Beijing’s nuclear fusion steals the limelight
US Senator wants to jail citizens who download DeepSeek; PRC builds military command centre 10x the size of the Pentagon
Observing China is the essential newsletter to understand the UK-PRC relationship, explained in the context of global developments.
You may be excused for thinking this week’s Tracker is a science and technology newsletter. While experts debate whether DeepSeek marks a turning point in the United States (US)-People’s Republic of China (PRC) Artificial Intelligence (AI) competition, the fact is that Beijing is reaping the fruits of its industrial strategy, generous state subsidies, and instillation of nationalist pride.
If you enjoy indulging in the occasional conspiratorial thought, consider this: on the same day as the inauguration of Donald Trump, President of the US, the PRC announced its scientists had made a breakthrough in nuclear fusion energy, surpassing the current record, and DeepSeek’s R1 model was released.
On a more serious note, of course this was a mere coincidence – at most, a cheeky one. But what we do know is that it takes a lot to keep up with all of these developments emanating from the PRC’s policies and progress in science, technology, diplomacy and economy.
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As the tech race may just be showing us: you snooze, you lose!
Welcome back to Observing China.
1.1 Executive of British business group decries ‘protectionism’ trend in PRC trade
Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), a prominent business group, believes that Britain should resist the ‘siren call of protectionism’ in its trade policy and not follow the likes of the US in its economic relations with Beijing.
Newton-Smith states that full decoupling from the PRC is neither realistic nor ‘right’.
1.2 UK minister says DeepSeek will be good for Britain
Lord Vallance of Balham has said that the advent of DeepSeek on the AI scene will benefit Britain as it expands the landscape beyond the few dominant players such as ChatGPT and Gemini. Like many others, Lord Vallance has said that DeepSeek’s innovation will spur smaller startups in countries around the world.
When asked about the possibility DeepSeek being used to spread CCP propaganda narratives, or the data security risk, Lord Vallance responded: ‘You’re never going to stop an individual country from doing certain things that shouldn’t be done, and that’s true of all technologies.’
1.3 British prime minister asks Mauritius to safeguard the Chagos Islands against ‘malign influence’
The talks between His Majesty’s (HM) Government and Mauritius on the handing over of the British Indian Ocean Territory (BIOT) are ongoing – our Tangram last week featuring Alicia Kearns MP, Shadow Minister for Home Affairs, outlined the security concerns surrounding the topic. In the latest development, Sir Keir Starmer, Prime Minister, has asked Mauritius to ensure that BIOT, in particular the island of Diego Garcia, home to a shared UK-US military base, would be safe from malign influence – where the PRC is considered a key risk factor.
1.4 First they came for Chagos, then they came for Brunei
It may be a distant worry, but a report claims that the British military base in Brunei may be at future risk of closure given the increasingly close economic and military cooperation between the sultanate and the CCP.
2.1 Nuclear fusion breakthrough positions the PRC in leading position – for now
According to researchers at CNA, the US national security think tank, the PRC appears to boast a nuclear fusion research centre that is 50% larger than its US counterpart. On 20th January, the Chinese Academy of Social Sciences announced that the PRC’s Experimental Advanced Superconducting Tokamak (EAST) project had set a new global record of sustaining a high-confinement plasma state for over 17 minutes – a significant development in the quest to develop the clean and limitless power by mimicking the sun’s fusion process.
The breakthrough of the project, combined with the discovery of the enormous nuclear fusion research centre, confirm that the science and technology race between the PRC and its main contenders – Japan, the United Kingdom (UK) and the US – is well underway.
The PRC’s rapid development in nuclear fusion is attributed to the fact that the CCP offers significant subsidies to the energy industry – the government subsidies, available across multiple industries, are often cited as a main reason for the PRC’s rapid development in comparison to competitors in free and open nations.
2.2 Beijing on track to build the world’s largest military command centre
According to satellite images analysed by US intelligence services, the PRC is building a military command centre that will be approximately 10 times the size of its American equivalent, the Pentagon – or 60 times the size of the Ministry of Defence on Whitehall. Located south-west of Beijing, the centre appears to house large bunkers suitable to shelter military leaders, even in the case of a nuclear war.
The People’s Liberation Army (PLA) – the PRC’s armed forces – is thought to be under instruction by Xi Jinping, General Secretary of the Chinese Communist Party (CCP), to be ready to invade Taiwan by 2027, which coincides with the centenary of the force’s establishment.
