The speed and scale of growth is dizzying. A higher education system devastated under the decade-long Cultural Revolution has emerged little more than 30 years on as the world's biggest tertiary education provider. China now has about 23 million students in more than 1,700 institutions, and within a decade, it is due to overtake the US as the world's number-one producer of research.

Perhaps even more remarkable than the sheer scale of this expansion is the fact that China has managed at the same time to develop an elite cadre of universities that can compete with the world's best.

When international academics gather in Shanghai this week for the third International Conference on World Class Universities, they can see at first hand the achievements of the host institution, Shanghai Jiao Tong University, and China's flagship universities, Peking and Tsinghua, and ponder them as extraordinary case studies in how to build world beaters. And the world is taking note.

Of course, money has been vital. The economic explosion that began in the early 1990s has fuelled the higher education boom, and vice versa. But leadership played a role, too. The Government made clear its intent by focusing funding on a handful of institutions to launch them up the global league tables. Under its "985" project, China has invested 33 billion yuan (?2.9 billion) in just 36 institutions. The top nine institutions are understood to have received about 40 per cent of all the project funding. More investment is planned.

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The policy is controversial because it has led to large disparities in quality and opportunities for students. But it cannot be ignored in a global knowledge economy. Germany, South Korea and others have launched similar drives.

Funding concentration is again exercising the UK. The opening shots in the debate were fired last week when the chairman of the Russell Group called for a greater share of the research funding pot, and the Government's Framework for Higher Education will keep the issue on the agenda.

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But China's growing power and confidence also highlight the value of collaboration. As Sir Drummond Bone said last year, in his paper on internationalisation for ministers: "World-class research is inherently international."

China's prodigious increase in its research output has been accompanied by a rise in research collaborations. This continues to present the UK with tremendous opportunities for exciting - and yes, lucrative - research and teaching partnerships. But it holds danger, too.

Thomson Reuters' global research report on China, due out next week, notes that although strong UK and US partners have helped push China's research up to international standard, regional collaborations, notably with South Korea and Singapore, are now growing faster.

"Asia-Pacific nations are entirely happy to work with one another's excellent research bases now," the report says. "They no longer need links to traditional Group of Eight partners to help their knowledge development. When Europe and the US visit China, they can only do so as equal partners."

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The UK and others in the West must adopt a new tone in dealings with China. As the report warns: "The question that may be put to them is what they can bring to the partnership to make it worth China's while to share."

phil.baty@tsleducation.com.