A Chinese researcher for the New York Times has been acquitted of leaking state secrets, but sentenced to three years in jail for fraud.
Zhao Yan has already been held for two years (image: New York Times)
A Beijing court decided there was insufficient evidence to convict Zhao Yan of illegally providing foreigners with state information.
While Mr Zhao's lawyers welcomed the acquittal, they said their client was likely to appeal the fraud conviction.
Analysts say this case has caused tensions between China and the US.
Washington has repeatedly calling on Beijing to release Mr Zhao.
Mr Zhao has been held by the Chinese authorities since September 2004.
No details have been given of his alleged crime, but Mr Zhao is thought to have been detained in connection with a New York Times report about plans by ex-President Jiang Zemin to retire from his top military post.
ZHAO YAN: TIMELINE
Sept 2004: Zhao Yan arrested in Shanghai
Dec 2005: Charged with leaking state secrets and fraud
Mar 06: Charges dropped ahead of Hu Jintao's US visit
May 06: Beijing prosecutors reinstate charges
Aug 06: Jailed for three years for fraud
At the time, Mr Jiang's intention would have been a closely guarded secret, and any leak regarded as a serious offence.
Mr Zhao, 44, has already spent nearly two years in detention, while the authorities decided whether to pursue the case against him.
The charges against him were dropped in March, weeks before President Hu Jintao visited the United States. But Mr Zhao remained in detention, and the case was revived in May.
Mr Zhao could have been sentenced to up to 10 years in prison if convicted of disclosing state secrets.
Despite insisting that his client was innocent, Mr Zhao's lawyer had not been hopeful of an acquittal on this charge.
"I was surprised. He seemed surprised as well," Mr Zhao's defence lawyer, Guan Anping, said of his client.
Before joining the New York Times Mr Zhao, a Chinese citizen, worked for the magazine China Reform, where he wrote reports criticising abuse of poor farmers by officials.
Zhao Yan's arrest may be linked to a report on ex-leader Jiang Zemin
A number of other journalists have been arrested in China under its national secrecy law.
Ching Cheong, a Hong Kong-based correspondent for Singapore's Straits Times, was accused in August of spying for China's rival, Taiwan. If convicted, he could face the death penalty.
Human rights activists have also been targeted in recent months. Blind civil rights campaigner Chen Guangcheng, who raised concerns about forced abortions, was sentenced to more than four years in jail on Thursday.
Prominent human rights lawyer Gao Zhisheng was detained by police earlier this month. He had actively campaigned on behalf of the banned Falun Gong spiritual group.