A Chinese court on Monday imposed a lighter penalty on Wu Ying, who has been convicted of financial fraud, after her initial death sentence sparked heated debates over China's fund-raising system and calls for using capital punishment prudently.

Following a retrial, the Higher People's Court (HPC) of east China's Zhejiang Province sentenced the 31-year-old businesswoman to death with a two-year reprieve.

The court's final judgement also ordered that all Wu's personal property be confiscated and that she be stripped of her political rights for life.

Zhejiang HPC said the verdict was delivered after the court considered that Wu had confessed to her crimes and voluntarily disclosed that she had offered bribes to multiple government workers, three of whom were charged after the briberies were verified.

In December 2009, Wu, the former owner of the Zhejiang-based Bense Holding Group, was sentenced to death by the Jinhua Intermediate People's Court (IPC) for cheating investors out of 380 million yuan ($60.2 million).

Wu raised 770 million yuan by promising investors high returns from May 2005 to January 2007, the intermediate court found. She still had 380 million yuan as well as a large amount of unpaid debt with creditors when the case was uncovered.

The intermediate court said Wu amassed the fortune by fabricating facts, deliberately hiding the truth and promising high returns as an incentive.

Despite Wu's appeal, the Zhejiang HPC upheld the death sentence without reprieve on January 18. But the Supreme People's Court overrode the ruling on April 20 and sent the case back to the Zhejiang HPC for re-sentencing.

Wu's initial sentence of death sparked public outcry for a more lenient punishment. The public's reaction has grown stronger since China last year did away with the death penalty for 13 types of economic and non-violent crimes, or nearly one-fifth of the total number of crimes punishable by death.

Meanwhile, experts believe the current financing system is also to blame in Wu's case, as it has made it difficult for small entrepreneurs to get loans from banks.

A thriving underground lending market has been widely documented in Zhejiang, a bustling coastal province flush with abundant liquidity. Companies such as Wu's turned to underground lenders to finance their businesses when they were unable to get loans from banks, creating more problems.

"There has been no administrative body designated by law to manage private funding," said Li Youxing, a law professor with Zhejiang University. "A complete supervision system on private funding is also missing."

In mid-March, Premier Wen Jiabao admitted at a press conference that Wu's case showed that private financing cannot meet the requirements of economic and social development in China.

"We need to guide and permit private capital to enter into the financial arena, standardize it and bring it into the open, encourage its development and strengthen supervision over it," said Wen.

Two weeks later, the State Council, China's Cabinet, announced a plan to set up a pilot zone in Zhejiang's city of Wenzhou, where many private businesses have converged to regulate private financing activities.

The trial program specifies 12 major tasks, including encouraging and supporting the participation of private capital in the reform of local financial institutions by setting up or taking shares in rural banks and credit companies.

As part of the pilot scheme, a private lending registration service center was inaugurated in Wenzhou in late April to serve as an intermediary between borrowers and lenders in an attempt to standardize private lending in the city.

On Monday, Wenzhou IPC issued a circular on securing the construction of the pilot zone, offering legal advice on problems that arose during the latest financial reform.

Juridical support will be given to private funds, companies offering small loans and rural funding outlets to facilitate the construction of the zone, said the circular.

Chen Youwei, deputy head of the Wenzhou IPC, said a special tribunal on finance will be established in the court and it will introduce financial experts as jurors.

"There is a lot to do in the juridical field to support the financial reform," said Chen.

Niu Taisheng, deputy head of Zhejiang Provincial Law Society, said Wu's case reflected that China still has a lot of issues to address on the country's systematic level.

"China has made huge progress in criminal law reform, and it is foreseeable that death penalties for economic and non-violent crimes will be largely reduced or more prudently used in the future," Niu said.

(Xinhua News Agency May 21, 2012)