By David Lawder

WASHINGTON (Reuters). While China does not seem to have helped Russia evade Western financial sanction on Moscow for its invasion in Ukraine, it would do “profound damage” to China’s image, a Biden Administration senior official claimed on Saturday.

The official stated that China was not responding to China’s rescue efforts. He spoke to reporters following the announcement that America and allies had agreed to place sanctions on Russia’s Central Bank and to disconnect the SWIFT financial transactions network from key Russian banks.

According to the official, recent news reports that Chinese banks had stopped issuing credit letters for Russian physical commodities purchases was a good sign.

According to the official, this suggests that China has, in line with the U.S. sanction pattern, tended “to respect the force of U.S. Sanctions.”

China is Russia’s largest trade partner in both imports and exports. It bought a third Russia’s 2020 exports from Russia and supplied it with manufactured goods, including cell phones, computers and toys.

Since 2014 when sanctions were first placed by the West against Russian entities in response to Moscow’s annexe of Crimea, China and Russia have had a significant increase in their trade relations.

Graphic – Russia’s biggest oil customer: China by far: https://graphics.reuters.com/UKRAINE-CRISIS/SANCTIONS/dwpkrldklvm/chart.png

Some of this trade takes place in currency. This could theoretically be outside the purview of U.S. sanctions that seek to block Russia from any transactions in U.S. Dollars, Euros, Sterling, or other major currencies.

However, Chinese banks doing business with Russian banks or other entities that are subject to full blocking sanctions could be placed on Treasury’s “specially designed nationals” list and face possible sanctions as well as loss of access the U.S. financial systems.

According to the official, if China helped Russia to evade U.S. sanction sanctions, it would “be an unfortunate signal for China’s vision of the globe” and “tacit/explicit accommodation to Russia’s invasion in the heartland of Europe.”

The official spoke out about China, saying that it would cause “profound damage” to China’s reputation.