Xi put forward the proposal Wednesday during a meeting in Jakarta with his Indonesian counterpart, Susilo Bambang Yudhoyono, reports Xinhua news agency.
Beijing stands ready to offer financial support for infrastructure construction in developing countries in the region, including members of the Association of Southeast Asian Nations, Xi said.
The new bank, he added, will cooperate with existing multilateral development banks to make full use of their respective advantages and jointly promote the sustained and stable growth of the Asian economy, Xi said.
Xi reached there earlier in the day for a state visit to Indonesia, the first leg of his maiden trip to Southeast Asia since he assumed presidency in March.
During their talks, the two leaders agreed to lift bilateral ties to a comprehensive strategic partnership.