Meanwhile, a separate court in Shandong province upheld its sentence against human rights campaigner Chen Guangcheng, in a case supporters say was designed to punish him for his work.
Zhao, 44, argued in his appeal that a defense witness was not allowed to testify during the trial and that the prosecution’s evidence did not amount to a criminal charge.
In August a Beijing intermediate court convicted Zhao for defrauding a rural official of $2,500 in 2001. Zhao says he did not take the money. The court did not allow a witness to testify on his behalf.
Zhao has spent more than two years in detention, during which family members have not been allowed to visit him.
The time spent in custody will count toward his sentence, leaving him with about 10 months to serve, his lawyer said.
Zhao was an investigative journalist for Chinese publications before joining the New York Times in 2004. He wrote about official corruption and abuses in the countryside.
Human rights activist Chen Guangcheng was sentenced in August to four years in jail for damaging property and "organizing a mob to disturb traffic".
Earlier this month an intermediate court overturned the verdict, citing insufficient evidence and returned the case to the lower court.
On Friday that court ruled that its original sentence should be upheld.
The decision came after a 30-minute session in which no witnesses or evidence were allowed, said Chen Guangfu, the only family member permitted to attend the proceedings.
Supporters of Chen, who has been blind since childhood, have accused officials of fabricating the charges against him.
They say the case was in retaliation for his work documenting complaints that officials were trying to enforce China's birth-control regulations by forcing villagers to have late-term abortions and sterilizations.
The court decisions came on the same day that the Chinese government announced plans to relax restrictions on foreign reporters ahead of the 2008 Olympics in Beijing, but that the freedoms would expire when the Games finish.
Currently foreign reporters must apply to get permission to interview officials and to travel to certain areas.
China is the world’s leading jailer of journalists, with at least 32 in custody, according to the advocacy group Reporters Without Borders.