Tax Deadbeat Treasury Secretary Nominee - "China is manipulating it's currency"

Mr. Geithner’s comment was made in writing to the Senate Finance Committee hours before it voted 18 to 5 to recommend that the full Senate confirm him. The statement, which is certain to anger the Chinese government, comes at a particularly sensitive time, with economies in both the United States and China weakening and tensions already rising around the globe over trade. The United States, moreover, is increasingly dependent on China to finance its ballooning deficit.

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It remained unclear whether Mr. Geithner was signaling that Mr. Obama would officially declare later this spring that China was engaging in currency manipulation, when the administration is required by a 20-year-old trade law to report to Congress on exchange rate issues. Such a finding would begin a legal process that starts with diplomacy and could end with the imposition of trade barriers like tariffs. The objective would be to persuade China to let the value of its currency, the yuan, freely float — a move that would let its value rise and would increase the cost of its exports.

OK, it's stating the obvious - We all know that the Chinese have been artificially keeping their currency weak, but it's significant that Geithner would say such a thing. Some people people think it's indicative of an enhanced free trade stance:

On Thursday, Mr. Schumer welcomed Mr. Geithner’s reply. “For the first two days, this is a big step” from the Obama administration, he said in an interview. “And I think it’s an indication: They are not going to be anti-free trade; they are not going to be for putting artificial barriers in the way. But when other countries do, they’re going to be much tougher on them.”

Others think it's unnecessarily confrontational at a time when the U.S. needs foreign investment to finance various stimulus programs. I am wondering if it's actually the first signal that the U.S. is going to start imposing trade barriers to please the anti-free trade crowd?

The U.S. is bound by the treaties that established the free trade agreements, but I believe almost all of them have escape clauses to address things like currency manipulation. By "taking a tougher line" Obama get to claim to be pro-free trade by not actually withdrawing from the agreements while at the same time pleasing his unionized labor overlords.

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