China was angered after Australia last month blocked the A$10 billion ($7.7 billion) sale of the country's biggest energy grid to Chinese bidders.
The two were speaking on the sidelines of a G20 summit in the eastern Chinese city of Hangzhou.
China was angered after Australia last month blocked the A$10 billion ($7.7 billion) sale of the country's biggest energy grid to Chinese bidders after they failed to overcome security concerns.
China "hopes the Australian side continues to dedicate itself to providing foreign investors a fair, transparent and predictable policy environment", China's Foreign Ministry cited Xi as saying.
"This also accords with Australia's own interests."
The decision has caused a rift between Australia and its biggest trading partner. China has accused Australia of bowing to protectionist sentiment in blocking the bid for Ausgrid, as well as an earlier one by a China-led consortium to buy cattle company Kidman & Co.
Australia, a staunch U.S. ally, has also drawn criticism from China for running surveillance flights over disputed islands in the South China Sea, and supporting U.S. freedom of navigation exercises there.
Xi said China and Australia should respect each others "choices in their development paths and each others core interests and major interests", the foreign ministry added.