China’s higher education sector is undergoing a profound structural and institutional transformation.

In recent years, the authorities have introduced a series of top-level policy measures aimed at promoting the differentiated development of universities, greater institutional specialisation, dynamic adjustment of academic programmes and more targeted allocation of resources.

This is more than a matter of fine-tuning academic disciplines. It represents a systematic restructuring of the supply side of higher education.

At its core, the reform seeks to break away from the longstanding problem of “a thousand universities looking alike”, encouraging institutions to move from extensive expansion towards more focused, demand-driven and substantive development.

1. Classification and specialisation: From “bigger is better” to precise positioning

For years, China’s higher education system has been affected by an institutional tendency to pursue size and comprehensiveness.

Some local undergraduate institutions have sought university status, while institutions traditionally focused on the humanities and social sciences have rushed to add science and engineering programmes, hoping to compete on conventional measures of institutional prestige.

This tendency towards homogenisation has not only led to inefficient use of educational resources, but has also contributed to structural mismatches between the supply of graduates and labour-market demand.

The current push for classified development and institutional specialisation is intended to address precisely this problem.

Official policy documents call for universities to clarify their positioning as research-oriented, application-oriented or skills-oriented institutions, while distinguishing between comprehensive and specialised development.

Under this framework, China is moving towards a more diversified system of evaluation.

Leading universities such as Peking University and Tsinghua University are expected to focus more heavily on basic research and breakthroughs in strategically important technologies. Local universities and vocational institutions, meanwhile, are being encouraged to deepen their engagement with regional economies and strengthen links with industry.

Shanghai’s “12-grid” classification and evaluation framework, for example, seeks to move away from a one-size-fits-all approach to assessing universities. It creates greater room for smaller institutions with distinctive strengths to develop along their own lines.

The message is clear: universities are increasingly expected to excel in their own lanes rather than compete on a single, uniform track.

2. Dynamic adjustment: Stronger intervention by national strategy and market demand

Among the various reform measures, the dynamic adjustment of academic programmes is arguably the most consequential.

At its heart is the creation of a more demand-driven mechanism for introducing, restructuring and withdrawing programmes.

The scale and frequency of programme adjustments in recent years have been unprecedented. During the 14th Five-Year Plan period, Chinese universities collectively withdrew or suspended around 12,200 undergraduate programmes.

At the provincial level, the scale of intervention has also been substantial.

In Heilongjiang, for example, the proportion of university programmes undergoing addition, withdrawal or adjustment reached 29.3%, while the proportion of programmes supporting key industries rose to 74%.

Zhejiang has pushed for adjustments involving 31.4% of university programmes across the province, with a strong emphasis on supporting its advanced manufacturing clusters.

In Shaanxi, an “encouraged development list” has been used to guide universities towards areas aligned with key industries, contributing to an increase of nearly 19% in programmes supporting those industries.

The direction is unmistakable.

On one hand, programmes facing weak employment prospects or persistent mismatches with market demand — including some traditional humanities, public administration and management disciplines — are coming under pressure for restructuring or withdrawal.

On the other hand, emerging strategic fields such as artificial intelligence, quantum information, the low-altitude economy and embodied intelligence are receiving strong policy encouragement.

The objective is to address structural imbalances between the supply of graduates and the changing needs of the economy.

3. Differentiated resource allocation: The financial lever

No major institutional reform can succeed without changes to the way public funding and resources are allocated.

In the past, university resources in China were to a considerable extent linked to institutional status, administrative hierarchy and student numbers, creating elements of what could be described as an “egalitarian” allocation model.

Today, differentiated resource allocation is becoming a powerful policy lever for driving institutional transformation.

Central and local governments are moving towards performance-based funding, targeted investment and differentiated support. Resources are increasingly being tied to institutional positioning, evaluation outcomes and strategic priorities.

In practical terms, the results of classified evaluation can influence decisions concerning student intake, government funding, programme approval and research infrastructure.

Zhejiang, for instance, has increased per-student funding coefficients for disciplines and programmes aligned with its advanced manufacturing clusters. In effect, public finance is being used as a lever to encourage universities to align themselves more closely with strategic economic priorities.

Universities that perform poorly or are slow to adjust their programmes could face increasing financial pressure, while institutions that transform more decisively may receive stronger policy and financial support.

4. Conclusion: Challenges and prospects during the transition

This government-led drive for greater efficiency and structural optimisation is, in many respects, an attempt to ensure that China’s higher education system can respond to the demands of high-quality economic development and changing demographic conditions.

Yet the transformation also presents significant challenges.

How should universities retrain or redeploy academic staff in disciplines undergoing rapid restructuring?

How can policymakers prevent a new wave of overcrowding when universities rush into fashionable fields such as artificial intelligence and robotics?

And, perhaps most importantly, how can universities preserve their academic and humanistic foundations while responding to increasingly strong demands for strategic and economic alignment?

The transformation of higher education will therefore be a long-term test of policy discipline and institutional governance.

China is laying out a new playing field built around classification, specialisation, dynamic adjustment and differentiated resource allocation.

Ultimately, the success of this reform will depend on whether universities can genuinely absorb the opportunities created by these policies and transform themselves from within — not merely by changing programme titles or institutional labels, but by reshaping their governance, academic strengths and social functions.

The ultimate goal is to build a higher education system capable of providing the talent and intellectual capacity required for China’s modernisation.

But the deeper change may lie elsewhere: universities are increasingly being asked not simply how large they can become, but what distinctive value they can create — for their students, their industries and the communities they serve.