The transformation of local universities constitutes a critical strategy for diversifying higher education and advancing China’s modern vocational education system. Through a two-dimensional analytical framework, examining policy instruments and policy themes, this study analyzes 165 policy documents to reveal four systemic challenges: inadequate synergistic effects across policy initiatives, ambiguous conceptual definitions of institutional transformation, underdeveloped multi-stakeholder governance mechanisms, and insufficient policy coordination. To advance institutional transformation, we propose establishing a national transformation framework to coordinate institutional development, creating a differentiated classification system with clear institutional benchmarks, defining statutory responsibilities for government-institution-enterprise collaboration, and optimizing instrument-theme configurations to enhance policy efficacy.