In an interview with the Daily Mail, the Barcelona legend spoke of his reverence for Scholes and suggested that the cultural differences between England and Spain meant that he would have been more highly regarded in La Liga.
"In the last 15 to 20 years the best central midfielder that I have seen - the most complete - is Scholes," the 32-year-old Spain international revealed.
"I have spoken with Xabi Alonso about this many times. Scholes is a spectacular player who has everything.
"He can play the final pass, he can score, he is strong, he never gets knocked off the ball and he doesn't give possession away. If he had been Spanish then maybe he would have been valued more."
Xavi, who has played over 400 times for the Blaugrana and been awarded third place in the Ballon d'Or on each of the previous three occasions, stressed that he meant no disrespect towards the style of English football.
"England are a nation of warriors," he added.
"If I go to Liverpool’s ground and someone puts the ball into the area and Carragher hammers it out of play then the fans applaud. In the Nou Camp you would never be applauded for that.
"It’s a different culture that values different things. Here if they see you are afraid when you are in possession then you get whistled. It’s the world in reverse."
Xavi has scored three times in 14 La Liga appearances this campaign as Barcelona sit at the top of the table, six points clear of Atletico Madrid.