US President Joe Biden vowed he would not hesitate to defend his country’s interests against Beijing after he ordered the downing of what the US suspects is a Chinese surveillance balloon but, delivering his State of the Union address, kept the door open to cooperation.

In the annual speech to assembled lawmakers on Tuesday, Biden said: “I'm committed to work with China where it can advance American interests and benefit the world.”

"But make no mistake about it – as we made clear last week, if China threatens our sovereignty, we will act to protect our country. And we did," he said to applause.

Biden said that "winning the competition" with China should unite Americans.

"I will make no apologies that we are investing to make America stronger – investing in American innovation, in industries that will define the future that China intends to be dominating."

But Biden steered clear of hawkish language as he mentioned President Xi Jinping, whom he met at length in November in Indonesia, saying he told Xi that "we seek competition, not conflict".

Beijing has said the balloon that was shot down was primarily gathering weather data and that it had been blown off course.

It has also said the US "seriously impacted and damaged" relations between the two countries by shooting it down and lodged a formal complaint with the US embassy in Beijing. (AFP)