The Shenguang-IV (“Divine Light”) laser facility under construction near Mianyang is estimated to be at least 50% larger than NIF—which itself cost $3.5 billion and required over two decades to build. China has three ICF systems under construction and two more in late-stage planning. Its weapons labs are recruiting 2,000 scientists, engineers, and other experts for these programs, with thousands of additional hires anticipated.

American facilities can currently test only palm-sized components against limited nuclear effects. China’s planned facilities will enable testing of entire warheads against nearly the full spectrum of nuclear radiation, giving Beijing significant advantages in designing next-generation nuclear weapons, including low-yield tactical warheads and advanced thermonuclear devices.

China’s Expanding Nuclear Arsenal

These ICF investments coincide with a dramatic expansion of China’s nuclear arsenal. China’s stockpile has grown to an estimated 600 warheads as of 2025, making it the world’s third-largest nuclear force, and is projected to reach 1,000 by 2030 and up to 1,500 by 2035 according to earlier Pentagon estimates (figure 6). China is the only signatory to the Nuclear Non-Proliferation Treaty significantly expanding its arsenal. Advanced ICF capabilities would allow Beijing to design more sophisticated warheads with greater confidence, even under a testing moratorium, fundamentally altering the strategic balance.

FIGURE 6

Fusion Commercialization and the AI Race

Constraints on AI development are shifting rapidly from hardware to electricity supply. Data centers are driving an unprecedented surge in demand, and the International Energy Agency projects global data center electricity consumption could more than double by 2030, depending on the pace of AI deployment (figure 7). In one example, one AI-model (GPT-4) can consume more than the annual energy of 35,000 U.S. homes. Fusion’s commercial viability remains unproven, but no other energy source combines firm baseload power, zero carbon emissions, and virtually unlimited fuel supply — the combination that large-scale data centers will eventually require.

FIGURE 7

The major technology companies recognize this constraint. Microsoft has signed a 20-year agreement with Constellation Energy to restart the Three Mile Island nuclear plant for $1.6 billion. Meta has committed to 1.1 gigawatts of nuclear power for its AI data centers. Amazon, Google, and Meta have pledged to triple nuclear energy capacity worldwide by 2050. Helion’s power purchase agreement with Microsoft for fusion-generated electricity by 2028 signals where the industry believes the future lies.

Fusion energy and artificial intelligence form what the Commission on Scaling of Fusion Energy has called a “powerful flywheel”: AI accelerates fusion research through advanced plasma modeling and materials design, while fusion promises the limitless clean energy that AI infrastructure demands. The nation that masters both technologies first will enjoy compounding advantages in cheaper compute and superior industrial competitiveness.

If China commercializes fusion energy before the United States, it will be positioned to power AI data centers at a scale that American infrastructure cannot match.

Human Capital Crisis

Perhaps the most underappreciated dimension of the fusion competition is the workforce gap. China produces approximately ten times more doctoral graduates in fusion science and engineering than the United States each year. In 2025, 47% of authors published in the journal Nuclear Fusion, the field’s leading publication, were from China, a dramatic shift from the era of Western dominance in fusion research (Figure 8).

FIGURE 8

The brain drain is bidirectional and compounding. Insufficient federal funding has driven talented American researchers out of government laboratories and into private startups, where their expertise falls outside any coordinated national strategy. Chinese-born scientists trained at top U.S. institutions are returning to China’s expanding fusion infrastructure, drawn by superior funding and state-of-the-art facilities.

China’s military fusion programs alone are recruiting 2,000 scientists and engineers, with thousands more hires planned. The Commission on Scaling of Fusion Energy, a bipartisan initiative endorsed by U.S. Senators, recommended funding 100 additional graduate students and 100 postdoctoral researchers annually through 2030, a modest proposal that remains unfunded. Without urgent action to rebuild the domestic fusion workforce pipeline, the United States will lack the scientific talent to translate its best ideas into commercial and strategic reality.

Policy Solutions: How the U.S. Can Win the Fusion Race

The Commission on Scaling of Fusion Energy has published a detailed roadmap for restoring American fusion leadership centered on a $10 billion federal investment and a 90-day interagency action plan. CPA endorses the Commission’s core framework and urges policymakers to act on the following priorities.

1. Declare Fusion a National Security Priority

The President should issue an executive directive designating fusion energy as a national security priority, analogous to the designations that accelerated the semiconductor and space industries. This declaration should trigger a 90-day interagency action plan to align resources, streamline regulations, and establish clear milestones. A dedicated “Fusion Lead” political appointee at DOE should be empowered with budget authority and a mandate to drive commercialization.

The CHIPS and Science Act demonstrated that national security designations unlock bipartisan support and accelerate industrial mobilization. Fusion warrants the same treatment. The semiconductor precedent also shows that delay is costly: the U.S. spent $52 billion through the CHIPS Act to claw back manufacturing capacity it had already ceded. Acting before China consolidates its fusion lead would be far cheaper than trying to recover it afterward.

