China, with its long history of using education to serve the nation, has committed significant financial and human resources to building world-class universities in order to strengthen the nation's development, steer the economy towards innovation, and gain the prestige that comes with highly ranked academic institutions. The key economic shift from "Made in China" to "Created by China" hinges on having world-class universities and prompts China's latest intentional and pragmatic step in using higher education to serve its economic interests. This thesis analyzes China's potential for reaching its goal of establishing world-class universities by 2020. It addresses the specific challenges presented by lack of autonomy and academic freedom, pressures on faculty, the systemic problems of plagiarism, favoritism, and corruption as well as the cultural contradictions caused by importing ideas and techniques from the West. The foundation of the paper is a narrative about the traditional intertwining role of government and academia in China's history, the major educational transitions and reforms of the 20^th century, and the essential ingredients of a world-class institution. It offers an evaluation of how well China uses its resources, talents, and governance structure to strengthen its elite universities, and concludes with my opinion regarding the long-term resolution of the obstacles that stand in the way of China's quest for world-class universities.