For some time, American officials have talked about the need to “put a floor” under the sharp deterioration in US-China relations. But the controversy surrounding the Chinese spy balloon (which Beijing insists was a “civilian” vessel blown by accident into American airspace) has dashed efforts to gradually improve relations between the two countries. A visit to Beijing by Antony Blinken, the US secretary of state, has now been cancelled.

Even before the current crisis, there was very little trust or warmth left between Washington and Beijing. Both sides understand that tensions are dangerously high. General Mike Minihan, head of the US Air Mobility Command, recently predicted in a leaked internal memorandum that the US and China “will fight in 2025” — as a result of a Chinese attack on Taiwan.

While Minihan’s views do not represent a settled consensus within the US government, they do reflect the fevered nature of the debate between western officials about China’s intentions towards Taiwan.

The rise in military tensions has also led to a much more determined American effort to restrict the supply of cutting-edge technology to China. New restrictions on the export of semiconductors and related equipment to the country have been announced, threatening its high-tech sector and some leading Chinese and western firms. Talk of the two economies “decoupling” is now routine — although the current reality is that the volume of trade between the countries continues to increase.

It is hardly a revelation that China and the US are spying on each other. But the progress of the balloon from Alaska through Canada and down past Montana has a certain Hollywood quality that has fascinated television audiences and politicians across the US — increasing pressure on the Biden administration to respond.

By historic standards, the current episode looks like a relatively minor infraction. Between 2010 and 2012, China is believed to have dismantled CIA operations within its borders — executing at least a dozen US sources. In 2015, it was announced that China had successfully hacked America’s Office of Personnel Management, gaining access to the personal data of over 4mn current and former federal government employees.

The US has intensified its own intelligence-gathering efforts aimed at China. In 2021, the CIA announced the formation of a new China mission centre to “address the global challenge posed by the People’s Republic of China.”

The increased surveillance capabilities of the Chinese state, linked to the rise of the smartphone, have made it increasingly difficult for western intelligence agencies to run agents within China. But the technological surveillance capacities of both Washington and Beijing continue to expand. One oddity about the Chinese spy balloon is that, in the age of spy satellites, it sounds like a technological solution from a previous era. Spy balloons were employed as long ago as the French revolutionary wars.

The current incident is, however, particularly inflammatory given America’s already heated political debate about China. Leading Republican politicians used the balloon’s journey across the US to accuse the Biden administration of weakness towards Beijing. The White House’s decision to shoot the balloon down just off the US coast may have reflected domestic political imperatives, as much as national security ones.

China has its own nationalists and hawks to satisfy. They too may demand a response to America’s attack on the balloon, which the Chinese government has called a serious violation of international conventions.

In recent weeks, more moderate voices in both Beijing and Washington had been cautiously trying to restart dialogue between the two countries. Those efforts are over — for now. But in the long run, the stakes are too high for diplomacy between China and the US to fall victim to a spy balloon.