In keeping with China’s President Xi Jinping’s “Chinese Dream,” China has set a goal of becoming a world-class innovator by 2050. China’s higher education Science, Technology, Engineering, and Math (STEM) research environment will play a pivotal role in influencing whether China is successful in transitioning from a manufacturing-based economy to an innovation-driven, knowledge-based economy. Past studies on China’s research environment have been primarily qualitative in nature or based on anecdotal evidence. In this study, we surveyed STEM faculty from China’s top 25 universities to get a clearer understanding of how faculty members view China’s overall research environment. We received 731 completed survey responses, 17% of which were from individuals who received terminal degrees from abroad and 83% of which were from individuals who received terminal degrees from domestic institutions of higher education. We present results on why returnees decided to study abroad, returnees’ decisions to return to China, and differences in perceptions between returnees and domestic degree holders on the advantages of having a foreign degree. The top five challenges to China’s research environment identified by survey respondents were: a promotion of short-term thinking and instant success (37% of all respondents); research funding (33%); too much bureaucratic or governmental intervention (31%); the evaluation system (27%); and a reliance on human relations (26%). Results indicated that while China has clearly made strides in its higher education system, there are numerous challenges that must be overcome before China can hope to effectively produce the kinds of innovative thinkers that are required if it is to achieve its ambitious goals. We also raise questions about the current direction of education and inquiry in China, particularly indications that government policy is turning inward, away from openness that is central to innovative thinking.