Biden added that the two leaders must make sure their relations do not veer into open conflict, including by installing "common sense" guardrails.
Biden spoke with Xi over a video conference as the two leaders engaged in their most extensive talks since Biden became president in January.
Xi said the two sides must increase communication and cooperation to solve the many challenges they face.
The talks, which were initiated by Biden, were intended to set terms for future U.S.-China competition. Biden is expected to press Beijing to honor international rules on commerce and security issues.
The United States and China, the world's biggest economies, disagree on the origins of the COVID-19 pandemic, trade and competition rules, Beijing's expanding nuclear arsenal and its stepped-up pressure on Taiwan, among other issues.