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Experts said the VAT reform might be a key to unlocking wider reforms down the road, as it not only changes China's overall tax structure but also has bearing on how the central and local governments share tax revenue.

Detailed requirements for business sites have also been lowered, removing what was once a difficult prerequisite for entrepreneurs. The business site registration procedure will be streamlined based on field research. In some cities such as Shanghai, certain residential buildings are allowed to be converted to business venues after due procedures.

On the South China Sea issue, the two countries agreed that maintaining peace, stability, cooperation and development of the South China Sea area is in line with the common interests of regional countries, calling on the parties directly concerned to resolve disputes peacefully through negotiation.

China will also promote afforestation via multi-lateral cooperation mechanism, such as the Belt and Road Initiative, so as to cope with global challenges, such as climate change, and to contribute its due share to global ecological security, Xi said.

Hua's comments came after U.S. Secretary of State John Kerry said China's actions in the South and East China Seas threatened to create a "tinderbox."