Chinese electronics giant ZTE Corp on April 17 was forced to halt trading of its shares in Hong Kong and Shenzen after the US slapped it with a seven-year ban on buying American-made chips and components as punishment for violating a sanctions settlement over the sale of products to Iran and North Korea.

ZTE was accused by the US Commerce Department of failing to follow through on pledges to discipline employees responsible for illegal exports to the Iranians and North Koreans. The company reached a $1.2bn settlement after pleading guilty to the offences last year. It reached a plea bargain, the terms of which US officials have accused it of breaching. The broader picture is, of course, that the world’s two largest economies are edging towards what could feasibly be a trade war with all economic guns blazing.

A five-year federal investigation last year concluded that ZTE had conspired to evade US embargoes by purchasing US components and incorporating them into equipment which was then illegally shipped to Iran, evading US sanctions still applicable to Tehran.

ZTE said many of the jobs of its American employees would be on the line due to the latest ruling by Washington. Analysts estimate that American companies provide it with 25-30% of the components used in its equipment, which includes smartphones and telecommunication network components.

"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them," US Commerce Secretary Wilbur Ross said.

Given the punishment which bans the Shenzhen-based company from purchasing vital sensitive technology from the US, ZTE chairman Yin Yimin said the enterprise had established a crisis team and was ready “to go to all lengths to face this crisis head-on”.

"We are in a complicated international situation," Yin said in an open letter circulated online, warning that the company now faces "twists and turns" abroad.

ZTE has been taking a critical role in helping China build a fast, 5G wireless service that could rival the best US tech in this field.