CX Weekly Briefing: China Bets Big on Fusion

A summary of recent headlines in China over the past week covers a range of developments in business, technology, finance, and policy[para. 1].

In business and technology, Shanghai-based startup NovaFusionX made news by raising 500 million yuan ($69 million USD) in angel funding just months after its founding. The company focuses on small, modular, distributed fusion power plants, particularly for AI data centers, and has both state and private investors. NovaFusionX’s leadership includes Guo Houyang, who has experience in Sino-U.S. fusion research. This funding comes amid China’s push to commercialize nuclear fusion energy, with the government recently launching a national fusion energy company—an important move towards achieving commercial fusion power, seen as the ultimate clean energy source due to its limitless fuel and zero carbon emissions[para. 2].

Nvidia Corp. became embroiled in controversy after China’s internet regulator alleged that Nvidia’s H20 chip for the Chinese market had security vulnerabilities, including potential tracking and remote shutdown features. Nvidia denied these accusations, emphasizing that such features would violate their security commitments and undermine customer trust. This dispute emerged as the U.S. reauthorized sales of the H20 to China, pushing Chinese tech firms to form alliances to counter Nvidia’s dominance[para. 3].

A viral rumor had significant financial repercussions for HK Express, the low-cost carrier under Cathay Pacific, which reported a pre-tax loss exceeding half a billion Hong Kong dollars in early 2025. The downturn followed a Japanese manga artist’s viral prediction of an imminent earthquake in Japan, the airline’s main market, causing a sharp drop in demand that began to recover only after the predicted disaster did not occur[para. 4].

In the electric vehicle sector, Li Auto and a state-backed testing agency publicly apologized to a state-owned truck manufacturer after a crash test video misrepresented the truck’s safety performance, causing reputational damage. The carmaker admitted the video was misleading in a joint statement, resolving a high-profile dispute over unfair competition[para. 5].

China’s two leading state-owned shipbuilders, China State Shipbuilding Corp. (CSSC) and China Shipbuilding Industry Co. (CSIC), are finalizing a long-planned merger. A cash swap deal will be offered to dissenting shareholders, after which CSIC will delist and transfer all assets to CSSC. Stocks will be suspended on August 13, 2025, and the merged entity is valued at over 250 billion yuan, aiming for over 30% global market share[para. 6].

In finance and economics, China’s July exports grew by 7.2% year-on-year in dollar terms, driven by strong demand from the EU, despite a significant drop in exports to the U.S. Imports rose 4.1%, the fastest in a year, leaving a trade surplus of $98.2 billion[para. 7].

China will begin levying value-added tax on interest from newly issued sovereign, local government, and financial bonds from August 8, keeping individual investors exempt to continue encouraging participation but aiming to prevent funds from parking in safe bonds and to boost fiscal revenue[para. 8].

Huaxia Life Insurance, part of Tomorrow Holding, had its license revoked for extensive misconduct, with 23 executives fined a collective 2.3 million yuan. Tomorrow Holding has been heavily weakened by regulatory crackdowns over the past decade, with other major subsidiaries also losing their licenses earlier this year[para. 9].

The yuan's reference rate strengthened to 7.1395 against the U.S. dollar, reaching its highest level since November, after fluctuating with changes in Federal Reserve policies and weak U.S. payroll data[para. 10].

On the policy front, the State Council has announced plans to gradually make public preschool free, starting with waiving childcare and education fees for children in their final year of kindergarten. This move, coupled with a new national childcare subsidy for families with children under three, aims to ease the financial burden of parenting and support higher birthrates amidst demographic challenges[para. 11].