To set up and to complete an operating mechanism of higher education under the condition of market economy and to deal with the relationship between government, market, community and university at a reasonable way for China is a significant issue which is regards to if higher education be accept to the period of transition of economy and the needs of social development. This article illustrates the relationship between market economy and higher education, the general characteristics of higher education under the market environment, and introduces western countries and China's situation at moment. On the basis of above, ideas and suggests are given to reform and to complete an operating mechanism of higher education in China.
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