The US decision last week to leave China off a list of seven additional countries exempt from US sanctions on Iran has led to questions about how the US and China will resolve the issue before the end-of-June deadline.

The Obama administration has said talks are still ongoing with China, while Beijing has underlined that it may not endanger its interests for the sake of the US aspirations.

Under the new sanctions, foreign financial institutions doing business with Iran's central bank for the purpose of energy purchases stand to be barred from US financial markets. India, Japan and South Korea which are the main customers of Iranian crude were all granted exemptions.

China, however, is Iran's largest buyer of crude, receiving 22% of Iran's exports in the first half of 2011. China Petrochemical Corp., known as Sinopec Group, and Zhuhai Zhenrong Co., are the two main importers, and attention has focused on Sinopec, which imported about 280,000 barrels a day of crude oil and condensate into China in 2011. China has repeatedly said its oil imports from Iran aren't in violation of the UN Security Council resolutions and that it doesn't recognize unilateral sanctions.

China Real Time report spoke with Erica Downs, an expert on China's state-owned energy companies at the Brookings Institution, to get her take. The following is parts of the interview:

China Real Time: Will the US require China to cut Iranian imports or will it simply accept a promise that China won't raise its imports?

Erica Downs: I suspect one of the reasons that China wasn't among the countries granted exemptions to US sanctions on the Central Bank of Iran last week is because of uncertainty in Washington about China's intentions with respect to crude imports from Iran.

China's purchases of Iranian crude dropped more than 30% during the first four months of 2012, but the decline was due to a contract dispute between Sinopec and the National Iranian Oil Co., rather than an explicit decision to support American efforts to pressure Iran.

The fact that China's crude imports from Iran are now on the rise (Sinopec finally signed a new contract with NIOC in late March) may make it a bit more difficult for the Obama administration to grant China an exemption, especially because it is an election year. That said, I suspect China will get one by the June 28 deadline.

CRT: How much influence does Sinopec have over Chinese government policy toward Iran and the US?

ED: Sinopec is a powerful company that, at times, undoubtedly lobbies the Chinese government to take actions to advance Sinopec's interests. But China's national oil companies ultimately follow the guidance issued by China's leaders, especially on sensitive foreign policy issues.

CRT: Can Sinopec commercially afford to reduce crude imports from Iran?

ED: Last year, China imported more than 550,000 barrels per day from Iran. Most - if not all - of this oil ended up in Sinopec's refineries. It would be difficult for Sinopec to replace such a large volume of crude.