The story aroused widespread attention among journalists, lawyers and intellectuals, who began discussing the issue on blogs and microblogs, a local version of Twitter. That same evening, Qiu wrote on his microblog, generating even more discussion.

'Those who have done no wrong are not afraid of ghosts knocking in the middle of the night,' Qiu wrote defiantly. He also correctly predicted that the police would eventually apologise to him.

The next day, media began to report on the incident, sympathising with Qiu.

The media involved included major news organisations such as CCTV, People's Daily, Caijing, Xinjing Bao, Nanfang Dushi Zhoubao, and China Daily and Global Times, the latter two both English-language dailies.

Qiu blogged again the next day from hiding, claiming he had written nothing wrong and that he had strong evidence of insider trading in the listed company. He also charged that the company tried to bribe him to keep quiet.

Public support widened for the journalist, and by Thursday, the local Public Security Bureau, facing growing pressure, cancelled the arrest warrant.

The next morning two police and three other local government officials boarded a train for the capital to make an official apology.

The meeting was originally planned for the newspaper's office in Beijing, but was shifted to a nearby hotel after the delegation arrived to find a crowd of journalists awaiting them.

Wang Shengzhong , a senior editor at the newspaper, said the police apology was sincere.

'They said the decision to issue the arrest warrant was a wrong one and they expressed their regret,' Wang said.

However, the police who came to Beijing declined to answer any questions about the incident, arguing they were not directly involved in the case.

Wang said further that Zhejiang Kan Specialty Materials had not yet dropped the charges against Qiu.

While the Economic Observer, in an editorial, called the resolution a victory, observers argued that had the incident occurred elsewhere the result might not have been as positive.

'I believe that if this incident occurred in a relatively stronger area the result would not have been the same,' said Luo Changping, a journalist.

'This type of thing could happen again,' he said.

'There's no media law, no guarantees for journalists and no freedom of expression.'

Russell Leigh Moses, a Beijing-based professor of Chinese affairs, said: 'I think it would be wrong to see this event as a harbinger of greater press freedom or social openness.

'This was a local error corrected by officials in the central party apparatus. The incident shows, in fact, just how nimble the party can be.'

Critic Li Xiang argues, however, that the case will have an impact on journalists.

'It's significant in that all the media will try to use this opportunity to establish a principle or precedent that news organisations can actually write critical reports about public companies without being harassed by powerful governments and institutions,' he said. 'And if later a more powerful institution is involved in a similar case, journalists can cite this as a precedent to defend themselves.

'So news organisations see this as a good opportunity.'