The liberal theory of industrialism is one of the chief political theories impacting education. Such a framework associates academic achievement directly with employability and establishes education's dominant position in mediating social mobility. However, Chinese graduates are confronted with the broken promises of higher education, since college credentials are no longer regarded as 'golden tickets' that guarantee decent jobs or high social status. Therefore, this paper establishes a critical framework for analysing the liberal theory of industrialism. By referencing to empirical research, the current study provides an in-depth discussion from the national perspective and offers explanations from both quantitative and qualitative evidence. The study suggests that the implementation of the theory in egalitarian societies has been largely compromised with regard to meritocratic selection. Meanwhile, the theory relies on a veil of ignorance, for it assumes that people would have a unanimous perception regarding social status. In both respects, it is argued to be incompatible with the contemporary Chinese context. Thus a more comprehensive and flexible perspective is needed to identify functions of higher education in developing countries.