IN ITS TRIAL of the second instance on Sunday, the Intermediary People's Court of Jiujiang, East China's Jiangxi province, annulled the two-year prison sentence given a businessman found guilty of tax evasion. Beijing News comments:

Gongqingcheng People's Court found Dai Xiaoquan, the founder of Cellon, a cellphone parts manufacturer, guilty of tax evasion in May. But the appeal court said the amount of tax Dai evaded, about 3.6 million yuan ($570,000), was less than 10 percent of the tax he had paid so he should not have been charged under the Criminal Law.

Dai, who should have received administrative penalties, was placed in criminal detention in 2015 before he was sentenced to prison.

Dai was invited by the Gongqingcheng government from Shenzhen, South China's Guangdong province, to invest in the inland county in 2010. His business created 3,000 jobs for locals, and the annual turnover hit 2 billion yuan in two years, making him the largest taxpayer in the county.

But Dai's enterprise encountered difficulties afterward with the fast development of the cellphone industry and the increasingly cutthroat competition.

Dai was first put in custody for tax evasion in 2014. In a statement, Cellon claimed the local government did so to demand shares in Dai's business, which Dai refused. The local government responded by accusing Cellon of "sucking its blood" after the company suspended production.

The case reveals how far the market environment in Gongqingcheng is from the rule of law and is an indicator of the business environment in China.

Local governments must realize what attracts entrepreneurs is not just the subsidies and policy support they provide enterprises, above all how healthy a local business environment is.

If the government suspects Dai of cheating it by obtaining subsidies under false pretenses, it should charge him for that, rather than tax evasion. At the same time, Dai has every right to bring charges against the Gongqingcheng authorities for abusing their power and influencing the judiciary.