The businessman, 49, died on December 23 after he ate a slow-boiled cat meat hotpot, a southern delicacy.
A local official, Huang Guang – who police say had economic disputes with Liyuan – was arrested on Friday, on suspicion of poisoning the stew.
Guang, the deputy director of agriculture, is suspected of putting the herb Gelesemium elegans in the hotpot, say police.
The police said that all three men were ill but Liyuan died because he ate more.
A friend of Liyuan’s said he hadn’t eaten much because it tasted “more bitter” than usual.
Liyuan and Guang met at a restaurant in Guandong because forestry company owner Liyuan wanted to buy some woodland to develop.
The two men had worked together since 2009 and the local media has said Liyuan had paid Huang up to 3.5 million yuan (£350,000) in bribes.
Police say the two were involved in a dispute after Huang allegedly embezzled money from Liyuan.
But Liyuan soon felt dizzy and sick and was taken to hospital where he died after a heart attack.
The owner of the restaurant initially detained the restaurant owner on suspicion of serving unsanitary food, but Liyuan’s family didn’t believe his death was down to food poisoning.
