Since the open-door policy and economic reform was launched in 1978, Chinese higher education has developed dramatically in terms of the number of student enrollments and the number of higher education institutions. The transition policies applied in higher education demonstrate that, the Chinese government has applied three incentive methods to motivate universities and academics towards improved performance, these incentive methods are reducing state authority, enhancing academic power and creating market rewards, such as policy decentralisation, charging tuition fees, establishing private higher education, and so on so forth. Through a variety of government policies on higher education in the post-Mao period, the Chinese government has reduced state authority, enhanced academic power and created market rewards in Chinese university management. Apparently the traditional highly centralised hierarchical governance in Chinese higher education has been replaced by the new hybrid governance, which is characterised by low state authority, strong academic power and strong market rewards.