Modernizing the industrial system is an integral and strategic priority within the broader scope of modernizing the economic system. It demands a focus on boosting China’s labor productivity and self-sufficiency rate of key technology products, with the aim to advance industrial upgrading and optimize the industrial structure. Hence, China must promote the strategy to expand domestic demand and accelerate the creation of a new development pattern from the supply side, coordinate economic development across regions, establish a national unified market, and create a more open industrial system. Specifically, China should increase funding in scientific research and experimental development, enhance the innovation capacity of core technologies in key fields, optimize the digital economy structure, strengthen the modern service industry, raise the labor productivity of the service industry, maximize the market’s decisive role and the government’s function in resource allocation, and build a talent system tailored to the modern industrial system.