On Sunday afternoon at Tsinghua University, parents photograph their small children by the ceremonial gate at the heart of the campus. Tsinghua celebrates its 100th anniversary this year, and remains the dream of many.

Finding a place among the lucky 30,000 students requires years of hard study at school and success in national exams. Alumni include President Hu Jintao. As inspiration, visitors buy spiritware from the many merchandise shops scattered across the campus pens, jumpers, plates, cups and satchels, all stamped with the Tsinghua crest.

The rebuilding of the Tsinghua campus in recent years is astonishing in scale and ambition. Buildings and landscape recall a distinguished American college, complete with sports stadium, imposing new libraries, and contemporary sculpture. The emphasis is on medicine and engineering, though the new arts and social science facilities are impressive. The inevitable science park sits on the edge of campus, home to Japanese and American companies keen to work with China's academic elite.

Just a few blocks away, delegations from foreign universities take photos by the pagoda and lake at Peking University, an institution famous for law, arts and science. Mao Zedong is only one of many influential alumni. Here too rapid rebuilding is underway, swiftly replacing low structures from an early time with multi-story facilities, some generic and others echoing traditional forms of Chinese architecture.

The sports field is lined with a new school of economics, a convention centre, a school of government and an impressive MBA centre alongside the university hospital. Peking lacks the dramatic entrance, straight lines and orderly streets of the Tsinghua campus, but curving paths, hidden pavilions and ornamental water recall its origin as a Qing Dynasty royal garden.

Similar stories of campus make-overs can be cited from Shanghai and Hong Kong, from Korea and Singapore. Tsinghua and Peking are part of the biggest expansion of tertiary education in human history. In Beijing, the concentration of academic talent includes many specialist research institutes of the Chinese Academy of Science, and an array of single discipline universities.

Across Asia, governments see higher learning as fundamental to national identity and prosperity. Countries are building technological and civic capital through university education. In China, cumulative investment in nine leading universities will ensure all rate among the most research productive institutions on the planet.

As Ben Wildavsky argued in The Great Brain Race, the rise of Chinese universities is a good thing. Chinese research adds to the sum of human knowledge. Chinese technology will be important to new industries, and Chinese scholarship will bring significant texts and traditions to a wider audience.

The expansion of universities is integral to a society seeking an economy based on sophisticated technology and services. And just as higher education produces more productive, happier and healthier citizens in the west, so it will in China.

Yet any weekend walk through Beijing's Haidian district underlines the pending end of a familiar world. For 25 years Australian universities have prospered by offering Chinese students opportunities for higher education.

Now there are numerous foreign students studying on the Tsinghua and Peking campus, and many Australians keen to join their number. Chinese students who once looked overseas have less incentive to study abroad. The invention of international ranking systems, currently working in our favour, will over time reflect and entrench the Chinese investment in higher education.

So how do we respond?
Australia is a small player in a wide world; we cannot match our competitors like China in bricks and mortar we have neither the population nor the economic power. However, if we maintain the quality and reputation of our universities, we can engage through mutually rewarding partnerships, allowing each party to contribute to the intellectual, social and economic lives of its counterpart. That may be how we can find a niche in the new world, as it is constructed, building-by-building, in China.