The biggest under-appreciated political story of the day might be the news that China has finally agreed to allow its currency to rise against the U.S. dollar. Granted, the details of this, which are not yet clear, are extremely important. U.S. officials, however, are already trumpeting the move as a sign that U.S. diplomatic engagement with China helped to precipitate the policy change, which has long been desired by the West, and particularly by China's debtor nations. (That China signed on to a U.N. Security Council resolution calling for Iran sanctions, leading the E.U. to adopt unilaterally tougher sanctions, is seen as the Obama administration's first major policy success. The second is China's willingness to participate in the Nuclear Security Summit.)
Military to military relations between the U.S. and China are poor, but diplomatic relations seem to be fairly stable, if not pretty good.
I'm no expert in Chinese economic policy, but I did ask a member of my kitchen cabinet for an assessment of what China's move really means. "China was unlikely to appreciate the currency significantly to begin with, given its dependence on exports," my guy says. "In the wake of Europe's troubles, appreciating the RMB would further weaken China's exporters. So I think the government is offering a bargaining chip when it's easy for them to point to reasons not to appreciate in a significant way."
Remember, next weekend marks the beginning of the G-20 summit, where each nation has been asked to bring something concrete that would help stabilize the world economy. This is China's offer, so to speak.
As to the appreciation decision's effect on the U.S. economy, the administration here might make a case that the move could help economic growth pick up more rapidly, but the reality is that appreciating the RMB would only help to curb inflation, which isn't much of a problem to begin with ... at least not in the short term.