Yuanna bet?

Yuan Congress: Beijing’s currency concession might temporarily defuse Capitol Hill critics who want to limit imports. But US unemployment remains high and congressional elections just months away. China is still a convenient economic scapegoat.

The shift will almost certainly keep the Treasury Department from declaring the nation a currency manipulator, a decision it was loath to make. Then again, Secretary Timothy Geithner isn’t up for re-election. But all of the House and a third of the Senate are — and incumbents, particularly Democrats, seem an endangered species. Only if PetroChina oil was fouling the Gulf of Mexico right now could China be a more tempting political target.

Many in Washington argue — or are at least nudged by interest groups to argue — that a rapid rise in the yuan would restore millions of manufacturing jobs lost offshore. That’s bad economics, but good politics. China had been shoveling ammo to critics by insisting on the currency status quo. Such intransigence made it easy to fashion a black-and-white case against it, especially as most non-Chinese economists think the yuan is at still undervalued.

Now the debate has changed. Beijing's statement that the currency will rise makes the case against it more technical — a question of how fast a rise is appropriate — and gives China time to show it’s serious. The announcement is likely to be enough to shake off the less adamant in Congress. Also, if President Barack Obama claims this as a foreign policy victory, many Democrats will be loath to deprive him of his moment with inflammatory legislation.

But the Hill’s yuan-obsessed will continue to push hard their case. They can say a 5 per cent annual increase in the yuan is too slow. They will argue currency legislation would push Beijing to move faster, and tariff tools should be on hand for penalties if China does not co-operate.

Congress could give Obama a tough choice — whether to veto an anti-China bill. The president has yet to show interest in killing any legislation due to anti-trade content. A currency bill could mark a first.