China on Thursday accused the United States of escalating the dispute over the downed surveillance balloon, as concerns grew that the saga may send relations between the world’s two largest economies further into a tailspin.

The episode and the mystery surrounding subsequent aerial objects shot down over North America have fueled a domestic media frenzy and piled political pressure on the White House, but also intensified concerns about the global fallout from U.S.-China diplomacy being knocked off course.

As President Joe Biden prepared to give his most extensive remarks yet on the matter, Beijing hit back anew over what it has framed as Washington’s overreaction. But the response has also undermined China’s recent efforts to signal a diplomatic softening, experts told NBC News.

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