Dragoman Digest

Beijing’s nuclear drive gives it an edge in fuelling AI

Washington’s chip controls offer little sway over the power data centres need

More than half of the 58 large nuclear reactors under construction worldwide are in China. Concurrently, AI’s voracious electricity demand favours nuclear power, which, unlike standalone wind and solar generation, runs around the clock. China’s new reactors will help supply its growing fleet of data centres (DCs), whose power use is forecast to quadruple to 774 terawatt hours by 2030. The US is trailing China on its nuclear buildout due to steep upfront costs and regulatory hurdles. Its only two reactors completed this century took 11 years and cost a combined US$35 billion. Chinese developers, by contrast, finish one in five to six years, drawing on cheap state loans and a few standard designs built repeatedly. While this gives China an edge in powering its DCs, the US holds other critical advantages – namely its lead in designing the most advanced chips and its sweeping export controls on them.

China is also extending its state-backed financing to next-generation nuclear technology. Junhe Atomic, a private developer of small modular reactors (compact units built in factories), was founded last year by a former senior state nuclear engineer. Beijing is also betting heavily on fusion, which forces atoms together (similar to the sun) and could in theory supply near-limitless clean energy. Its investment in commercially oriented fusion projects is roughly three times Washington’s. Meanwhile, US start-ups such as Helion – backed by OpenAI’s Sam Altman – rely on private capital. Chinese rival NovaFusionX is led by a scientist whose earlier work on a US energy department programme, he says, informed Helion’s approach. Export controls can restrict the flow of AI chips, but not expertise like his.

Junhe aims to have a demonstration reactor running around 2031 despite unsolved engineering problems, and NovaFusionX hopes to build its first in the early 2030s. Any nuclear power advantage China has this decade therefore rests on conventional reactors. Beijing’s longer-term goal is to parlay that strength into an export industry – Chinese firms have already completed six reactors in Pakistan. Each sale binds buyer and supplier together for decades. Countries buying Chinese reactors, whether conventional or next-generation, to power their DCs would thus hand Beijing a hold over their AI ambitions, much as US chip controls constrain China’s.

Nicaragua provides swathes of land to Chinese miners

The mining concessions are central to Beijing’s foothold in the country

Nicaragua has awarded 80 mining concessions to Chinese firms since 2023 that collectively equate to more than a tenth of the country’s land mass. In total, Nicaragua has provided concessions to 16 Chinese companies, which have won more new concessions than all other mining firms in the country put together. Although the concessions are not specific to any mineral, they largely play into attempts by Chinese miners to tap into Nicaragua’s rich gold deposits, which provided more than a fifth of the country’s exports in 2025. The deals align with Beijing’s ambitions to expand its global production of gold and leverage the role of gold as a central bank reserve asset.

Beijing’s interests in Nicaragua also provide it with a strategic foothold in the Americas at a time when Washington is consolidating its claim to dominance over the region. After the US imposed sanctions on members of President Daniel Ortega’s regime in 2017 over internal repression, it pushed global institutions to stop lending to the government, threatening the country’s development and Ortega’s authority. Since Nicaragua re-established bilateral relations with China in 2021, Beijing has poured over US$1 billion in financing into infrastructure, energy, and telecoms that has propped up the country’s critical industries. This has left Nicaragua as one of the few countries in the region where Washington has yet to meaningfully curb Beijing’s influence. Elsewhere, the US has acted more decisively. Since January, it has constrained China’s influence over the Panama Canal, and has appeared to successfully shift the Venezuelan government’s attitudes towards Washington since the ousting of China-aligned leader Nicolás Maduro earlier this year.

Western firms take aim at Ukraine’s battle-tested drone industry

The growing number of deals is consolidating the fragmented sector

Western investors and defence primes are seeking a share of Ukraine’s battle-tested and innovative drone industry that has helped stall Russia’s invasion. Drone company Swarmer, which was founded in Ukraine but is now based in Austin, Texas, is buying Ukrainian unmanned ground vehicle (UGV) maker Ratel Robotics for up to US$224 million. Swarmer is backed by Blackwater founder and Trump ally Erik Prince, and the deal marks one of the industry’s largest acquisitions. This builds on previous buyouts of Ukrainian drone companies by Western firms such as US investment firm MITS Capital’s consolidation of four Ukrainian defence firms last year. The deals highlight the Ukrainian drone industry’s sophistication and investors’ appetite for battle-proven technology. There are growing fears that Western technology is not keeping pace with the battlefield realities faced in Ukraine.

Ukraine’s drone market is extremely fragmented, leaving room for well-capitalised Western companies to consolidate the industry. Under Ukraine’s procurement model, individual military units are allowed to acquire drones independent of other units using a digital marketplace instead of a centralised tender process. This has contributed to the creation of more than 500 drone companies competing for the same government orders. The level of saturation has made it difficult for individual companies to scale within Ukraine, leaving many firms with little choice but to seek easier paths to financing in the US and Europe. Critically, NATO members last year committed to raising their defence investment spending to five percent of GDP, up from the current 2.8 percent average, and many are now searching for ways to put that extra money to use in time to meet the target.

US set to remain reliant on Chinese rare earth production despite heavy government spending

Sophistication of Chinese refining technologies is a key advantage the West is yet to check

The US’ strategy to break China’s grip on rare earths has yet to bear fruit. In the 18 months to June 2026, US government non-equity financing in rare earths and magnet projects grew to US$7.6 billion, more than four times the amount between 2020 and 2024. The financing has been committed under a government-wide effort overseen by the White House National Security Council and has involved over 180 deals in critical minerals-related projects. Despite this, estimates suggest the US can currently only meet 42 percent of demand, and will still rely on imports for nearly a quarter of its demand in five years. Some Pentagon officials are aiming for the US and its allies to become self-sufficient in some minerals by 2030. China still accounts for 91 percent of global rare earth oxide output and 92 percent of rare earth permanent magnet production. Rare earths, which are among the 60 minerals deemed critical by Washington, are essential for the US’ defence, automobile, computer, and AI industries.

Further US financing to increase industry buildout is unlikely to be an effective measure on its own. China’s most crucial advantage in the sector is in the refining process, where its companies’ more efficient technologies for separating rare earth elements are years ahead of Western counterparts. China is also advantaged by its weaponisation of export controls. In April 2025, China responded to wide-ranging US tariffs by imposing export controls on seven key rare earths, effectively giving Beijing the ability to shut US production lines. These hurdles make it unlikely that Washington will be able to achieve its key targets for rare earths supply, including its mandate to block Chinese rare earth imports into the US from January 2027, and its requirement for defence contractors to source certain metals independent of China from the same month.