Australian tourists briefly held hostage in China by a lone man armed with explosives told of their ordeal as Canberra urged holidaymakers to heed travel warnings ahead of the Beijing Olympics.

The man attacked a group of 10 Australian travel agents visiting the northwest city of Xi'an, famed as home of the Terracotta Warriors, on Wednesday before he was shot dead by a police sniper.

"He was pacing up and down the bus, they couldn't understand what he was saying. Then he turned around, opened up his jacket and he had a bomb strapped to him," said Sue Wynne, a friend of hostage Rhiannon Dunkley, after speaking to her.

Nine of the hostages were released by the man, but a 48-year-old woman was held captive for several hours before the gunman was killed.

Australian Foreign Minister Stephen Smith said there was nothing to suggest the Australians were deliberately targeted and the motive for the attack remained unclear.

"We've asked for a full briefing to try to understand the motivation," Smith told journalists in Melbourne.

The travel agents were on an educational tour to Beijing, Xi'an and Shanghai, organised by a Sydney-based travel wholesale company, when the attack took place.

As the Australians boarded flights for home from Shanghai on Thursday, the company's General Manager Jimmy Liu said China was a safe destination for the Olympics in August and described the attack as "very rare".

Smith said Australian travel danger warnings for China were set at a very low level, but urged travellers planning trips to the country for the Olympics to read them for their security.

"This is an unusual event for China and the Chinese authorities are no doubt putting their minds to the motivation behind it," Smith said.

Australian foreign ministry advice for China warns that foreigners have been assaulted and robbed, "particularly in popular expatriate gathering areas".

The official Xinhua news agency said police believed the man was named Xia Tao and was a worker in Xi'an. Police investigators did not offer an explanation for the attack.

China has been preparing for an influx of foreign visitors for the Beijing Olympics, and the government has been at pains to highlight the security steps it is taking.

"I don't view this case as an embarrassment to China. Such things happen in every country and what matters is how you handle it," said Chinese Foreign Ministry spokesman Qin Gang.
Reuters