Treasury Secretary Timothy Geithner said on Monday the United States and China need to work together to reduce trade barriers and develop a more balanced global economy.

In prepared remarks for delivery at an opening ceremony for the two-day Strategic and Economic Dialogue, Geithner indirectly urged China to ease up on its indigenous innovation policies aimed at giving Chinese companies a larger share of new cutting-edge technologies developed in China.

Innovation holds the key to a more prosperous future, and innovation flourishes best when markets are open, competition is fair, and strong protection exists for ideas and inventions, Geithner said.

Geithner and Secretary of State Hillary Clinton are leading a delegation of nearly 200 U.S. officials in the talks, which will range from trade to how to contain Iran's nuclear ambitions and North Korea's alleged sinking of a South Korean warship in March.

Geithner made no reference in his remarks to U.S. calls for China to let its yuan currency rise in value but did say the two countries should seek more balanced growth.

As we reform the U.S. economy to promote savings and investment, China is reforming its growth model to promote domestic demand and consumption, Geithner said.

Europe's woes are also expected to come up during the two days of high-level talks. There has been concern on the U.S. side that China may delay letting its currency resume appreciating because it fears exports to Europe will decline.

Our common interests lie in a stronger and more resilient world economy where growth is more balanced, both within and among nations, said Geithner, who leaves Beijing on Tuesday night for talks in Britain and Germany on efforts to stabilize the European economy and financial markets.

(Editing by Ken Wills)