The primary aim of the paper is to examine the scope of university autonomy and extent of government control on higher education (HE) through mapping out the complexity of centralised decentralisation of HE. It consists of three major parts. University autonomy is critically analysed in the first section by examining regulative rules and opinions expressed by questionnaire respondents. Institutional autonomy is the analytical focus in this part, because the paper focuses on the state-university relationship. It then turns to controlling mechanisms of the government and CCP on HE. This is followed by a discussion on shifting university identity and its influence on university autonomy. It concludes by arguing that the coexistence of the dual controlling mechanism and the neo-liberal practices indicates an innovative scope of state capacity. (Contains 4 tables, 2 figures, and 1 note.)