By Michael Martina, Humeyra Pamuk and David Brunnstrom

WASHINGTON (Reuters) - The political uproar over a suspected Chinese spy balloon drifting over the United States did not just derail a planned visit to Beijing by the top U.S. diplomat, it also threatens to upset attempts by both countries to steady an increasingly rocky relationship.

The reaction in the United States to what appears to be an ill-timed spying mission will have lingering consequences for efforts to stabilize ties - already near historic lows. Some U.S. lawmakers are demanding that President Joe Biden, a Democrat, hold China to account for what officials are calling an unacceptable violation of U.S. sovereignty.

U.S. Secretary of State Antony Blinken, who postponed a trip that was to begin on Friday, said he would be prepared to visit Beijing "when conditions allow," but the administration could be hard pressed to quickly revive the trip short of China offering up serious gestures of goodwill, policy analysts said.

Daniel Russel, the top U.S. diplomat for Asia under then-President Barack Obama, said China's "laughable alibi" that the aircraft was an errant weather balloon, didn't help.

"This incident has soured the atmosphere and hardened positions and there's no guarantee the two sides can successfully resurrect the 'Bali' momentum," Russel said, referring to the November meeting between Biden and Chinese leader Xi Jinping in Indonesia where they agreed to increase communications.

Ties between the superpowers have frayed over the past few years and sank to their worst in decades last August, when then U.S. House of Representatives Speaker Nancy Pelosi visited Taiwan, prompting Beijing to conduct military drills near the Chinese-claimed island.

Since then, the Biden administration has said it hopes to build a "floor" for the relationship and ensure that rivalry does not spiral into conflict.

But Republicans who control the House are already working on ways to investigate potential threats from the United States' top geopolitical rival and have been quick to put heat on Biden about the balloon, questioning how it was allowed into U.S. airspace.

CALLS TO SHOOT DOWN BALLOON

Michael McCaul, the Republican chair of the House Foreign Affairs Committee, on Friday demanded to know why the administration had not shot the balloon down, accusing the president of allowing it to pose "a direct and ongoing national security threat to the U.S. homeland."

China has often complained about surveillance of its growing military by U.S. ships and aircraft, though such operations in recent years have been conducted from widely recognized international waters and airspace.

The mood in China over the balloon was also glum. The government expressed regret that an "airship" used for civilian meteorological and other scientific purposes had strayed. Some Chinese domestic commentators were scathing, however, about the U.S. response.

"If Blinken were to cancel his trip to Beijing because of the balloon, I'd see it as him using that as an excuse to do what he had wanted to do anyway - not visit China," said Zhu Feng, executive dean of the School of International Relations at Nanjing University, speaking before the State Department announced the trip's cancellation.

Had Blinken gone ahead with the visit, it likely would have opened the administration to more strident criticism that its approach toward was China weak and poor optics in Congress where there is bipartisan support for a hard line on Beijing, some analysts said.

MISSED OPPORTUNITIES

Expectations for Blinken's trip had been low, but he had intended to raise by name the cases of American citizens the United States says are wrongfully detained in China, and push Beijing to cooperate on stemming the flow of fentanyl, both areas where any progress would have built momentum that could carry into other discussions.

Ivan Kanapathy, a former White House National Security Council deputy senior director for Asia, said he anticipated a string of hearings in Congress about China that would make it difficult for Blinken to justify a trip to Beijing unless he can win the release of detained Americans or return with another major prize.

China, too, wants a stable U.S. relationship so it can focus on its economy, battered by the now abandoned zero-COVID policy.

Blinken's visit - what would have been the first by a secretary of state to China since 2018 - was seen largely as an effort to develop ways to navigate future crises. With a trip to Taiwan by new House Speaker Kevin McCarthy likely this year, the next crisis might not be far off.

"Overall, I do think the Biden administration would like to reschedule, as there are many issues on the table and a real chance for a thaw. But the balloon incident probably means the thaw is postponed indefinitely," said RAND Corporation Indo-Pacific analyst Derek Grossman.

But Ryan Hass, a China expert at the Brookings Institution, said on Twitter that China's balloon operation had at least given the United States and China a chance to work out rules of engagement in space and at high altitudes, where the two countries' militaries will come into increasingly close contact.

"We should not squander this opportunity to materially reduce risk and also prevent future violations of U.S. airspace by PRC spy balloons," Hass said.

(Reporting by Michael Martina, Humeyra Pamuk and David Brunnstrom; Editing by Don Durfee and Grant McCool)

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