The man was taken by ambulance to nearby Royal Prince Alfred Hospital to be treated for minor injuries, which were sustained when he scaled the consulate fence.
About 60 police were sent to the scene.
Mr Murdoch said that when police arrived, one man was seen leaving the hotel before the other man was chased on foot.
"The second man ran from police," he said.
"During the course of that pursuit, shots were fired. Police continued their pursuit of the male who scaled a fence of the nearby premises. Those premises were then secured by police," Mr Murdoch said.
"A police search continued for the next five hours, from about 1.30am.
"During the course of that search, police located a hammer and a firearm, which were allegedly used in the commission of the armed robbery in the hotel area."
The first man arrested was taken to Newtown police station where he remained in custody and was being questioned by police on Friday morning, while the other man was still in hospital.
"We believe that when he climbed the fence of the Chinese consulate in Dunblane Street, he injured himself whilst going over the fence."
Police had fired shots, Mr Murdoch said.
"How many shots were fired and who fired them is still a matter for investigation.
"The man did get inside the consulate grounds. Police were able to make contact with the consulate officials who rendered every assistance to police, giving them access so that we could search the compound for the offender."
Both men were previously known to police but Mr Murdoch declined to say whether either of them had been were involved in previous armed robberies in the area.
- AAP
