Xi's visit comes during a flurry of diplomacy with the United States -- Taiwan's main security backer -- with Treasury Secretary Janet Yellen currently in Beijing for talks aimed at stabilising economic ties.
China views self-ruled Taiwan as part of its own territory and has vowed to bring the island under its control one day, by force if necessary.
During an inspection of the People's Liberation Army's Eastern Theatre Command, Xi told military representatives that they should "dare to fight, be good at fighting, and resolutely defend national sovereignty (and) security", state broadcaster CCTV reported.
"At present, the world has entered a new era of turbulence and change, and our country's security situation has become more unstable and uncertain," CCTV quoted Xi as saying.
"It is necessary to deepen war and combat planning... focus on military training for actual combat, and accelerate the improvement in our capacity to win," Xi reportedly said.
The military "must... raise party committee leaders' capacity for preparing for war and doing battle", he added, according to the broadcaster.
Footage broadcast by CCTV on Thursday evening showed Xi in a khaki military dress shirt entering a room of rapturously applauding military officials before making remarks from a podium.
China and the United States have butted heads in recent years over the status of Taiwan, with Beijing holding large-scale military exercises in response to a visit to the island by then House speaker Nancy Pelosi last year.
In April, Chinese forces conducted three days of drills simulating a blockade of the island after Pelosi's successor, Kevin McCarthy, held talks with Taiwanese leader Tsai Ing-wen in California.
Yellen's visit comes after another top US official, Antony Blinken, raised concerns about China's "provocative" actions towards Taiwan during a visit to Beijing last month -- the first such trip by a US secretary of state in nearly five years.
But China batted away the comments, with top diplomat Wang Yi saying there was "no room to compromise" on the issue.
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