From the New York Times (link):
Chinese authorities on Friday unexpectedly withdrew the state secrets case against a Chinese researcher for The New York Times, a surprise decision that may clear the way for his release and comes a month before President Hu Jintao is scheduled to visit the United States.
The researcher, Zhao Yan, 44, who worked in the paper’s Beijing bureau, could be freed within days after spending the last 18 months in prison, his lawyer said. The rare reversal by prosecutors and Beijing court officials comes less than three months after Mr. Zhao was indicted for disclosing state secrets to the Times and also on a lesser charge of fraud. Mr. Zhao has denied the allegations.
UPDATE: The New York Times has posted an updated version of Yardley’s story on their site, which adds in a statement from the Foreign Ministry on the case.