China’s brain-computer interface industry is racing ahead

While Elon Musk’s Neuralink often frames itself as “pioneering” brain-computer interfaces (BCIs), China’s BCI sector is already largely out of the spotlight, shifting from lab research into early scale-up.

A fresh cohort of startups is pushing to ccommercialiseboth implantable and noninvasive BCIs, helped along by firmer policy backing, expanding clinical trials, and rising investor attention. That’s the view of Phoenix Peng, who has built not one but two BCI startups. He’s a co-founder of NeuroXess, which develops implantable BCI systems, and he’s also the founder and CEO of Gestala, a company working on noninvasive ultrasound-based BCIs.

Peng’s conviction about the market’s momentum rests on tangible moves already underway: Provinces including Sichuan, Hubei, and Zhejiang have set medical service pricing for BCI, a step that can accelerate its pathway into China’s national medical insurance system.

Over the longer term, Peng expects the technology to move beyond medicine’s familiar role of “treating disease” and into “human augmentation,” as he put it.

“I have always maintained that neuroscience and AI are two sides of the same coin,” Peng said. “They are destined for deep integration, realising direct high-bandwidth connections between the human brain and AI. BCI will serve as the ultimate bridge between carbon-based and silicon-based intelligence. While this may sound distant, it represents an unimaginably vast market in the future.”

Four factors driving BCI in China

In the next three to five years, Peng believes BCI adoption will remain focused mainly on healthcare, with the market reaching a multibillion-dollar scale as insurance coverage widens.

In August 2025, China’s industry ministry and six other agencies issued a national roadmap to accelerate BCI development. The plan sets major technical milestones for 2027, outlines the formation of shared industry standards, and calls for a complete supply chain by 2030. It also sets an ambition to build globally competitive BCI companies while supporting smaller, specialised firms.

So what’s behind China’s rapid progress? Peng said it comes down to four main factors. First is strong policy support, including cross-departmental collaboration that ties technical standards to medical reimbursement. In December, at the 2025 Shenzhen BCI & Human-Computer Interaction Expo, China announced an 11.6 billion yuan ($165 million) brain science fund to support BCI companies from research through commercialisation.

Second is the scale of China’s clinical resources: large patient pools and relatively lower research costs can speed trials, and the presence of national health insurance can enable faster commercialisation once authorities approve a device. Peng contrasted this with the U.S., where, even after FDA clearance, private insurers — the primary payers — must each decide separately whether to reimburse.

Researchers have now completed the country’s first fully implanted, wireless BCI trial — only the second globally — enabling a paralysed patient to control devices without external hardware, according to CGTN. Neuralink is the company that carried out the first such trial.

“In traditional electrical BCIs, Chinese firms have achieved clinical progress in motor and language decoding, spinal cord reconstruction, and stroke rehabilitation, with over 50 flexible implantable BCI clinical trials completed by mid-2025,” Peng said. He added that next-generation efforts are now shifting toward whole-brain neural decoding and encoding, including ultrasound-based approaches like Gestala’s.

The third factor is China’s mature industrial manufacturing base, Peng said, spanning semiconductors, AI, and medical hardware, which supports faster R&D cycles and prototyping. The fourth is strategic investment in the category, with state-guided funding and private capital both increasing under national initiatives.

Some recent deals underscore that momentum. Shanghai-based StairMed Technology raised $48 million (350 million yuan) in Series B funding in February 2025. BrainCo, a neurotech company developing noninvasive BCIs and bionic limbs, has also reportedly filed quietly for a Hong Kong IPO after raising $287 million (2 billion yuan) earlier this year. Peng said Gestala, which launched in January, is currently in discussions with investors and expects to close an angel round soon.

Taken together, China’s BCI startups are ramping up to challenge U.S. leaders such as Neuralink, Synchron, and Paradromics. Among the more active companies in China are NeuroXess, Neuracle, NeuralMatrix, BrainCo, Bo Rui Kang Tech, Aoyi Tech, Brainland Tech, and Zhiran Medical. These firms cover a range of approaches, from implantable flexible interfaces to noninvasive brain-computer technologies.

That acceleration is happening alongside big market projections. China’s BCI market was expected to grow to more than $530 million (3.8 billion yuan) in 2025, up from 3.2 billion yuan in 2024, according to media reports, with longer-range projections putting it at more than 120 billion yuan by 2040.

BCI types

BCIs are developing along two primary tracks. One is invasive electrophysiological BCI systems like NeuroXess and Neuralink, which implant electrodes in the brain to capture precise neuron-level signals—an approach that also carries surgical risk. The other is noninvasive systems like those from NeuroSky and BrainCo, which typically trade some precision for safety and ease of use. These devices — often headsets or headbands using electroencephalography (EEG) — detect electrical activity through the skull.

The field is now widening further, with emerging approaches such as ultrasound, magnetoencephalography imaging, transcranial magnetic stimulation, optical methods, and hybrid BCIs expanding the toolkit researchers can use to read, and in some cases influence, brain activity.

Startup founders are also betting that noninvasive systems can lower adoption barriers. Many people are not willing to undergo brain surgery to have an implanted device.

Ultrasound BCIs from companies like OpenAI-backed Merge Labs and Gestala are targeting high-prevalence conditions, including chronic pain, stroke, and depression. As noninvasive options, these technologies may be more acceptable to patients and offer far greater commercial scalability.

Gestala, for example, expects to launch its first-generation product by Q3, Peng said. Early clinical trials have shown promising outcomes, he added, including claims that a single session reduced pain scores by 50 and that the effects lasted 1 to 2 weeks.

HSG, formerly Sequoia China, has also invested in Zhiran Medical, a 2022-founded startup focused on improving the long-term performance of implants. The company uses flexible, high-throughput electrodes intended to reduce inflammation and signal loss that can occur with rigid implants.

“Some technologies may look cutting-edge but far from practical application,” Yang Yunxia, a partner at HSG, wrote in a blog post. Others may appear commercially viable but still face “high costs” or major technical barriers, Yunxia argued. Ultimately, investment decisions hinge on whether an investor believes a product can be developed into a sustainable business, the partner noted.

The years ahead

Over the next five years, industry insiders expect China’s BCI regulations to align more closely with international standards, with particular attention on regulatory approval and data sovereignty. Global frameworks developed by organisations such as the IEC and ISO, along with guidance from the U.S. Food and Drug Administration (FDA), are expected to serve as key reference points.

Chinese regulators are also expected to tighten oversight of invasive devices — and the data generated by all BCI systems — while easing the approval path for noninvasive technologies.

On the ethical front surrounding brain-implanted or brain-modulating devices, China is expected to strengthen informed-consent requirements, expand ethics review beyond purely medical contexts, and move toward unified technical standards for clinical evaluation.