The two leaders met for talks and dinner at the prime minister's official country residence, Chequers.
In a joint statement before the meeting, they said stronger UK-China ties were of "global significance and strategic importance."
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But Cameron and Xi downplayed their differences over issues such as human rights, promising a relationship of "mutual respect" that recognised "the importance each side attaches to its own political system, development path, core interests and major concerns."
Cameron's office said today's talks would focus on international affairs and how China can help battle extremism. Western governments are keenly interested in China's response to the war in Syria.
China had joined Russia to block a series of Western resolutions at the United Nations against Syrian President Bashar Assad's government. Russia has stepped up a military intervention in Syria that it says targets the Islamic State group but that Britain and others say seeks to prop up Assad.
Earlier, Xi and his wife said goodbye to Queen Elizabeth II after spending two nights as the monarch's guest at Buckingham Palace. Xi will visit the northwest England city of Manchester on Friday to end his four-day trip.
Xi has been greeted with elaborate British pomp and ceremony on the state visit, the first by a Chinese leader to Britain in a decade.
The two countries signed more than 30 billion pounds in trade agreements, including a contentious nuclear power deal, as Cameron said Britain sought to be China's "partner of choice" in the West.
There have also been protests by human rights activists and pro-Tibet groups, and opposition politicians have urged Cameron to press Xi on China's rights record.
The trip has dominated state media in China, where the Communist Party newspaper Global Times said "the Sino-UK relationship will expect the harvest of the 'golden era.'"
It's a marked change in tone from Cameron's trip to China in December 2013, when the Global Times said Britain was an old country, "easily replaceable in China's European foreign policy.
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