Maybe my word choice is wrong. 'Limited' here does not mean someone is limiting the resource. It means the scarcity. In another way, it is limited by nature. Like how it is used the definition of Economic Problem: "How do we satisfy unlimited wants with limited resources?" (https://en.wikipedia.org/wiki/Economic_problem)

Back to your question, China is not limiting education. But the education is limited by the nature of a lack of resources problem. Lets say we are in a university called US. We have 10 students and 10 Profs in US. Then every student could easily get into the course they want. An entry test might be placed only to make sure the student has knowledge required for this course. But in another university called China, they have 20 students but only 5 Profs. So a entry test is placed on those 20 to select the best 5 students for classes. So these 20 students need to study damn hard for the chance to get into the course they want. For here, prof is a 'limited resource.'

It's not really much different from the US. There are a few elite universities that have very competitive admissions and then a bunch of second-rate local universities (although the elite universities in China are about the same level as second-rate universities in the US). The problem is that university admissions in China is decided entirely based on a single test. You basically get one shot. If you don't do well, that's it for you (unless you have rich parents that can send you to the US to study).

> I can't imagine a country having to limit educating students because of lack of resources. I hope they're not doing it artificially just to have a gradient

What I've heard about India is that there are a few (15, IIRC) prestigious Engineering colleges and everyone wants to go there. So high school students have to outdo each other to get a place, meaning a lot of study & completion. The gradient is not intentional