The Supreme People's Court (SPC) on Friday overturned a death penalty ruling that was handed down to Wu Ying, one of China's wealthiest women and a convicted fraudster.

Some people said that the handling of the case underscores the need for the liberalization and regulation of the country's private financing sector.

Wu Ying, a businesswoman convicted of cheating investors out of 380 million yuan (US$60.23 million), was spared the death sentence after the Supreme People's Court?ruled that an immediate execution might be "inappropriate" after considering the case, although it admitted that the nature of the crime had been accurately determined in verdicts made by lower courts.

The court has referred the case back to a high court in Zhejiang Province.

Wu, 31, who rose from running a single beauty salon to raking in billions of yuan in three years, thrived by swindling hefty sums of money from private creditors with empty promises of high returns.

There is no doubt that Wu's deeds caused severe losses for her victims, undermined national financial order and created extremely harmful effects, as the supreme court said in its statement.

However, Wu has drawn sympathy from the public, who have criticized a financing system that has made it difficult for small entrepreneurs to get loans from banks. These companies subsequently turn to underground lenders to finance their businesses, creating more problems.

In mid-March, Premier Wen Jiabao said at a press conference that "we need to guide and permit private capital into the financial arena, standardize it and bring it into the open, encourage its development and strengthen supervision over it," when commenting on Wu's case.

"The case must be handled on the basis of real facts," said Wen, who added that the case shows that private financing cannot meet the requirements of economic and social development in China.

Two weeks after Wen's remarks, the State Council, or China's cabinet, announced a plan to set up a pilot zone in the eastern city of Wenzhou, where many private businesses have converged to regulate private financing activities.

"The handling of Wu's case, in my view, will play a role in the implementation of the pilot program in Wenzhou," said Ruan Chundao, president of the China Ruixin Group, a Wenzhou-based leather producer.

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.

Private funds will also be guided toward the establishment of venture capital and private equity activity, as well as other types of investment.

Cases like Wu's will disappear if the reforms are carried out properly, Ruan Chundao said.

While admitting that the pilot program has helped to usher in long-awaited reform, experts have warned that it does not cover several key areas.

Zhang Shuguang, a researcher with the Beijing-based Unirule Institute of Economics, said the establishment of private banks should have been included in the reform package, adding that the exclusion indicates that regulators are still thinking conservatively.

The liberalization of China's interest rate formation mechanism was also excluded from the reforms, Zhang said.

Under the controlled interest rate mechanism, the gap between the benchmark rate and the market rate is set to widen, which leaves room for speculation and irregularities and will eventually negate the reform's effectiveness, Zhang said.