He asked a panel of three judges for leniency because of his youth and lack of any previous criminal record.
He said that on the night of the killing he caught the taxi and began chatting with Mr Mohini about working in a hotel.
Xiao said an argument began when Mr Mohini said there were too many Asian people in New Zealand taking jobs. The argument escalated after he disputed the fare.
Xiao said he reached for his knife because Mr Mohini was much bigger than him and he felt intimidated, but he did not mean to stab the taxi driver in the heart or to kill him.
"I did not mean to kill the driver. I am sorry for what I did. I am guilty," Xiao said, wearing a neatly pressed white cotton shirt and black trousers.
"Please forgive me ... I am still young, have no previous criminal record and am the only child in the family. I was scared of the result so I did not surrender.
"Please consider these reasons for giving me a lenient sentence."
But Chinese prosecutors said Xiao meant to hurt Mr Mohini in the late-night attack.
"Although Zhen Xiao's act of violence was not premeditated, he meant to hurt the driver," state prosecutor Feng Zhiyu said.
"What he did is a serious crime and the sentence should be more than 10 years to life in prison."
Prosecutors said a lighter sentence would be considered if the victim's family forgave Xiao.
Outside the court, Xiao's aunt, Li Liping, apologised to Mr Mohini's family on behalf of her nephew. She said her family had also written a letter of condolence to Mr Mohini's widow, Falguni, and their two daughters.
"No one has the right to take someone else's life," she said. "We are deeply remorseful."
Detective Senior Sergeant Hywel Jones, who led the investigation and flew to China for the trial, said the hearing went "very well".
"We have had 17 months of co-operation with the Chinese authorities and I think it has strengthened our relationship."
After discovering that Xiao had fled to China, Mr Jones went to Beijing in March last year to ask the Chinese Government for help.
Within three months, Chinese police traced Xiao to his apartment in Shanghai and arrested him.
"He was not trying to hide, but he was not giving himself up either," said Mr Jones.
Four Chinese police officers flew to New Zealand and examined the evidence.
"We had a wealth of evidence and at one point had 50 to 60 officers working on the case. We also had DNA evidence on him.
"The Chinese police came over in February this year and looked at the scene of the crime, interviewed the key witnesses and we passed them the key exhibits," said Mr Jones.
The judges will consider the evidence presented to the court yesterday before announcing another date for Xiao's verdict and possible sentence.
Mr Jones said he had been in contact with Mr Mohini's widow before leaving for China and felt that the dead man's family could take comfort from the handling of the case by the Chinese authorities.
- Additional reporting, NZPA