2.3 List of countries banning DeepSeek grows
So far, Australia and Taiwan have banned the Chinese artificial intelligence startup DeepSeek from being used on government devices, due to concerns around user private data being stored on servers in the PRC. Italy has banned the application altogether from operating in the country. Employees of the Pentagon cannot access the technology either.
Meanwhile, Josh Hawley, US Senator, has filed a bill in the US which if approved, would see a law implemented whereby individuals who download DeepSeek could face up to 20 years in prison and be fined up to US$1 million (£800,000).
2.4 US tells Panama it is ready to act against PRC’s increased canal presence
The US has intimated that the PRC’s increased presence so close to the Panama Canal breaches the neutrality treaty that was agreed when the US returned the waterway to Panama in 1999. Marco Rubio, Secretary of State of the US, visited Panama recently and is currently concluding a trip to another four nearby countries – Guatemala, El Salvador, the Dominican Republic and Costa Rica. This is a strong diplomatic move as recent years have seen few American leaders visit Central and South America – a region which has witnessed a charm offensive by the CCP and enjoyed high levels of investment from Beijing.
2.5 Beijing hits back at Trump’s tariffs
On 1st February, Trump announced that he was to impose 10% tariffs on all goods imported from the PRC. On 4th February, Beijing stated that a series of retaliatory tariffs imposed on US imports would come into effect on 10th February, including a 15% tariff on coal and liquefied natural gas imports and a 10% tariff on oil, agricultural equipment and large-engine cars.
Separately, the Ministry of Commerce in the PRC announced that a series of US brands and companies would be added to Beijing’s ‘unreliable entity’ list – meaning that fines and a broad range of other sanctions might ensue, from freezing trade to withdrawing work permits for foreign staff.
Following Beijing’s retaliatory tariffs, the scheduled phone call between Trump and Xi to abate the incoming trade war was cancelled, and the US president has stated that he is in ‘no hurry’ to speak with the leader of the PRC.
2.6 Manila and Washington host joint air patrol in South China Sea
The first joint air patrol since Trump’s return to the White House took place over the disputed Scarborough Shoal. In August 2024, Chinese fighter jets fired flares in the path of an air force plane of the Philippines on routine air patrol.
2.7 Cook Islands expected deal with Beijing surprises Auckland
The Cook Islands’ self-governance in free association with New Zealand means that the island nation can make its own choices regarding domestic and foreign policies and partnerships, but is required to consult with Auckland on matters which could affect defence and security.
As such, there are concerns that the deal breaches terms of the agreement.
3.1 A report by the International Institute for Strategic Studies looks at how the PRC uses ‘legal warfare’ against Taiwan to strengthen legal and regulatory links to promote cross-strait integration and provide a legal justification for potential future action against Taiwan.
3.2 A report by the Royal United Services Institute (RUSI) argues that DeepSeek does not mark a turning point in US-PRC AI competition.
4.1 The Foreign Ministry of the PRC has issued a statement expressing the view that ‘pressure is not the right way for the US to deal with China’, in response to the tariffs announced by Trump on 1st February.
It is ironic that Beijing speaks of pressure when Xi declared that Taiwan will become part of the PRC, ‘by force’ if necessary.
Specific to this case of tariffs, which were in part imposed because of anger by Washington in the PRC’s role in its domestic fentanyl crisis, Beijing responded that essentially, the US could learn a thing or two from how drugs are handled by the CCP:
The basic solution for the US is reducing its domestic drug demand and strengthening its law enforcement cooperation…China has some of the strictest drug control policies and highest levels of enforcement globally.
Thanks for the tip.
4.2 Qiushi, the official theoretical journal and news magazine of the CCP, often writes press releases which promote upcoming articles to be published by Xi to whet readers’ appetites for what is to come. The latest article by Xi is due to be a riveting bedtime read for the Chinese youth, as it calls for:
Chinese households to integrate their love for the family with their love for the country…to nurture and practice core socialist values, encouraging family members, especially the younger generation, to love the Party, the motherland, the people and the Chinese nation.
Economic instability, poor employment prospects and an ageing population threaten the ‘social harmony’ at the core of CCP promises. Xi hopes that fostering a spirit of rallying for a joint cause will distract the public from their woes and unite them for a common purpose.
Thank you for reading this week’s Tracker. Hopefully, by next week’s newsletter, we will have some more information about the upcoming visit of Wang Yi, Foreign Minister of the PRC, to the UK – few details have been released about the visit thought to be taking place as soon as next week. Please subscribe!
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Grace Theodoulou – Policy Fellow, China Observatory
Email: grace@geostrategy.org.uk
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