"Rapid Growth on State Backing" China’s BCI Industry Closes In on Neuralink Amid Regulatory Drag

Beijing Steps Up Support for BCI Sector, Driving Surge in Clinical Trials and Investment
Industry Frontrunner Neuralink Accelerates Mass Production and Portfolio Expansion
FDA Regulatory Overhang Weighs on Neuralink, Raising Commercialization Barriers

China is intensifying efforts to cultivate its brain-computer interface (BCI) industry. The government is laying the groundwork for expansion through sweeping fiscal and institutional support, while companies are rapidly scaling their market presence in tandem. Industry observers note that as Neuralink, the sector’s leading player, grapples with stringent U.S. regulatory constraints, comparatively less encumbered Chinese firms could narrow the gap and potentially reshape the competitive landscape.

China’s Push to Foster BCI Development

On the 19th (local time), the Financial Times reported that NeuroXess, a Chinese brain-chip startup, recently enabled a quadriplegic patient to control a computer cursor just five days after implanting a brain device. NeuroXess places a polyimide and metallic mesh on the brain’s surface to capture neural signals and transmit them to external electronic devices. The battery pack is embedded in the chest, with wiring routed along the exterior of the skull. The company stated that robust government backing and strong investor interest significantly shortened the transition from laboratory research to commercial application.

In practice, Beijing designated BCI a national strategic industry last year and unveiled a roadmap aimed at nurturing two to three globally competitive firms by 2030. Authorities have expanded fiscal support for core component and signal-processing chip research and development, while streamlining industrial standards and testing and certification systems to formalize clinical and product approval pathways. In parallel, policymakers have strengthened industry-academia collaboration through cluster development and talent programs, linking companies to policy-driven financing vehicles, including the national manufacturing transformation fund, to facilitate capital access.

Buoyed by this policy tailwind, the sector has posted tangible growth. From January to November last year, Chinese BCI startups secured 24 investment deals, marking a 30% increase from a year earlier. Armed with fresh capital and leveraging the country’s vast patient pool, Chinese firms are aggressively advancing clinical trials. Since February of last year, more than 10 invasive brain-chip clinical trials have been launched in China.

Neuralink’s Market Expansion Strategy

Chinese BCI companies are widely expected to compete head-on with Neuralink, the U.S.-based neurotechnology startup widely regarded as the industry leader. In May 2023, Neuralink received approval from the U.S. Food and Drug Administration (FDA) to initiate its first-in-human PRIME clinical trial, implanting its N1 device (development code: N1) in 12 patients with severe paralysis as part of a global study. The first implanted patient is currently able to perform basic digital tasks, including internet searches and posting on social media platforms.

Neuralink plans to commence mass production of BCI devices this year and expand the technology beyond the clinical trial stage into a viable therapeutic platform. Co-founder Elon Musk stated in public remarks last month that “this year will mark the first year of large-scale BCI production,” adding that the implantation procedure would be significantly simplified and pushed toward near full automation. Neuralink has set a target of implanting BCIs in 20,000 patients annually by 2031. If achieved, annual revenue is projected to exceed 1 billion dollars.

The company is also developing an indication-specific BCI portfolio in phases, including “Telepathy,” a concept enabling direct communication with computers via neural signals; “Blindsight,” aimed at restoring vision; “Deep,” targeting recovery of memory, cognition, and emotional function; and “Speech,” designed to support language and vocal restoration. Blindsight and Speech received FDA Breakthrough Device designation in September 2024 and May of last year, respectively. Neuralink intends to leverage this status to mitigate uncertainty in clinical development and regulatory review.

Persistent FDA Regulatory Hurdles

Industry analysts suggest that the technological gap between Neuralink and Chinese BCI firms could gradually narrow. While Neuralink faced significant headwinds during early clinical trial approvals under the weight of U.S. regulatory scrutiny, Chinese companies are rapidly enhancing capabilities under proactive state support.

Neuralink encountered considerable friction with the FDA in securing approval for human clinical trials. When the company submitted its first Investigational Device Exemption (IDE) application in early 2022, the FDA rejected the proposal outright, demanding additional safety data and detailed technical documentation. The agency specifically sought concrete evidence addressing potential heat generation during long-term implantation, power supply stability, and biocompatibility concerns. It also required explicit risk management protocols in the event of electrode migration or device failure within the brain, along with clearly defined surgical procedures for safe device removal in emergencies. Neuralink subsequently underwent more than a year of redesign and data supplementation before obtaining approval.

Although demonstrations of Neuralink’s technology and additional implantations have steadily increased since its first human trial approval, substantial regulatory barriers remain. The ongoing trial is limited to a small patient cohort and focused on safety and functional validation. Commercial launch will require FDA premarket approval (PMA), a comprehensive review encompassing long-term follow-up data, verification of device durability and battery stability, statistical validation of adverse event risks, and quality control systems governing manufacturing processes. Broad commercialization to general patients effectively necessitates expanded clinical trials and multi-year data accumulation.