2. Commit $10 Billion in Strategic Federal Investment

The current federal fusion budget of approximately $790 million is wholly inadequate to the scale of the challenge. A one-time strategic investment of $10 billion, as recommended by some Senators and the Commission on Scaling of Fusion Energy, would fund critical research facilities, support multiple technologically diverse pilot-plant pathways, and rebuild the workforce pipeline. This figure is less than what China has committed to a single laser facility and represents a fraction of the cost of ceding fusion leadership permanently.

For context, Congress appropriated $52 billion for semiconductor manufacturing through the CHIPS Act and directed over $60 billion in clean energy tax credits through the Inflation Reduction Act. A $10 billion fusion investment is modest by comparison and targets a technology with arguably greater strategic significance.

3. Secure the Fusion Supply Chain

The United States should conduct an immediate supply-chain mapping exercise to identify vulnerabilities in fusion fuel, construction materials, superconducting tape, and precision components. Responses should include Section 45X manufacturing tax credits for domestic fusion component production, targeted tariff exclusions for critical inputs, and strategic partnerships with allied nations, particularly Japan and South Korea, whose industrial bases can compete with China in thin-film processing and metal-alloy fabrication.

The administration should also consider deploying Section 232 tariff authority on fusion-critical inputs where import dependence poses a national security risk, mirroring the approach used for steel, aluminum, and copper. Section 45X advanced manufacturing production tax credits, which have proven effective in incentivizing domestic battery and solar component production, should be extended explicitly to fusion component manufacturers.

4. Streamline the Regulatory Pathway

The Nuclear Regulatory Commission should expedite clarification that fusion machines are regulated as particle accelerators rather than fission reactors, a determination that would dramatically simplify permitting. The Federal Energy Regulatory Commission should establish clear grid-interconnection rules for fusion plants. Environmental reviews should be fast-tracked using existing authorities.

5. Protect Intellectual Property and Counter Technology Transfer

Multiple U.S. fusion companies have reported that Chinese state-backed enterprises are replicating their patented designs. DOE should develop cybersecurity support protocols and relevant resources for U.S. fusion companies to protect against state-sponsored technology transfer. The administration should consider targeted export controls on fusion-relevant technologies where doing so does not impede domestic commercialization.

The pattern is well-documented in other sectors. Chinese state-backed manufacturers used subsidized joint ventures and forced technology transfer to replicate U.S. solar cell innovations in the 2000s, ultimately capturing over 80% of global production. Similar dynamics have played out in telecommunications equipment and lithium-ion batteries. The fusion industry should not wait for the damage to materialize before seeking enforcement.

6. Reverse Funding Cuts and Rebuild the Workforce

The federal government should fund 100 additional graduate fellowships and 100 postdoctoral positions annually in fusion science and engineering through 2030, as the Commission recommends. National laboratories should serve as training hubs, and fusion should remain on National Interest Waiver immigration priorities to attract global talent.

These investments should complement, not replace, efforts to retain talent already working in the domestic fusion ecosystem. Retention bonuses and competitive pay at national laboratories, modeled on DOD’s approach to retaining cybersecurity talent, would help stem the flow of experienced researchers to the private sector and abroad.

CPA additionally recommends that Congress direct the U.S. International Trade Commission to investigate China’s fusion supply-chain subsidies under Section 301 authority, and that the administration apply Buy American provisions to any federally funded fusion facility construction. The fusion industry must avoid repeating the mistake of the solar industry, where American innovation was commercialized and scaled by Chinese state-backed manufacturers at the expense of domestic producers.

Conclusion

The pattern is familiar. The United States invents a transformative technology (e.g. solar panels, semiconductors, and lithium-ion batteries) only to see China capture the technology through coordinated state investment, supply-chain integration, and outright theft.

Beyond its utility as an energy source, fusion is the foundation of twenty-first-century military capability, AI infrastructure, and industrial competitiveness. China understands this and is investing accordingly. Beijing’s $10 billion commitment to military ICF facilities could give it warhead-testing capabilities rivaling America’s. China’s control over critical fusion supply chains mirrors the chokepoints it has established in solar, batteries, and rare earths. Its 10-to-1 advantage in fusion workforce training compounds annually.

The United States has, at most, a few years to act. As the Commission on Scaling of Fusion Energy warned: “The U.S. has less than a decade to achieve leadership in fusion or be left behind by China with stark and perhaps unrecoverable consequences.” The $10 billion investment is both sound industrial policy and a national security imperative.

References

(1) Tom Wilson. “Can Nuclear Fusion Save the Planet?” Financial Times, October 2025. https://www.ft.com/content/eac809b2-bb90-42a1-a465-73655aafba43?syn-25a6b1a6=1.

