This paper attempts to address connections between the Chinese model for development or the "Beijing Consensus" and Chinese universities. Chinese universities seem to be caught between serving governmental agendas and pursuing their own goals as an academic community. Up until recently, they had become used to following the lead of the government, which often comes with rationales and approaches featuring pragmatism and utilitarianism. Drawing on the perspectives of social embeddedness and external control of organizations in higher education, we argue that the lack of dynamism and innovation that is hindering Chinese higher education's development is largely owing to the political, social, and cultural factors prevailing in the environment in which the universities operate. Put in another way, Chinese universities are confronting a crisis, owing to the inbuilt constraints of China's development model.