A trip to see China’s famed Terracotta Army took a terrifying turn for a group of Australian tourists when they were taken hostage by a man claiming to be carrying explosives.

The drama unfolded yesterday as the ten men and women, all travel agents on an education tour, visited the Drum and Bell Tower Square in the heart of the ancient city of Xi’an, near one of the last old low-rise districts that has escaped the developers’ bulldozers.

A Chinese man boarded their bus and took the group hostage, telling their translator that he had explosives strapped to his body.

Police arrived and the man, identified as Xia Tao from the Yanliang district of the city, said he wanted to negotiate.

He allowed nine of the Australians to leave the bus but kept a 48-year-old woman from New South Wales and the Chinese translator as hostages. Fearing that the man could blow up the bus in the crowded city centre, police persuaded him to transfer with the hostages to a smaller vehicle. The police agreed to resume negotiations with the man once the smaller bus had been driven outside the city.

The man, whose demands apparently included a request to speak to the Chinese President, Hu Jintao, was then driven along the highway to the airport.

Reports differ about what happened next. Some say the negotiations broke down, others that a police marksman took aim when the vehicle stopped at a highway toll.

What is certain is that the hostage-taker was shot dead near the tollgate in an operation overseen by the city’s boss, the powerful Communist Party Secretary of Xi’an.

The Australian woman and her Chinese companion were unharmed.

Janaline Oh, the spokeswoman at the Australian Embassy in Beijing, said: “The Australian Government is pleased that the hostages are now safe.” The Australians later flew to Shanghai, where they received consular assistance.

It was not known if the group visited what must be a highlight of any trip to China: the Terracotta Army — more than 8,000 life-size figures of warriors dating back to about 200BC that are buried around the grave of China’s first emperor, Qin Shihuangdi, in the countryside outside Xi’an.

The taking of hostages, especially foreigners, is rare in China. Last year police in Shanghai shot dead a knife-wielding man who took a four-year-old girl hostage in a fast-food outlet.

The latest incident involving foreign tourists in a city that is one of the most popular destinations for visitors to China must have jolted security authorities preparing for the Olympic Games in Beijing in August.

Security will be tightened around Beijing and at entry points to China during the Games and a security zone will be set up around the capital’s airport to prevent aircraft from being shot down.

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