The Chinese leader's remarks, reported by the official Xinhua news agency, set the stage for what Trump described as possibly the "biggest summit ever" following a pomp-filled reception at Beijing's imposing Great Hall of the People.
With Trump's approval ratings dented by his Iran war, the first visit by a US president to America's main strategic rival since his last trip there in 2017, has taken on added significance.
After an opening ceremony that featured an honour guard and throngs of children excitedly waving flowers and flags, Xi opened the summit on Thursday by telling Trump that stable relations between the world's two biggest economies benefit the entire world.
"When we co-operate, both sides benefit; when we confront each other, both sides suffer," he said in brief remarks that were open to media.
"You're a great leader, sometimes people don't like me saying it, but I say it anyway," Trump responded.
"There are those who say this may be the biggest summit ever."
Behind closed doors, Xi said negotiations between economic and trade teams on Wednesday had reached an "overall balanced and positive outcome", according to Xinhua.
The latest round of negotiations aimed to maintain the trade truce struck between Trump and Xi in October 2025 and establish mechanisms to support future trade and investment, officials said.
Xi also broached the subject of Taiwan, the democratically governed island claimed by China and armed by the United States.
The Chinese leader told Trump that Taiwan was the most important issue in US-China relations and if handled poorly could lead to conflict and an extremely dangerous situation, according to the Chinese readout of the talks, which concluded after a little over two hours.
Joining Trump on the trip are a group of CEOs looking to resolve issues with China, including Elon Musk and Nvidia CEO Jensen Huang.
Trump has said his first request to Xi will be to "open up" China to US industry.
The leaders' meetings will provide plenty of face time between Xi and Trump: after their initial talks, they will tour the UNESCO heritage site Temple of Heaven and attend a state banquet on Thursday, before taking tea and lunch together on Friday, according to the White House.
Trump enters the talks with a weakened hand: US courts have hemmed in his ability to levy tariffs at will on exports from China and other countries.
The Iran war has also boosted inflation at home and escalated the risk that Trump's Republican Party will lose control of one or both legislative branches in November's midterm elections.
Though the Chinese economy has faltered, Xi does not face comparable economic or political pressure.
Nevertheless, both sides are eager to maintain a trade truce struck in October in which Trump suspended triple-digit tariffs on Chinese goods and Xi backed away from choking global supplies of rare earths, vital in making items from electric cars to weapons.
They are also expected to discuss forums to support mutual trade and investment and dialogue on AI issues.
Aside from trade matters, Trump is expected to encourage China to convince Iran to make a deal with Washington to end the conflict.
But analysts doubt that Xi will be willing to push Tehran hard or end support for its military, given Iran's value to Beijing as a strategic counterweight to the US.
For Xi, US arms sales to Taiwan are a top priority, with China reiterating on Wednesday its strong opposition to the sales, with the status of a $14-billion package awaiting Trump's approval still unclear.
