(Bloomberg) – President Joe Biden has said the United States will cooperate with China where it can only protect its sovereignty “as we made clear last week,” an indirect reference to fury over the alleged Chinese spy balloon that had previously sent US territory had crossed shot down.

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With tensions running high between Washington and Beijing over the issue, Biden took a toned down approach in his State of the Union address, saying in his prepared text that the United States was in the “strongest position in decades.” decades to deal with China or anyone”. ” to compete in the world.

“I am committed to working with China where it can advance American interests and benefit the world,” Biden said. “But make no mistake: as we made clear last week, if China threatens our sovereignty, we will act to protect our country. And we have.”

Biden made no mention of the balloon in the prepared speech, nor did the American argument that his transit through the United States last week was part of a larger and growing spy program. aggressive. The spying dispute sparked a diplomatic row and forced Foreign Minister Antony Blinken to postpone a planned visit to Beijing. A US fighter jet shot it down over the ocean off South Carolina on Saturday.

At the same time, Biden has not approached Chinese President Xi Jinping or attempted to defuse tensions, which have been fueled by a host of other measures, including new US export controls on sensitive tech. microchips. The United States says China is taking a more aggressive stance, including toward the self-governing island of Taiwan.

Beijing denied the balloon was a spy device and insisted on conducting weather research. The Chinese government has accused the United States of overreacting to the balloon launch.

Biden had met Xi in Bali last November with a promise to try to reverse a slippage in relations and resume military contacts that had been cut after House Speaker Nancy Pelosi’s visit to Taiwan. But the Pentagon said on Tuesday that China had pushed back on efforts to arrange talks between the two countries’ top defense officials after the balloon was downed.

The speech was in line with Biden’s broader approach. He told reporters on Monday that the balloon incident had not weakened US-China relations and shrugged off the notion of Chinese espionage, saying it was “something expected from China”.

While Biden otherwise omitted China from the speech, he said the United States had “lost our edge” in semiconductor manufacturing, citing the inability of automakers to get chips made to China. stranger during the pandemic.

“We must never allow this to happen again,” he said.

The United States reached an agreement with the Netherlands and Japan last month to limit shipments of advanced semiconductor equipment to China, a move that analysts say is likely to cripple the tech ambitions of China. Beijing. The White House is also aiming to restrict investment in critical sectors in China through executive measures that have been in the works for months.

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