China’s supreme court threw out a retail tycoon’s fraud conviction on Thursday in an unusual show of leniency toward entrepreneurs amid a string of high-profile detentions that has rattled the Chinese business world.

Zhang Wenzhong, former chairman of one of China’s biggest retail chains, Wumart Stores Inc., was released in February after serving 12 years in prison on charges that included improperly obtaining technology development subsidies.

The Supreme People’s Court ruled that while Zhang, a computer scientist who studied at Stanford University and founded Wumart in the 1990s, violated rules in applying for the subsidies, he did so unintentionally and his company was eligible to receive them.

Zhang and another executive who was convicted had no “subjective intention” to commit fraud, the court said. It said their convictions were a “misapplication of the law and should be corrected.”

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The ruling was a rare success by a high-profile defendant in the midst of a marathon anti-corruption crackdown led by President Xi Jinping.

It reflected the ruling Communist Party’s desire to “strengthen the protection of the legitimate rights and interests of entrepreneurs,” said a Supreme Court official quoted by the website of the Shanghai newspaper The Paper.

In a possible…