US-China relations to improve 'very shortly': Biden

US President Joe Biden on Sunday said that he expected relations with China would improve "very shortly" that were derailed over the alleged spy balloon this year.

Speaking at a press conference following the G7 summit in Hiroshima, Japan, Biden said that the US decision to shoot down the suspected balloon changed the dynamic of relations after talks with Chinese President Xi Jinping at the G20 summit in November last year.

The world's two largest economies saw a diplomatic spat following Washington's decision to shoot down a "silly balloon that was carrying two freight cars worth of spying equipment".

A visit to Beijing by Secretary of State Antony Blinken that had been billed as a chance to improve relations was cancelled over the incident.

On Sunday, at a press conference following the G7 summit in Hiroshima, Japan, Biden was asked why a planned hotline between the United States and China was not in operation.

"You're right, we should have an open hotline. At the Bali conference, that's what President Xi and I agreed we were going to do and meet on," he said.

"It [the balloon] got shot down and everything changed in terms of talking to one another. I think you're going to see that begin to thaw very shortly."

Biden's administration has also infuriated China by targeting trade in advanced microchips, citing risks of military use.

The president defended those actions on Sunday, a day after the Group of Seven leading economies warned China over its "militarisation activities" in the region.

"It is building its military, and that's why I've made it clear that I am not prepared to trade certain items with China," he said.

"We've now got a commitment from all of our allies that they're not going to do that either, provide that kind of material.

"But that's not a hostile act, that's an act that says, 'we're going to make sure that we do everything we can to maintain the status quo.'"

Additional input from AFP/Geo News