The weak industrial foundation has been restricting the development of China’s anufacturing sector; it even threatens the high-quality economic development, social stability, and national defense security of China. As a significant aspect for modern industrial system construction, industrial foundation upgrading, aims to implement new development ideas, form new development patterns, and achieve high-quality development. In this paper, we analyze the connotations of industrial foundation and industrial foundation upgrading in China based on the idea and methods of systems engineering. The general idea for promoting industrial foundation upgrading in China are proposed. Market regulation and government intervention should be effectively coordinated. Focus should be given on basic parts, materials, manufacturing equipment, industrial software, and test platforms. Moreover, innovation and common research should be promoted. The industrial foundation upgrading should be promoted by stages. First, stranglehold problems should be resolved using the new national system. Second, a chain-type solution should be implemented to solve the weaknesses in development. Third, leading enterprises and some specialized and innovative small- and medium-sized enterprises should collaborate to establish an enterprise support pattern. To provide a theoretical reference for industrial foundation upgrading, the top-level design should be enhanced, the fundamental innovation system should be improved, and basic education and talent should be support strengthened.