This is going to effect innovation and education in China very badly. If there elite University students are getting there by cheating, then it means there elites aren't really elite: just better at being dishonest.
Devil's advocate: grades are a stupid thing; if someone sits in class and learns and for the exam needs to cheat in order to keep up with cheat-driven-grades-inflation, we have not made a comment about that student's ability or anything. The elites may yet be elite.
All that proves is that exams aren't the best way of assessing someone's ability. However, cheating doesn't show ability in anything, other than deviousness.
As opposed to the elite in the USA...
I went to school in the US. Anecdotally, the top students genuinely cared about learning. Most of the cheaters just barely got by, if that.
Anecdotal data point: My brother taught pure math in both Australia, and the U.S (in ivy league institutions). His view is that the quality of students in Australia (largely classless given the govt subsidies education so much) is leagues above the undergrads at top ivy leagues (who are there because of $$$).
Yes, but take a step “down” to the elite but not aristocratic schools (berkeley, NYU, georgia tech, etc.), and you'll find the quality of the students go up.