Literature suggests that state--market relations in Asian transnational education appear as a hybrid of economic socialism and economic liberalism as well as of supra-territoriality and sovereignty. Such a notion of hybrid focuses on how Asian states manage the struggles over the meaning and value of higher education, thereby addressing various ways in which states participate in neoliberal globalisation. This paper argues that Asian states' higher education policy choices are restricted by local politics and the resulting policy agendas. This argument explains the paradoxical situation that Malaysia continuously encounters when developing its regulatory regime to govern transnational education. The argument also illuminates the recalibrations that appeared in the transnational education policies of Singapore and Hong Kong. The paradox and recalibrations reveal how a political perspective on transnational education is important to understand Asian states' responses to globalisation in higher education regardless of the nature of their regulatory regimes.