The two-year reprieve means the death sentence of Liu, who had become a powerful official for promoting China's much showcased high-speed trains, would most likely would be commuted to a life prison term.
The sentence was announced by an Intermediate People's Court in Beijing, Xinhua News Agency reported. The court's decision comes as the government under China's new and reform-minded president, Xi Jinping, has vowed to tighten its crackdown on official corruption, an endemic problem facing the country.
Liu had been under investigation since February 2011, when he was removed from his government post on suspicion of "serious disciplinary violations," Xinhua reported.
The Chinese Communist Party's Central Commission for Discipline Inspection found Liu had used his position to seek illegal profits for private businessmen, causing great economic losses and negative social influence, the report said. The agency also discovered Liu "had taken massive bribes and bore the major responsibility for severe corruption in the railways system."
The indictment said Liu accepted more than $10 million in bribes to help people win promotions or contracts between 1986 and 2011, the Voice of America reported.
In its ruling, the court also took away Liu's political rights for life and confiscated all his personal property for taking bribes. He also was sentenced to 10 years in jail for abuse of power. He had earlier being expelled from the party.
China's bullet train system, despite its high cost and being widely publicized, has not been free of problems. Two years ago, a high-speed train collision left 40 passengers dead and another 172 injured and Xinhua reported the tragedy was blamed on improper management.
There have also been articles in the state media about safety scandals.