In August, New York University officially started its Shanghai program, welcoming nearly 300 undergraduates—150 from China, 100 from the United States, and 45 from other parts of the world. As NYU-Shanghai begins in earnest, let’s examine why China has enticed American universities to its shores.

Chinese universities are already changing the world and will become a dominant force by midcentury, when Asia is expected to become the world’s economic powerhouse. American institutions are deepening their engagement with Chinese higher education, and how this relationship develops will have a profound impact, positive or negative, on both countries and, indeed, on the world.

The Chinese leadership views internationalization of higher education in a positive light. The leaders understand that universities are drivers of economic development and instruments of competition in a globalized world. The legitimacy of the Communist Party of China depends on its ability to make globalization work in China’s favor.

A key test of China’s international higher-education aspirations is its incorporation—or adaptation—of Western liberal-arts traditions, an educational goal seen in other Asian countries. Most American universities developing programs in China, whether large or small, share one idea in common: that liberal-arts education will change China’s universities.

The hype for the liberal arts is unmistakable. The logic goes that liberal-arts education, with its roots in ancient Greece and Rome, helped give birth to the Renaissance and the Enlightenment, permeated higher learning in modern France, England, and Germany, and made its way to the United States, where it came to underlie the greatness of American higher education. All along the way, each of these nations adapted the liberal arts to align with its national character and the unique circumstances of its higher-education system. The argument goes that China is next in line to adapt liberal-arts education in its own way, with Chinese characteristics.

To counter overly specialized study and traditional Chinese rote learning, adapting liberal-arts education means increased emphasis on intellectual skills, such as creativity and critical thinking, as well as interpersonal and cross-cultural communication. But there are key differences in how American educators and those in China view such ideas. American higher education makes a direct link between liberal-arts education and the democratic process. For China, liberal-arts education is a means to strengthen international competitiveness and domestic social harmony.

With 6.9 million college graduates this year, most of whom have not yet found jobs, the question arises: Will the liberal arts help students get jobs or promote social instability? Ideally, liberal-arts education produces graduates that can adapt to a changing workplace and even become entrepreneurial enough to create new jobs. The Chinese will seek the truth about this from the facts in the employment statistics.

There is increasing pressure from employers in China for graduates to have relevant knowledge and skills, and from Chinese parents, most who have never been to college, who demand gainful employment for their children after graduation.

Thus, internationalization of higher education, even if it includes a deepening engagement with U.S. universities, has to help China face a double-edged sword. It has to add more dynamism to higher learning by reforming curriculum and teaching methods, but retain key national values and traditions, and encourage scientific innovation while holding civil society in check. Feasible?

So far, China has been successful in liberating its economy enough to challenge the United States for the top slot, even while holding political reform in check. In education, Shanghai schools with a Chinese-style curriculum scored above those in all other countries in the Programme for International Student Assessment. China has already shown great skill in adapting Western innovations in business, finance, and management, while retaining what it sees as its essential national character. For China, the jury is still out on liberal-arts education.

Unfortunately, liberal-arts education, as the heart of a U.S. engagement with Chinese higher education, has a weak spot. As Victor E. Ferrall Jr. notes in Liberal Arts at the Brink, there has been a declining demand for liberal-arts education in the United States since the 1960s. This is due to the rise in demand for vocational education that emphasizes practicality and usefulness for the job market. Most of the Chinese students are the first in their families to attend college. If American parents are less concerned about the liberal arts and more concerned about the high price of a college education and its value as a ticket to a good job after graduation, Chinese parents, who also pay dearly, are sure to want the same.

As in the United States, it will be elite families who will be more willing to accept the case for the liberal arts in college. To be effective, American university engagement in China should focus not so much on liberal-arts curriculum but more on what U.S. campuses do best—creating an open and lively learning environment by permitting students to engage as freely as they see fit, both on campus and in society.

It will take time to see how NYU and other U.S. universities, in cooperation with their Chinese partners, can help create such an environment that encourages students to take the initiative in making liberal-arts education engage their country and its culture, and also figure out how to make it work in the rapidly changing workplace after graduation. In the meantime, it will be equally interesting to keep an eye on those Chinese institutions such as Peking, Tsinghua, and Fudan Universities that are experimenting with liberal-arts courses on their own.