It's unfortunate that Mr Xi was caught in the crossfire. But, it's not like he was held in prison without justice. In this case, the justice system worked itself out, and Xi was shown to be innocent. He was not, as far as I can tell from reading the article, deemed guilty until proven innocent. He was suspected of a crime, the evidence showed that he had not committed a crime, and the charges were dropped.
But, generally, I think the U.S. is much too lax in its patrolling of Chinese espionage. Things have been out of control for many years, at least for the couple decades that I've worked in research and development. Too often, at conferences and trade shows, have I seen the roving groups of Chinese with their video cameras and notebooks, blatantly stealing ideas and IP. Several times, I've witnessed suspicious Chinese citizens coming to work for tech companies, straight from China, being overly interested in details of IP, then mysteriously quitting, without a trace. It's a real problem.