In a meeting at Beijing's Diaoyutai state guesthouse, where China's leaders have historically received senior foreign guests, Xi told the Microsoft co-founder and philanthropist he was very happy to see him after three years and described Gates as the first American friend he had met this year.
"I often say the foundation of US-China relations lies with its people," a video published by state broadcaster CCTV showed Xi as saying.
"I place my hopes on the American people.
"With the current global situation, we can carry out various activities beneficial to our two countries and people - activities that benefit humanity as a whole."
Gates, who arrived in Beijing on Wednesday, told Xi he was "honoured" to have the chance to meet.
"We've always had great conversations and we'll have a lot of important topics to discuss today," he said.
"I was very disappointed I couldn't come during the last four years so it's very exciting to be back."
Xi stopped travelling abroad for almost three years as China shut its borders during the pandemic and his international meetings since the reopening have mostly been with other state leaders.
A number of CEOs have visited China since it reopened early this year but most have met with government ministers.
Gates stepped down from Microsoft's board in 2020 to focus on philanthropic works related to global health, education and climate change.
The last reported meeting between Xi and Gates was in 2015, when they met on the sidelines of the Boao forum in Hainan province.
In early 2020, Xi wrote a letter to Gates thanking him and the Bill & Melinda Gates Foundation for pledging assistance to China, including $US5 million ($A7.3 million) for the country's fight against COVID-19.
The mood of the foreign business community towards China has turned cautious as Sino-US tensions intensify and Xi increases the country's focus on national security.
Gates' visit comes ahead of a long-delayed visit to China by US Secretary of State Antony Blinken, aimed at stabilising relations between the world's two largest economies and strategic rivals.
Blinken had a tense call with China's foreign minister Qin Gang on Wednesday, during which Qin urged the US to stop meddling in its affairs and harming its security.
During his meeting with Gates, Xi said China would not follow the old path of a "strong country seeking hegemony" but would work with other countries to achieve common development, according to the People's Daily newspaper.
Gates also gave a speech at the Global Health Drug Discovery Institute about the need to use technology to solve global health challenges.
The Bill & Melinda Gates Foundation and Beijing municipal government, which founded the institute with Tsinghua University, also pledged to each provide $US50 million ($A73 million) to bolster the institute's drug discovery capacity.
