"A peaceful, stable and developing Middle East is the common interest of all parties... China appreciates that the Israeli side will continue to tackle the Israeli-Palestinian issue on the basis of the 'two-state solution'," Xinhua news agency quoted Xi as saying during their meeting.
""As soon as possible, (I hope) the two countries will live in peace and coexistence."
Netanyahu said Israel was willing to see China play a bigger role in Middle East affairs, according to Xinhua.
The Israeli leader also pitched a comprehensive innovation partnership between the two countries focusing on the development of various technologies.
"We know that you have great scientists, great industrialists, great capabilities, and we think that by working together we can make the future better for our peoples," Israeli media quoted Netanyahu as saying.
Xi said the two countries would push forward with "major cooperation projects" in science and technology, water resources, agriculture, medicine, clean energy, and other fields, according to Xinhua.
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The meeting was part of a three-day trip by the Israeli leader marking 25 years of diplomatic relations.
China depends on the volatile Middle East for oil supplies but has long taken a back seat in its disputes.
But over the past year Xi has taken a new approach, with steps that include offering to host talks between the opposing parties in the Syrian conflict.
Netanyahu was accompanied by 90 businesspeople -- the largest Israeli business delegation ever to visit China, according to Chinese state broadcaster CGTN.
They met executives from some of China's largest corporations including Internet giants Baidu and Alibaba.
Trade between China and Israel has flourished since diplomatic ties were established.
China's total investment in Israel exceeds six billion dollars, and Israeli-designed technologies are used across the world's second largest economy.