Senate Finance Committee Chairman Sen. Max Baucus (D-MT) delivers opening remarks during a hearing on Capitol Hill February 16, 2011 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)

President Obama's decision to nominate Senate Finance Committee Chairman Max Baucus (D-Mont.) as the next U.S. ambassador to China took many in Washington by surprise. But there are plenty of reasons why this was a smart move from the White House's perspective. Here's three.

1. It (probably) increases the chances of Democrats holding onto his seat in 2014.

With Baucus retiring and former governor Brian Schwietzer (D) declining to run for his seat, Democrats face long odds in Montana, a red state where Republicans have landed a top recruit in Rep. Steve Daines. But Democratic chances of springing an upset could be about to improve.

Gov. Steve Bullock (D) will be tasked with appointing a replacement for Baucus -- one who could also run for a full six-year term in 2014. The clear early front-runner for the pick is Lt. Gov. John Walsh (D). Walsh is already running and is liked by national Democrats. If appointed, he would suddenly have the advantage of incumbency (think Dean Heller in Nevada circa 2012) and could use it to craft a moderate profile through things like pushing for Obamacare fixes, for example.

But here's the million dollar question: Would Bullock appoint Walsh, given that Walsh faces an underdog primary challenge from former lieutenant governor John Bohlinger? Doing so could risk the impression that Bullock is trying to keep Democrats in Montana from having a choice in the race. That could prompt some backlash against Bullock that he may want to avoid so early in his tenure. Schweitzer, though he is technically neutral, might be tempted to make hay over Bohlinger, who was his lieutenant governor, getting the shaft. And there is no love lost between Schweitzer and Baucus. Self-preservation almost always comes first in politics, making Bullock's decision especially tough.

All that said, Walsh is the name to watch right now.

One more name to keep in mind in all this is Jim Messina, Obama's 2012 campaign manager. Messina is a Montana native and former top Baucus hand, who has been the subject of Senate speculation in his own right. If Bullock opts for a placeholder, Messina's name could be in the mix.

2. It removes a credible critic of the Affordable Care Act from the scene. Baucus had expressed frustration with how the Administration was implementing its landmark health care law for months, suggesting in February it could be "a huge train wreck" if the government did not have enough money to spend on outreach to consumers. A month after the launch of the senator compared the federal health care marketplace to Humpty Dumpty, questioning whether the White House could repair the complicated online enrollment system.

Baucus, who has chaired the Finance Committee since 2007 (and served as ranking member for the previous six years), has sought to conduct oversight of the Administration's health care efforts for months, and it is less likely that the panel can do this aggressively -- especially in the next few months -- if he's gone. After Baucus, Sen. Jay Rockefeller (D-W.Va.) is the Finance Committee's second-ranking Democrat. But Rockfeller already chairs the Senate Commerce and Transportation Committee and also is retiring after next year. So the Finance Committee gavel is expected to go instead to Oregon Sen. Ron Wyden, who currently chairs the Senate Energy and Natural Resources Committee, but is eager to lead a more prominent panel, according to several senior Senate aides. Wyden, who has sparred with the White House at times over health care in the past, may get the gavel, but he has not been as harsh in public about the law's recent rollout.

Senior Senate aides said Wednesday evening that no final decisions have been made on which senators would climb the ranks of Finance and other committees affected by the changes.

The administration has made a similar move before, when it sent Jon Huntsman to China as its ambassador. Obama won plaudits by reaching across the aisle to select Huntsman, Utah's former governor, to China. In doing so it placed a potential 2012 rival out of the country, and Huntsman later had to defend himself in the 2012 GOP presidential primary against charges he had served under the very man Republicans were seeking to replace as president.

3. Baucus has extensive experience when it comes to China, especially on trade issues. The senator, who has visited China eight times, led the U.S. effort in the 1990s to bring China into the World Trade Organization and to establish Permanent Normal Trade Relations between the two countries. He has hosted trade delegations from China in both Washington D.C. and Montana, and he shares the Administration's views on how to approach delicate U.S.-China relations questions including how they set their currency, address intellectual property, labor, and human rights, and treat the environment.

 Ed O'Keefe contributed to this report.

Updated at 8:34 p.m.