The "One Belt One Road" is a maze of projects meant to connect China with Asia, Europe and Africa.
"It is not our intent to contain China's economic growth. They must grow. They still have hundreds of millions of people that need to move out of poverty. But we do pay close attention to their OBOR policy," Tillerson told the State Department employees in a town hall.
The Secretary of State borrowed a quote from Defence Secretary Jim Mattis: "China has One Belt, One Road; the United States and the global economy has many belts and many roads, and no one country gets to choose the belt or the road."
"It's part of the global order, the international system of rules and norms. China can choose to carry out its OBOR within that system, or it can try to redefine that. And that's what a lot of the discussion between us is about: How are we going to live together? How are both of us going to be prosperous together?" the top US diplomat sought to know.
"In some respects, it was a good way to start this new administration's relationship with China because it gave us something of a shared objective from the very beginning to pursue. And they were very open to hearing our approach and have been supportive in that regard," he said.
Trump administration's engagement with China kicked off with the visit of President Xi Jinping to the US President's Mar-a-Lago residence in Florida.
Now there are four dialogues with China: diplomatic and security dialogue, economic and trade dialogue, law enforcement and cyber security dialogue, and people-to-people dialogue.
These dialogues, he said, are serving very important purposes because behind all of these discussions is trying to understand what is going to define the US-China relationship for the next half century.
"How are we going to live together, two great powers with great peoples that need to be have needs that need to be served? So that's framing much of the China policy in our engagement, and obviously, there are significant national security issues," he said.
"All of us have benefited globally with China's economic growth. But now, a lot of things have kind of gotten out of balance, as you well know," he said.
"The dialogue we're having with the Chinese today is okay, that worked for the last 40 to 50 years, but China is in a different place now. You are in many respects still a developing nation because you have millions of people that are yet to move out of poverty and to middle class status, but you're not the developing China of the Nixon era. You're in a different place today and we're in a different place," he said.
"China's continued building of these structures in the South China Sea in territories that are disputed others lay claim to and then further militarising those structures is a very serious issue that we talk about routinely," he said.
Tillerson noted that the contentious South China Sea issue is "a concern to many of our allies and trading partners in the Southeast Asia region."
China claims almost all of the South China Sea but Vietnam, the Philippines, Malaysia, Brunei and Taiwan have counter claims over the waterway.
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