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Around the world, governments are racing to build world-class universities. From Germany’s Exzellenzinitiative to India’s “Institutes of Eminence,” the goal is the same: to cultivate institutions that attract and nurture top global talent, conduct cutting-edge research, and drive innovation and growth. But the stakes are particularly high in the US and China, given the escalating competition between the world’s two largest economies.
The struggle to lead in higher education is about more than prestige. Elite universities affect economic performance in myriad ways, including by fostering innovation, boosting productivity, and increasing individual earnings.
Graduates from top-tier institutions are more likely to become scientists, inventors, and entrepreneurs. At the national level, countries with higher average university quality tend to enjoy faster technological development and stronger productivity.
A few years ago, any comparison of US and Chinese higher education would have been no contest. For decades, US universities have dominated global rankings, with institutions like MIT, Stanford, and Harvard forming the core of the innovation hubs that have been integral to the country’s global scientific leadership and entrepreneurial dynamism.
Many of the world’s most valuable companies – including Google, Meta, Nvidia, and Tesla – were built by graduates of elite US universities.
As often as not, those graduates were not American. Over half of America’s billion-dollar startups have at least one immigrant founder, and a quarter were launched by individuals who first arrived in the US as international students.
This points to a key strength of America’s university system: its ability to attract the world’s top talent. International students account for 14% of enrolment at America’s top research universities, and 28% at elite institutions, such as the Ivy League universities, Stanford, and MIT. In the 2023-24 academic year, international students contributed nearly US$44 billion to the US economy and supported more than 378,000 jobs.
But America’s continued dominance in higher education is far from guaranteed. While US (and European) institutions still lead in global rankings, Chinese universities have been rapidly gaining on them in recent years.
In the QS and Times Higher Education rankings, Peking and Tsinghua universities have now broken into the top 20. And in the 2025 Nature Index, eight of the top ten global research institutions are based in China, with Harvard and Germany’s Max Planck Society being the only Western institutions that made the cut.
Moreover, Zhejiang University, which has modelled itself on Stanford, has helped to transform Hangzhou into a Chinese Silicon Valley, with a vibrant startup ecosystem underpinned by strong government support and active university-industry collaboration. The AI powerhouse DeepSeek emerged in Hangzhou.
Chinese universities are particularly strong in the so-called STEM fields (science, technology, engineering, and mathematics). China now produces some two million science and engineering graduates annually, more than double the number in the US.
Engineering degrees comprise 33% of all undergraduate qualifications in China, compared to just 8% in the US, and more than 600 Chinese universities now offer undergraduate programmes in AI. Today, nearly half of the world’s top AI researchers are of Chinese origin – and a growing number of them are choosing to work in China.
These developments are no accident. Rather, they reflect three decades of sustained government commitment, exemplified by initiatives like Project 985 and the Double First-Class Construction programme. And continued progress is virtually guaranteed.
Earlier this year, China released a national strategy aimed at turning the country into an “education power with global influence” by 2035, particularly in areas like AI, semiconductors, and robotics.
To be sure, China’s push to lead in higher education will face considerable headwinds. Cutting-edge research and breakthrough innovation demand intellectual and academic freedom – the freedom to question prevailing ideas, explore new concepts, and update modes of thinking. As critics have warned, the Communist Party of China’s tight control over universities and the media is not conducive to any of this.
Nonetheless, China’s commitment to strengthening higher education is clear. The same cannot be said for the US, where President Donald Trump’s administration has effectively declared war on leading universities in the name of combating alleged ideological bias.
This has included freezing billions of dollars in research funding and demanding sweeping reforms by institutions like Harvard and Columbia, from curricula changes to the elimination of diversity programmes. Meanwhile, the Trump administration has sought to revoke and restrict visas for international students.
Though the Trump administration’s attacks have been met with some resistance from universities, there has been at least as much capitulation. Now, trust in higher education is plunging, and foreign applications are falling sharply – a trend that is no doubt compounded by Trump’s broader immigration crackdown. These developments jeopardise not only US academic freedom, but also America’s long-standing economic, scientific, and technological edge.
One can only hope that the Trump administration’s assaults on higher education will prove to be short-lived, and the US will recommit to promoting academic freedom, welcoming international students, and supporting universities as incubators of groundbreaking ideas.
With China investing heavily in building world-class universities, courting foreign talent, and strengthening ties between industry and academia, the US cannot afford to take its academic primacy for granted. How the global “brain race” unfolds could affect technological leadership, economic power, and geopolitical influence for decades to come.
Lee Jong-Wha, professor of economics at Korea University, is a former chief economist at the Asian Development Bank and a former senior adviser for international economic affairs to the president of South Korea.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
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