As I noted yesterday, Indian and Chinese diplomats have been working to avert a potential flashpoint between the two giant Asian neighbors over two detained Indian businessmen. And, after some fevered negotiations, it seems like they’ve managed it.

The two Indians, Deepak Raheja and Shyamsundar Agrawal, werereportedly being held hostage by Chinese traders in the city of Yiwu after the owner of the company they worked for, a Yemeni national, apparently fled after failing to clear his debt to the Chinese traders. The traders had been insisting that Raheja and Agrawal must pay the money as they finalized the transactions. When the Indian traders refused they were reportedly forced to drink their own urine.

The incident risked sparking a diplomatic row between the two countries, with one of the captive businessmen raising the stakes by apparently promising to commit suicide if the Indian government didn’t step in and evacuate them to Shanghai within 24 hours. 

Under pressure from Indian diplomats, the Chinese shifted gear under. Chinese envoy Zhang Yan met Indian External Affairs Minister S.M. Krishna on Wednesday and offered assurances over the safety of the two Indian businessmen. Zhang also met Joint Secretary (East Asia) Gautam Bambawale, who is said to have been instrumental in resolving the issue and securing the release of the two businessmen.

“I’m very happy with the outcome. The Traders have been released and they are on their way to Shanghai under consular officers’ security,” Krishna said. “We have friendly relations with China. Let’s not blow this incident out of proportion.”

“Both the traders will take care of themselves in the civil-suit case in China,” Krishna added at a late night press conference in New Delhi.

Zhang added:  “We are coordinating. We are working hard to solve the issue. Everything will be settled through Chinese law.”