Xi was speaking on the anniversary of the "Message to Compatriots in Taiwan" on January 1, 1979, when China declared an end to what had been routine artillery bombardment of Taiwan-controlled offshore islands and offered to open up communication between the two sides.
"The country is growing strong, the nation is rejuvenating and unification between the two sides of the strait is the great trend of history", Xi said.
Dr Hoo Tiang Boon, a cross-strait relations expert at the S. Rajaratnam School of International Studies, said putting the military option on the table was necessary for President Xi, who faces internal pressure over Beijing's handling of the trade dispute with the US.
"This is the first time a Chinese leader has so directly pointed out the feasibility of a Taiwan mode of 'one country two systems, ' and so openly vowed China's will and determination for it", said Liu Guoshen, who leads the Taiwan Research Institute at Xiamen University.
Xi did tout Taiwan's "great victory in frustrating the Taiwan independence movement and other separatist activities" - one day after Tsai said Taiwan's "greatest challenge" was combating Beijing's attempts to "interfere in Taiwan's internal politics and social development". But what does it mean for China-Taiwan relations?
"After peaceful reunification, Taiwan will have lasting peace and the people will enjoy good and prosperous lives", Xi said.
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Taiwan split from China in a civil war that brought the Communist Party to power in China in 1949.
"Secondly, China has to respect the 23 million Taiwanese people's persistence on freedom and democracy, instead of interfering with Taiwan's choice of democracy by polarizing (Taiwan's society) and luring (talents)".
Taiwan President Tsai Ing-wen holding a news conference in reaction to Chinese President Xi Jinping's speech in Taipei. The rival Nationalists set up their own government on the island about 160 kilometers (100 miles) off the Chinese mainland. It was caused by Beijing conducting missile tests over Taiwan's outlying islands in a failed attempt to sway voters not to re-elect Lee Teng-hui, whose high-profile visit to the United States had infuriated the mainland government.
President Xi also proposed talks between the two sides to work out "a systematic arrangement for the peaceful development of the cross-strait relationship".
Taiwan's leader rejected his call just hours later.
The implementation of the "one country, two systems" policy in Hong Kong has deprived its people of freedom and the rule of law - something the people of Taiwan will never accept, the MAC said.
It fears Tsai wishes to push for Taiwan's formal independence, though Tsai says she wants to maintain the status quo. Last year, China also forced worldwide airlines to change their websites and no longer list Taiwan as an independent country.