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China exonerates supermarket tycoon jailed for bribery

Tom Hancock and Wang Xueqiao
Zhang Wenzhong in 2006.
Lucas Schifres | Bloomberg | Getty Images

China has exonerated a supermarket tycoon jailed for fraud and corruption a decade ago in the first of several retrials of convicted entrepreneurs aimed at reassuring a private sector worried by state influence over the economy.

China's supreme court said Zhang Wenzhong, the founder of Wumart, one of China's largest grocery chains, was innocent of the charges of fraud, bribery and embezzlement for which he was jailed for 12 years in 2009. It added that a Rmb500,000 (US$78,000) fine imposed at the time would be returned.

The supreme court vowed in December to retry three high profile cases involving entrepreneurs, including Mr Zhang's, in what local observers are interpreting as an attempt to reassure business owners over the safety of their assets. Convictions in the three cases were all made before 2012, when President Xi Jinping assumed leadership of the Chinese Communist party.

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Although many have amassed vast wealth, Chinese entrepreneurs have long complained that they were subject to unfair competition from the state sector, were encouraged to pay bribes to officials and could be subject to arbitrary convictions.

The growth rate of private sector investment has plunged during Mr Xi's tenure, from about 30 per cent in 2012 to little more than two per cent in 2016, according to the World Economic Forum.

Analysts say the fall reflects how private business are being crowded out by increasingly dominant state-owned companies and concerns about a crackdown on corruption overseen by Mr Xi, which has encouraged wealthy people to move assets overseas.

The exoneration of Mr Zhang was "sending a signal to enterprises and entrepreneurs that their property rights will be protected", said Peng Jiyue, a partner at Beijing- based law firm King & Capital.

Chinese courts, which are controlled by the ruling Communist party, have in recent years exonerated thousands of people jailed for crimes including murder as the party attempts to boost trust in courts amid public anger over wrongful convictions often stemming from forced confessions.

Mr Zhang was released from jail in 2013 after two sentence reductions, according to court records. The reason for the reductions was not stated.

The original trial court in the northern province of Hebei had ruled that Wumart had fraudulently received Rmb31.9m in state funds, and that Mr Zhang had purchased shares of state-run enterprise as a bribe. But Wumart was in fact eligible for such funding, and the share purchase was a normal business transaction, the supreme court said.

Mr Zhang, who remains the controlling shareholder of Wumart, was the 106th richest person in China in 2017 with assets worth $2.6bn, according to Forbes, making him the second richest businessmen jailed during the tenure of Mr Xi's predecessor Hu Jintao.

The highest profile conviction under Mr Hu was of Huang Guangyu, founder of electronics retailer Gome and once China's richest man. He was jailed for 14 years in 2010, though his case is not being reconsidered by the supreme court.

Exoneration has come too late for some in China. The Supreme Court in 2016 posthumously exonerated Nie Shubin , executed for rape and murder 21 years previously, in a hard-fought victory that was a landmark case for opponents of the death penalty, who claimed that confessions were often extracted under torture.

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