With a population of less than one million, Djibouti has long punched above its weight, thanks to a strategic location on the Gulf of Aden, one of the world's busiest shipping routes linking Europe to Asia and the Middle East.
China formally opened the base, which it calls a logistics facility, on August 1, the 90th birthday of the People's Liberation Army. Djibouti also hosts large US and French bases.
Djibouti was politically stable, Xi told its president, Ismail Omar Guelleh, at a meeting in Beijing's Great Hall of the People.
"China sets great store by its relations with Djibouti," he added.
Guelleh, who has been in power since 1999, said he considered himself a "great friend of China's" and could not count the number of times he had visited.
"Djibouti is known for being a country of peace, exchanges and meetings," Guelleh said.
"I would like to recall the geostrategic position of Djibouti and its importance in this part of the world as an island of stability for Asia, Africa and the Middle East."
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