Modern universities are uniquely European in origin and characteristics. With the diffusion of the European model into the university throughout the world, the heritage of colonialism and the fact that contemporary universities are Western institutions without much linkage to their indigenous intellectual traditions are the fundamental reasons for the failure of non-Western societies to effectively establish their modern higher education systems. In China, the integration between the Chinese and Western ideas of a university remains unfinished despite many efforts to indigenize the Western concept since the nineteenth century. This article examines and compares the characteristics and development of medieval European universities and traditional Chinese higher learning institutions. In contrast to most existing studies on higher education, which have overwhelmingly portrayed the powerful influence of economic and political realities, this article adopts a cultural perspective on the development of Chinese higher education, calling for the return of culture in the analyses of higher education development and arguing that Chinese universities have considerably improved their hardware but not their software. In the current great leap forward of the Chinese higher education, attention to institutions and cultural establishments is usually absent.