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The Ethiopian government said it will send a mission to free the Chinese.
The Ogaden National Liberation Front attacked a Chinese oil installation in eastern Ethiopia on Tuesday in which nine Chinese and 65 Ethiopians died.
The ONLF said the seven were being well cared for and would be handed over to the Red Cross at the first opportunity.
It is "a very delicate operation, because Ogaden is a battle zone," said ONLF spokesman Abdirahman Mahdi.
China has strongly condemned the rebel attack against its interests.
The Ethiopian leader denounced the attack as "cold-blooded murder".
Ethiopia has accused neighbouring Eritrea of sponsoring the ONLF, an ethnic Somali rebel group.
Eritrea has denied the accusation, saying Ethiopia is trying to trigger a war.
Beijing urged the government in Addis Ababa to ensure the safety of Chinese expatriates after the "atrocious" act.
It says the attack will not stop it from investing in Africa, but it plans to boost security measures.
The clashes took place at an oil field in Abole, a small town about 120km (75 miles) from the regional capital, Jijiga.
"It is an outrage," Ethiopian Prime Minster Meles Zenawi said at a news conference.
"I can assure you that those responsible for this act will pay in full for what they did."
Fire fight
The ONLF has been waging a low-level insurgency with the aim of breaking away from Ethiopia.
The ONLF has in the past made threats against foreign companies working with the Ethiopian government to exploit the region's natural resources.
A Chinese oil worker said about 200 gunmen attacked the field, where the Zhongyuan Petroleum Exploration Bureau is searching for oil.
Gunmen briefly took control of the field after a 50-minute fire fight with soldiers protecting it, Xu Shuang, a manager for the oil group, said.
China has been working to increase its influence and investment in Africa in recent years as it looks to secure energy supplies for the future.
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