The US was sending Blinken to China in hopes of improving relations between the two countries. China spoiled this plan by sending this spy balloon into US airspace and leaving Biden with no choice but to shoot it down and keep Blinken stateside. Obviously, there will always be behind-the-scenes competition between the two nations, but China can’t publicly humiliate the US and expect détente.
The US is incompetent in dealing with crises because of the constant fighting between its political parties. The PRC's civilian airship wasn’t a threat, yet Biden shot it down to look tough in the face of Republican criticisms. Now he continues to be attacked by his political foes, but also has put US-China relations at risk with his overreaction. China can’t trust the US as a strategic partner because of its political dysfunction.
This whole story is an overreaction by the media. Whether you believe the balloon was a spying tool for China or it was just an off-course weather balloon, it certainly didn’t deserve the attention it received. Either the networks decided they needed to gin up ratings with scare tactics, and/or government representatives on both sides were feeding the frenzy to quash a US-China détente on purpose. But this balloon was nothing to freak out about.
There's a 9% chance there will be active warfare between the US and China before 2027, according to the Metaculus prediction community.