Abstract: This article analyses the higher education systems and institutions in China,and proposes that the great expansion of higher education in China is facing an urgentissue, which is the institutional innovation of the educational system. Principles and thoughts on the innovation of higher education systems in China are laid down for the government and higher education institutions; it proposes the guidelines, contents of institutional innovation, and sums up the achievements obtained and forecasts the trend in the future for the institutional innovation in higher education. These have all contributed to the search in higher education institutional innovation.