The unforgivable incompetence here is on the part of senior bureaucrats at the FAA who allowed this story to fester due to their failure to respond properly. They should have had radar records and tower control tapes to verify what that craft was. It should have been fully and publicly answered within 8 hours.
The military also could have provided more information to reassure the public. They may have felt no urge to exert themselves because by this point any pratfall by the civilian government will be met by a shrug by many in uniform.
Both conditions, incompetence and disorder in the civilian agencies or detachment and inaction by the military are dangerous. They certainly gave legs to the Chinese story, which given the conduct of this administration was plausible. The next bad news seems to be that the Chinese are being paid off for their grievances by getting General Motors.