He said in an interview with CBS News the US did not want to hold China down but would not allow it to undermine the rules-based international order.
He noted that a military confrontation was profoundly against the interests of both countries.
Tensions have soared in recent times over trade, espionage and the pandemic.
The China-US relationship is crucial to both sides and the wider world, with Beijing repeatedly calling on the new administration in Washington to improve relations which deteriorated under President Joe Biden's predecessor, Donald Trump.
Mr Blinken told CBS' 60 Minutes that Mr Biden and Chinese leader Xi Jinping had talked about a wide range of topics in their first phone conversation, which lasted two hours, in February.
"President Biden made clear that in a number of areas we have real concerns about the actions that China has taken, and that includes in the economic area, and that includes the theft of intellectual property," he said.
He stopped short of calling China an enemy even though the US has accused Beijing of stealing hundreds of billions of dollars in trade secrets and intellectual property.
"We don't have the luxury of not dealing with China," he said. "There are real complexities to the relationship, whether it's the adversarial piece, whether it's the competitive piece, whether it's the co-operative piece."