Some cynically believe that it will keep Huntsman close, as in, "keep your friends close but your enemies closer", so that his appointment may preclude a presidential challenge in 2012. (Actually, it might set him up as a more formidable challenger if not in 2012, then perhaps 2016...).
The truth is... I'm not sure that Obama could have found anyone else comparable to Huntsman's experience, skill, or diplomatic temperament. He is simply unparalleled in having all the right pieces of the ambassadorial puzzle. This is not a vanity ambassadorship. On the contrary, this position may be the most important foreign post there is.
China holds a lot of U.S. debt. It is a huge and growing economy with a critical impact on the global economy of which we are an integral part. Huntsman's experience as the #2 trade secretary with China prior to becoming Governor will be critical experience.
The fact that he speaks Mandarin fluently and has an adorable chinese adopted daughter is all bonus to his being accepted and prospering in his relationships with China. The fact that he has also served as an Ambassador in the region (Singapore) before is invaluable and will give him credibility with the State Department as well.
The genius of this pick isn't political genius, it is the genius of having the perfect candidate, party label aside, and having the integrity to make the right decision. The genius is doing the right thing.