“...If the Chinese are so smart, why aren’t there any “Ivy League” quality schools in China?”
There are - schools such as Tsinghua, Beijing Univ., Shanghai Jiaotong, etc... extremely difficult to get into, and moving into research, etc... as are US top schools.
The Chinese are still fascinated by the US though, and the Ivy’s carry special cache for them, as they simply see that the Ivy’s Grads are respresented in Gov’t and Business at much higher levels than other schools.
And who is to say, that over the course of time, there wouldn't be. One has to take into consideration, the course of time, society, family structure, etc. As China collapsed into chaos in the 19th and into the 20th century, schools in the West flourished. Now, schools in China (as well as the rest of Asia) are growing and improving in a setting of political and social stability.
But you are right, the Ivy League schools have a heritage to be proud of that is yet (key word, "yet") to be fully duplicated by China. But don't count out schools in China or the East, someday to create that same heritage ;) I'm confident (very much so) that it will be duplicated there, led by today's hard charging students.