Xiao understands that he has feelings for Luka but he doesn't really see a way for him to express his feelings just yet. The grudge they have between them is due to trust issues, Xiao sees his bullying as a way to sort of "correct" Luka and get him to apologize for having broken his trust.

The struggle between them is only temporary really, at their age it feels like an eternity but it'd only be a year or two tops. I see them getting back together as friends eventually and maybe perusing something more. They're definitely the type to be together for a while, then breakup, and then reunite again.