This study focuses on the development of the high-end manufacturing equipment industry in China, represented by machine tools. The machine tool referred to herein includes not only the machine tools in traditional definition, such as lathes, milling machines, planers, drilling machines, boring machines, grinders, and gear making machines, but also additive manufacturing equipment and additive-subtractive hybrid manufacturing equipment. This study analyzes the development trends of the machine tool industry in China and the globe, and then studies the problems existing in China’s machine tool industry. Compared with world’s advanced level, China’s machine tool industry still has weaknesses in (1) basic research and key technologies for ultra-precision machine tools, (2) the machining accuracy and efficiency of large-scale machine tools, (3) the reliability and accuracy retention of the whole machine performance, (4) the research and development of common technologies of the advanced additive manufacturing and hybrid manufacturing equipment, and (5) the level of intelligence of high-end machine tools. Furthermore, we propose the key direction of China’s machine tool industry during the 14th Five-Year Plan and the following five to ten years, and put forward some policy measures for the development of machine tool industry in China, including coordinating national science and technology plans with national policy supporting and evaluation systems, and establishing and strengthening the common technology collaborative innovation system for the high-end manufacturing equipment represented by machine tools.