TAIPEI—Chinese authorities said the actions of a manager with e-commerce giant Alibaba Group Holding Ltd. accused of sexually assaulting a co-worker didn’t rise to the level of a crime, dropping a case that had drawn widespread public attention and sent Chinese tech companies scrambling to implement sexual-harassment policies.

District prosecutors in the eastern China province of Shandong said in a one-line statement late Monday that they wouldn’t pursue criminal charges against the accused man, Wang Chengwen, despite a determination by police that he had committed an act of “forcible indecency” against a co-worker while on a business trip. It offered no further details.

In a separate statement issued the same night, local police handling the matter said they would subject Mr. Wang to 15 days of administrative detention.

Prosecutors have wide discretion in deciding whether an act of forcible indecency constitutes a crime and according to Chinese law can impose a penalty of up to five years in prison depending on the severity of the sexual assault. Instead they punished Mr. Wang with the maximum penalty for common indecency.

A female Alibaba employee accused Mr. Wang of sexual assault in late July and later posted an 11-page account of the episode on an internal company discussion board. In the account, the woman said she was pressured to drink at a dinner with clients in Jinan, Shandong’s capital, until she was almost unconscious. She wrote that she later woke to find Mr. Wang on top of her in a hotel room, kissing and groping her.

The account spread onto Chinese social media, where it triggered a flood of anger over Alibaba’s handling of the matter and widespread debate about the prevalence of sexual misconduct in Chinese workplaces.

Alibaba fired Mr. Wang after the scandal became public, and two other employees, including one senior executive, resigned. Several of the country’s biggest tech companies, including Alibaba, responded by instituting or bolstering policies against sexual harassment, with some in the industry describing the incident as a wake-up call. 

Alibaba also fired several employees whom the company accused of leaking the woman’s account online, a person familiar with the matter said. Bloomberg News reported last week that the company had fired 10 employees for leaking the account.

In a statement Tuesday, Alibaba acknowledged the prosecutors’ decision regarding Mr. Wang and said it would take the incident as a lesson. The company didn’t immediately respond to a question about the fired employees.

Monday’s decision came after police in Jinan last month published findings from their investigation that supported some of the woman’s account.

The official police account, which identified the woman by her surname Zhou, confirmed that Mr. Wang entered her hotel room several times and forced himself on her. But it said investigators found no evidence of rape, which the woman alleged on a separate occasion. Police also said that Ms. Zhou wasn’t pressured by Mr. Wang to go with him on the work trip nor was she pressured to drink at the dinner.

Mr. Wang couldn’t be reached for comment. Attempts to contact Ms. Zhou weren’t successful. Phone calls to the provincial prosecutor and local police went unanswered.

In her account, Ms. Zhou also accused a business client of Alibaba’s of forcing himself on her at the same work dinner. The official statements Monday made no mention of the client. Previously, police had said they were taking “criminal coercive measures” against him, as they had with Mr. Wang.

Victims of sexual abuse in China have long complained about the challenges of pursuing justice through the country’s court system, citing an unreasonably high bar for evidence. It is rare for prosecutors to pursue sexual-misconduct cases in the absence of direct evidence, such as surveillance footage, according to legal experts and women’s rights advocates.

China’s Communist Party, which wields ultimate authority over the legal system, is wary of encouraging social activism and has worked to keep a lid on a fledgling #MeToo movement since 2018, when sexual-assault accusations against Hollywood producer Harvey Weinstein inspired many sexual-assault victims in China to step forward.

The decision on Monday is likely to mute further public discussion of the Alibaba case despite continued fuzziness about what exactly happened, some Chinese women’s rights activists said.

“There’s no way to judge how the case should be handled legally as there was very little information disclosed,” says Lü Pin, a Chinese feminist activist and writer living in New York. “In an open society, there would be a media investigation to let people know exactly what happened.”

In Ms. Zhou’s case, she said, “this thing is finished.”

Imposing the 15-day detention addresses to some extent the public demands for punishment, and serves the government’s broader goal of making sure online outrage doesn’t spin out of control, Ms. Lü said.

Reaction to the police decision on Chinese social media was mixed. Some users on the popular Twitter -like Weibo platform lauded authorities for taking swift action while others remained skeptical.

“This conclusion is seriously confusing. If the man didn’t do anything, why detain him for 15 days?” one user wrote in a response that received dozens of likes.

Another user said Mr. Wang should sue Ms. Zhou for defamation.

Defamation suits by men accused of sexual misconduct are common in China and are another barrier for their accusers in turning to the legal system for help, lawyers and women’s rights activists say.

Write to Chao Deng at Chao.Deng@wsj.com