China has abruptly and fairly rapidly reset their relationship with the US, working on Iranian sanctions and announcing their attendance at a nuclear conference.

Tensions between China and the United States have ebbed significantly in recent days, with an hour-long conversation between their two presidents Thursday night [...]

In the call Thursday night, President Obama spoke by phone with Mr. Hu for about an hour — so long that Air Force One had to be held for 10 minutes on the tarmac at Andrews Air Force Base after landing so that Mr. Obama could finish up the conversation. Chinese television reported that Mr. Hu expressed a desire for healthier ties while stressing Beijing’s positions on Taiwan and Tibet, and the White House said Mr. Obama stressed for China press Iran on its nuclear ambitions to ensure the country “lives up to its international obligations.”

The warming trend that began earlier this week gained momentum on Thursday by the announcement that President Hu Jintao will attend Mr. Obama’s nuclear security summit meeting in Washington later this month. American officials had feared that Mr. Hu would skip the talks to convey China’s anger over recent diplomatic clashes, including a White House decision to sell arms to Taiwan and President Obama’s meeting with the Dalai Lama, the exiled Tibetan leader.

I wonder what has brought on all this new goodwill from the Chinese. It couldn’t be the pressure they were getting about pegging their currency to the dollar, could it?

For now, the United States is setting aside the most potentially divisive issue, deferring a decision on whether to accuse China of manipulating its currency, the renminbi, until well after Mr. Hu’s visit, according to a senior administration official. That decision, the official said, reflects a judgment that threatening China is not the best way to persuade it to allow the renminbi to appreciate against the dollar.

Actually, I think the opposite is true and the White House official isn’t being truthful. Economists and even Administration members have openly discussed China’s currency manipulation, and an April 15 deadline for the Treasury Department to confer currency manipulator status on China loomed. Suddenly, the Chinese want to cooperate on Iran and nuclear security. This is pretty transparent.

That’s not to say that the White House should let up on the currency issue. A separate NYT story today claims that China will start to un-peg their currency to the dollar, citing economic analysts. But Congress really isn’t satisfied. Chuck Schumer and Lindsey Graham have a bill that would penalize China for their currency “misalignment,” as they call it. A similar bill passed the Senate in 2005 with 67 votes, and the Chinese quickly allowed their currency to appreciate around 20% over the next three years. Pressure appears to work, and if Treasury sets aside the China question, I don’t think the Congress – backed by labor unions and manufacturers who have made this a central issue – will be so accommodating.

A recent study shows that Chinese currency manipulation cost America 2.4 million jobs from 2001-2008. With the unemployment rate unacceptably high, there’s no reason to leave those jobs on the table.