A company in the city is said to have received a phone call last week from a man who claimed he was a member of an "East Turkestan independence group".

The man said he would bomb the firm's offices if the money was not wired into his account, the Beijing News reported.

The police were quickly alerted and arrests were made two days later.

According to the Beijing News, the suspects were traced through their bank account details.

The paper identified the suspected leader of the extortion attempt as Sun Yongzheng, a man who devised the scheme after he lost all his money gambling.

The Chinese government has maintained that terrorism is the biggest threat to the Olympic Games, which take place in August in Beijing.

They have attributed potential attacks to a separatist group in the western, Muslim majority province of Xinjiang, who are fighting for an independent state called East Turkestan.

In April the authorities stated that they had foiled plots which involved suicide attacks and the kidnapping of athletes.

Qingdao will host the sailing competitions in the forthcoming games.

Source: BBC