This report takes a historical and comparative approach in examining the development of higher education in China at both systemic and institutional levels in the context of broad social and economic changes in China's society. The investigation focuses on four areas: relationships between universities and the state, the impact of changes on university management, financing of higher education, and quality improvement in instructional programs. By reviewing the literature and drawing on evidence from and experiences of other countries, the study provides a fair picture of the strengths and weaknesses of the country's higher education institutions in relation to their individual histories, current conditions, and potentials, as well as recommendations for their future development.