FILE PHOTO: The logo of China's ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

HONG KONG (Reuters) - Shares of China’s ZTE Corp rose as much as 18 percent in Hong Kong on Wednesday as the impact of a U.S. Senate bill that threatens to restore penalties on the company became clearer.

In clarification announcements during the noon trading break, ZTE said a National Defense Authorization Act (NDAA) passed by the U.S. Senate on Monday would restore penalties on the company, but the bill would only become law if it could be reconciled with a different version passed by the House of Representatives and signed by U.S. President Trump.

That echoed what the White House and Senate backers of the bill had said overnight.

In a rare departure from White House policy, the Republican-led Senate passed the NDAA on Monday that included two provisions that prevent any federal official from removing penalties on ZTE.

That sets up a battle with the White House over whether a supplier ban on the Chinese company could be lifted as part of a $1.4 billion settlement agreement ZTE reached with the U.S. Commerce Department on June 7.

Hong Kong-listed shares of ZTE rose to as high as HK$11.62 ($1.48) on Wednesday, after declining 25 percent in the previous trading day.

In catch-up with the Hong Kong shares that have more than halved in price since trading resumed last Wednesday, ZTE’s Shenzhen-listed shares declined by the maximum daily allowed 10 percent for the fifth consecutive day.