(FORTUNE Magazine) – Tsinghua welcomed its first management-school students in 1984, two decades after the bloody campus riots that launched the Cultural Revolution. But members of the school's founding classes have also lived lives filled with tumult. They were the first students in a generation admitted solely on the basis of their brainpower, the first from communist China granted permission to study in the West, and they emerged with advanced degrees just as Wall Street sniffed a China boom. Tsinghua catapulted these students from the Commu- nist Youth League to the Ivy League, from grinding poverty to the commanding heights of capitalism. But it also tethered them with ideals of service to country, school, and party.

Perhaps no one's career reflects these tensions more than that of Li Shan, son of an uneducated Sichuan painter who used to beat him for reading books. In 1981, four years after the reinstatement of the national university entrance exam, Li was the only Sichuan applicant to win admission to Tsinghua's economics department. In 1984, when the department was folded into the new School of Economics and Management, Li was tapped to be head of the Communist Youth League, an honor that guaranteed him a bright future in the party. But Li believed the best way to serve China was to venture beyond it, so he leaped at the chance to study in the U.S. At a 1986 dinner for graduates, the school's dean, Zhu Rongji, penned a message in Li's yearbook: "Gain broad knowledge from China and the world."

For the next seven years Li struggled with English, part-time jobs, and coursework, emerging from MIT with a Ph.D. in economics in 1993. He landed at Goldman Sachs, which posted him to Hong Kong as a China economist. Goldman in those years was searching for entrée to China's leadership. Li suggested the firm sponsor the 1996 opening of Tsinghua's national economics research center, and soon after, Goldman got a call from Beijing inviting the firm to co-manage its first big Chinese bond offering. The following year Zhu met with top Goldman partners, including Hank Paulson and John Thornton, to discuss the prospect of Goldman managing the IPO of China's biggest telecom company. At that meeting, Zhu astonished Li by pulling him aside and asking, "Why doesn't my student come back?"

Goldman transferred Li to London to groom him as a dealmaker, but by then he was hatching a plan for a Chinese investment bank that might someday compete with Goldman. When Zhu came to London in 1998 as Premier, Li wormed his way into a reception and slipped him a memo outlining his proposal, along with names of other Chinese at Wall Street firms who pledged support. Days later a top official called Li and urged him to get to Beijing, where he learned that Zhu wanted to move forward with the plan. Li dialed the Goldman voicemail system and delivered his resignation.

Li's bank proposal was nibbled to death by bureaucrats. But his dream of running a Chinese investment bank survived. In 2001, when he became CEO of Bank of China International, the troubled Hong Kong brokerage arm of one of China's large state banks, he and other Tsinghua graduates lobbied Zhu to grant BOCI banking and brokerage privileges on the mainland. At a meeting of the Tsinghua international advisory board, he slipped Zhu a note. "Dear Dean," it read, "I have returned to China. My dream is to build a world-class institution for China. Please allow me the chance." Before the year was out, the measure was signed into law.