This is a documentary study of education abroad policy in the People's Republic of China (PRC) between 1978 and 2009. By examining the dynamics underpinning the PRC state's efforts to shape the flow of Chinese students and scholars from and into China, this article reveals the major strategies that have enabled education abroad to become a source of brain gain. It argues that China's brain gain strategies feature three characteristics: a proactive diplomatic approach to international educational relations; strategic dependence on foreign higher education resources and a decentralized economic mechanism to raise foreign-trained human capital. The paper concludes by discussing the implications of Chinese experience for our understanding of the complex and dynamic relations between the state, the market, universities and international relations as relating to cross-border academic mobility, international educational relations, and national development in a globalizing world.