A potentially ugly diplomatic situation erupted between India and China on New Year’s Eve. Thankfully, though, some measured diplomacy on both sides prevented the situation from escalating.

Indian diplomat S. Balachandran had travelled to a courtroom in the Chinese city of Yiwu in hopes of negotiating the release of two Indians – Deepak Raheja and Shyamsundar Agrawal – who werereportedly being held hostage by Chinese traders. He communicated to the court that he was diabetic, but it appears he wasn’t allowed to eat as irate Chinese traders insisted that no one would be able to leave the courtroom until the verdict was announced. Balachandran collapsed, and was rushed to a local hospital.

The traders were said to be unwilling to free the Indians as their company owed money to local Chinese. The owner of the company had gone bankrupt and fled.

On January 2, India’s External Affairs Ministry (MEA) summoned the Chinese deputy chief of mission and lodged a strong protest over the incident. But rather than escalate the issue further, MEA officials sought to play down the incident, noting that it’s importance shouldn’t be exaggerated. Indian officials claim the matter has been resolved amicably, saying Chinese officials have promised an inquiry into the incident and vowed the safety and security of Indian diplomats in China.

Sources say the MEA accepted the Chinese expressions of regret, and they vehemently deny reports that the diplomat collapsed because local Chinese “manhandled” the official.

The issue was also raised at a Congress party briefing in New Delhi on Monday, although party spokesperson Manish Tiwari said he had no information about the development.