Ambassador Jon Huntsman urged China to immediately release Xue, 44, who lost his appeal in a Chinese court against industrial espionage charges and his eight-year sentence handed down in July. He also was ordered to pay a $30,000 fine.

"I'm extremely disappointed in the outcome, although it wasn't completely unexpected," Huntsman said outside the Municipal High People's Court in Beijing.

"We ask the Chinese government to consider an immediate humanitarian release of Xue Feng, thereby allowing him to get back to his family and to his way of life. This case has been brought up in every single meeting that I've been involved with for almost two years. We'll not let this one go."

The sentence was "very heavy" and "they rejected all our arguments," Tong Wei, Xue's layer said. Xue also claimed he has been tortured in prison where guards stubbed cigarettes on him.

Xue, an oil geologist who trained in China and at the University of Chicago, was arrested in 2007 and convicted in July 2010 after a 2 1/2-year trial for allegedly violating China's state secrets laws. He was accused of arranging the sale in China of a Chinese state oil industry database to his employer, Colorado consulting business IHS Energy, now called IHS Inc.

But his lawyers said the Chinese government declared the database classified information only after Xue legally bought the information.

Along with Xue last July, three Chinese nationals were sentenced in the case. Li Yongbo was given six years in jail and fined $30,400. Both Chen Mengjin and Li Dongxu were given 2 1/2-year sentences and fined $7,600.

U.S. State Department officials downplayed the arrest and conviction of Xue, although he reportedly wanted bold statements proclaiming his innocence.

His wife, who lives in Texas with their two children, said she wished for quiet diplomacy to pressure Beijing to release Xue. This would be better for the children and for relatives they have in China.

The latest episode in Xue's drawn out legal battle comes after Chinese President Hu Jintao's state visit to the United States last month. U.S. officials had hoped at the time that the visit could have paved the way for the release of Xue.

"The oil industry is what China sees as vital to its economic growth, which in turn is vital to maintaining stability," the manager of research and Hong Kong operations of the Dui Hua Foundation, Joshua Rosenzweig, said.

"The leak of information about the industry is seen as a national security issue," he told the Chinese newspaper Global Times. It indicates the importance China attaches to its natural resources, especially the steel and oil industries, he said.

The court's decision to turn down Xue's appeal will be little comfort for other foreign nationals, including Australian Stern Hu, awaiting trial or appealing their cases within China.

Chinese-born Hu, 48, was head of the Shanghai office of global mining business Rio Tinto, when Chinese authorities detained him in July 2009 during negotiations for iron ore sales between his employer and Chinese state companies. Hu, a graduate of Peking University and an Australian citizen since 1994, was taken into custody along with three Chinese colleagues.

However, Hu and his colleagues pleaded guilty to taking $13 million and one Chinese man admitted to commercial espionage. In March 2010, a Shanghai court sentenced Hu to 10 years in jail.

Immediately after the sentence, Rio Tinto terminated the employment of Hu, as well as his Chinese colleagues, because of their conduct, Australian media said at the time. Rio Tinto accepted the evidence provided showing instances of bribery.

The Hu case set the tone in China for those accused of bribery and industrial espionage, Dong Zhengwei, a lawyer in the Zhongyin law firm in Beijing, said. Hu's sentence was "a medium or slightly below medium" sentence, Zhengwei told Australian media.

"Overall. I don't think it's a harsh punishment. The verdict sends a message to all multinationals operating in China that if they don't discipline themselves or they abuse commercial morals they will face similar punishment. The case sets a milestone in that sense."

"If I was a mining executive working in China now, I'd certainly be lining up all my ducks in a row and making sure any negotiation that I would have had were iron clad," James Wilson, resource analyst at DJ Carmichael, said.

"Also, I'd make sure that the conduct of my employees was closely monitored and was within the letter of the law. Who would want this sort of thing thrust upon their company?"

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