The surfer managed to reach the boat, which had righted itself in the water, and used it to rescue the men.
Mr Xu was unable to be revived and was pronounced dead at the scene, police said.
"There is no doubt the surfer saved the life of the other man who was in the boat when it overturned," Senior Sergeant Thomas McIntyre of New Plymouth police said.
"His actions are commendable and we are continuing to speak to him and other witnesses in an effort to piece together the sequence of events."
Neither of the two men were wearing a life jacket at the time the boat overturned, police said.
The survivor, a local man in his 60s, suffered from minor hypothermia and was treated by ambulance staff at the scene.
The death has been referred to the coroner.