I'd imagine that both an overreaction (shooting it down) or an underreaction (ignoring it) could be in China's interest. Plus, simply it existing and people knowing it exists is enough to rile up the partisan discourse. Which could also play into its intended purpose. Maybe there is something useful on it they are testing, but seeing how and where the media-play goes because of, "squirrel." Is useful knowledge too. Manipulation doesn't actually require something nefarious. We seem to be quite capable of making stuff up to fill the gaps on our own. I might guess China wants it to be shot down. I think China wants the US to show its hand, and so it would behoove the US to not be manipulated into doing so. Which is why I'm okay so far with the "We know what you are doing, you aren't slipping something by us, but we're not going to show you our gun too." I know some people like to wave it around, but it is advantageous if you know what playbook, weaponry and how itchy the trigger finger the other side has.
The worrisome part, IMO, isn't the balloon itself, but whatever greater strategy China is implementing because they think it will pay off in the real endgame. What they hope to learn from this demonstration, and not from whatever surveillance equipment is physically on the balloon.