(2) Jennifer Hiller. “China Outspends the U.S. on Fusion in the Race for Energy’s Holy Grail,” Wall Street Journal, 2025. https://www.wsj.com/world/china/china-us-fusion-race-4452d3be?gaa_at=eafs&gaa_n=AWEtsqdXBzjQdSeAWBaNzkHnQHmQXooOTrD9NFE2reLisv1qXUyfIZAqibA3ziwyJG4%3D&gaa_ts=69b03a8f&gaa_sig=tVPu0T0sQeSdIlu4wyWPmqxppxC5syLHN5vleF1d-hNjsLYojkeMUEAyx5RHkIbyPsRWLD040Wx83Y3A1fd5TA%3D%3D.

(3) “Clean, Limitless Energy Exists. China Is Going Big in the Race to Harness It,” New York Times, December 2025. https://www.nytimes.com/2025/12/13/climate/china-us-fusion-energy.html.

(4) Bob Mumgaard, “China Just Bet $2 Billion on Fusion Energy. The US Must Respond,” The Hill, 2025. https://thehill.com/opinion/energy-environment/5431531-fusion-energy-china-us-race/#:~:text=This%20week%2C%20China%20took%20a,are%20organized%20and%20well%20resourced.

(5) “Seeking to Expand Its Lead in Fusion Technology, China Accelerates Construction on New Reactor Project,” Foundation for Defense of Democracies, May 2, 2025. https://www.fdd.org/analysis/policy_briefs/2025/05/02/seeking-to-expand-its-lead-in-fusion-technology-china-accelerates-construction-on-new-reactor-project/#:~:text=While%20China%20continues%20to%20produce,meet%20growing%20global%20electricity%20demand.

(6) “Nuclear Fusion: The US Led in This Clean Energy Race for Decades. Now China Is in Position to Win,” CNN, September 19, 2024. https://www.cnn.com/2024/09/19/climate/nuclear-fusion-clean-energy-china-us.

(7) “Images Show China Building Huge Fusion Research Facility, Analysts Say,” Reuters, January 28, 2025. https://www.reuters.com/world/china/images-show-china-building-huge-fusion-research-facility-analysts-say-2025-01-28/.

(8) Jeff Pao, “China Aims for World’s First Fusion-Fission Reactor by 2031,” Asia Times, March 2025. https://asiatimes.com/2025/03/china-aims-for-worlds-first-fusion-fission-reactor-by-2031/.

(9) “China Takes the Lead in Fusion Energy,” Neutron Bytes, July 20, 2025. https://neutronbytes.com/2025/07/20/china-takes-the-lead-in-fusion-energy/.

(10) Edward White and Wang Xueqiao, “Chinese Start-Up Aims for Nuclear Fusion at Half the Cost of US Rivals,” Financial Times, September 2024. https://www.ft.com/content/bf012cd9-1624-49c1-8352-5a91fb4d9a21.

(11) Commission on Scaling of Fusion Energy, “Fusion Power: Enabling 21st Century American Dominance,” Special Competitive Studies Project, February 2025. https://www.scsp.ai/wp-content/uploads/2025/02/Final-Fusion-Power_-Enabling-21st-Century-American-Dominance.pdf.

(12) Daniel F. Brunner, Edlyn V. Levine, Fiona E. Murray, and Rory Burke, “Will the West Lose the Race for Fusion Energy?” MIT Technology Review, July 8, 2025. https://www.technologyreview.com/2025/07/08/1119630/why-the-us-and-the-west-could-lose-the-race-for-fusion-energy/.

(13) “REBCO High-Temperature Superconductors Are Ideal for Tokamak Magnets, Study Suggests,” Physics World. https://physicsworld.com/a/rebco-high-temperature-superconductors-are-ideal-for-tokamak-magnets-study-suggests/.

(14) Fusion Industry Association, “The Fusion Industry Supply Chain 2025,” June 2025. https://www.fusionindustryassociation.org/wp-content/uploads/2025/06/FIA-Supply-Chain-2025-Report.pdf.

(15) Jimmy Goodrich and David Feith, “China May Grab a Lead in the Race for Military Fusion,” Wall Street Journal, February 27, 2026. https://www.wsj.com/opinion/china-may-grab-a-lead-in-the-race-for-military-fusion-c5ab6d2b.

(16) Federation of American Scientists, “Chinese Nuclear Weapons, 2025,” March 2025. https://fas.org/wp-content/uploads/2025/03/Chinese-nuclear-weapons-2025.pdf.

(17) “How Hungry Is AI? Benchmarking Energy, Water, and Carbon Footprint of LLM Inference,” arXiv, 2025. https://arxiv.org/pdf/2505.09598.

(18) “The U.S. Is Falling Behind China in Nuclear Fusion, Needed to Power AI,” CNBC, March 16, 2025. https://www.cnbc.com/2025/03/16/the-us-is-falling-behind-china-in-nuclear-fusion-needed-to-power-ai.html.

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