TAIPEI — Taiwan’s ruling Democratic Progressive Party won an unprecedented third-straight presidential term, as incoming leader Lai Ching-te pledged to stay open-minded in his approach toward governance, while committing to forging consensus in a split legislature.

The outcome of the presidential election on Saturday riled Beijing, which has repeatedly labeled Lai as a “stubborn worker for Taiwan independence” and a dangerous separatist. There are also fears this could in turn influence frosty China-U.S. relations and security in the broader Indo-Pacific region, with China having escalated military activity in the Taiwan Strait and other nearby waters.

“As president, I have an important responsibility to maintain peace and stability in the Taiwan Straits,” Lai said in a press conference, in an official party translation of his comments in Mandarin. He added though that he is also “determined to safeguard Taiwan from threats and intimidation from China.”

“I will act in accordance with our democratic and free constitutional order, in a manner that is balanced and maintains the cross-Straits status quo,” he added. “Under the principles of dignity and parity, we will use exchanges to replace obstructionism, dialogue to replace confrontation, and confidently present exchanges and cooperation with China.”

The Chinese Communist Party has refused to engage with outgoing President Tsai Ing-wen since she assumed office in 2016. Tsai did not stand at this election because she has served the maximum two presidential terms.

The DPP has not accepted the so-called “1992 Consensus,” disputing the tacit agreement for “one China” between the then-KMT government and Chinese Communist Party officials, which Beijing assumes as the basis for cross-Straits engagement.

Still, in his post-election comments in Mandarin, Lai invoked the official name of Taiwan — the Republic of China — at least twice.

DPP’s Lai — Taiwan’s current vice-president — won more than 40% of the popular vote in Taiwan’s eighth presidential election. DPP is the first party to win the presidential office three times in row since direct presidential elections were introduced in 1996. Beijing had framed the election as a choice between “peace and war, prosperity and decline.”

Kuomintang or KMT, Beijing’s preferred political partner, gained roughly 33% of the vote with Hou You-yi at the top of its ticket. Ko Wen-je — the surly, straight-talking former Taipei mayor who ran under the banner of the Taiwan People’s Party that was formed only in 2019 — received just over 26% of the vote.

Voter turnout appeared to be the second-weakest since direct presidential elections started in Taiwan in 1996. This year, 71.9% of all eligible voters cast their ballots for the presidential election, according to preliminary data from Taiwan’s Central Election Commission.

China dismissed the outcome of Taiwan’s Saturday elections, saying its ruling Democratic Progressive Party does not represent the mainstream public opinion.

“Taiwan is China’s Taiwan,” Chen Binhua, the spokesperson for the Taiwan Affairs Office of the State Council, said on Saturday shortly after DPP’s Lai emerged as the winner.

“This election cannot change the basic pattern and the development of cross-Strait relations, nor can it change the common desire of compatriots on both sides of the Taiwan Strait to draw closer,” Chen added, according to a CNBC translation of a report from Xinhua, the official state news agency.

China has never relinquished its claim over Taiwan — which has been self-governing since the Chinese nationalist party, or Kuomintang, fled to the island following its defeat in the Chinese civil war in 1949.

Chinese President Xi Jinping regards reunification with the mainland “a historical inevitability.”

The U.S. response starkly differed, but was broadly consistent with its past positions.

“We … congratulate the Taiwan people for once again demonstrating the strength of their robust democratic system and electoral process,” U.S. Secretary of State Antony Blinken said in a statement.

“The United States is committed to maintaining cross-Strait peace and stability, and the peaceful resolution of differences, free from coercion and pressure,” he added.

The outcome of the race to control Taiwan’s 113-seat legislature though is far less clear, with the DPP losing its majority. A hung parliament could well hobble Lai’s policy agenda, while heralding a return of the kind of notorious open feuding among Taiwan’s legislators.

“On the legislative elections, the DPP did not hold onto a majority,” Lai said. “This means we did not work hard enough, and there are areas where we must humbly review and look back on.”

As it stands, the new Taiwan government will have its hands full, with voters largely concerned with bread-and-butter issues, particularly stagnant wages at a time of escalating rents and home prices that have been worsened by high inflation.

These issues have largely helped buoy Ko’s popularity as he positioned himself as a political outsider. 

“Taiwan People’s Party got more votes than expected. Ko got 25%, showing there is still a significant number of voters wanting a change,” Wei-Ting Yen, an assistant professor in government at Franklin and Marshall College, told CNBC.

“The social force is there, and the Lai administration has to address the social and economic issues right on,” she said. “People may be supporting the DPP’s foreign policy directions, but they are not necessarily supporting them for domestic policies.”

At the same press conference on Saturday after his two opponents conceded, Lai said he will carefully consider and include policy ideas and positions of his two electoral rivals that further Taiwan’s interests.

In a nod to issues that dominated the presidential election campaign, Lai singled out the financial sustainability of Taiwan’s labor and health insurance, along with the country’s energy transition as urgent issues that he will prioritize in forging consensus.

Lai also said he will appoint the most qualified professionals and personnel regardless of political affiliations in the “spirit of a democratic alliance.”

“The elections have told us that the people expect a strong government and effective checks and balances,” Lai said. “As for the new structure of the new legislature, Taiwan must build a new political environment of communication, consultation, participation, and cooperation.”

Still, Lai also had one eye on the broader strategic significance of his electoral victory — however diminished it may seem in comparison to the DPP’s comfortable victory in the presidential and legislative elections in 2016.

“Through our actions, the Taiwanese people have successfully resisted efforts from external forces to influence this election. We trust that only the people of Taiwan have the right to choose their own president,” Lai said.

Taiwan’s DPP-led government has often accused Beijing of vote interference either by military intimidation or by co-opting Taiwan’s business elite due to their economic reliance on China.

In the run-up to Saturday’s vote, Lai said that Beijing’s meddling is “the most serious” at this elections.

Xi told U.S. counterpart Joe Biden on the sidelines of the APEC leaders summit in November that Taiwan has always been the “most important and sensitive” issue in China-U.S. relations.

Prior to Saturday’s elections, a senior Biden administration official said the White House is preparing for several different outcomes. Biden has pledged to defend Taiwan in the event of a China invasion, a position that has irked Beijing.

Former U.S. House Speaker Nancy Pelosi visited Taiwan in 2022, becoming the highest-ranking U.S. official to visit the island in over two decades. Her trip was one reason that communication between the world’s two leading powers ground to a halt before a tentative resumption only months ago.

“As one of the first and most highly anticipated elections of 2024, Taiwan has achieved a victory for the community of democracy,” Lai said. “We are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy.”

Tencent lost about $43.5 billion in market value on Friday after China surprised financial markets with a fresh set of rules aimed at curbing excessive gaming and spending.

The draft guidelines from China’s National Press and Publication Administration sank the Hong Kong-listed shares of Tencent, NetEase and Bilibili — among the largest online gaming-related counters in the world’s biggest online gaming market.

“The most recent regulatory move on the online gaming industry is the last thing the market was hoping to hear out of Beijing,” Brian Tycangco, an analyst at Stansberry Research told CNBC.  

“While well intended, the move casts doubt on the viability of existing business models that mostly are built around incentive or rewards to attract users and boost loyalty,” he added.

Shenzhen-based Tencent, which owns WeChat and generated over a fifth of its third-quarter revenue from domestic online gaming, saw its shares tumble about 12.4% to close at HK$274, its lowest closing level since end-November 2022.

NetEase, 80% of whose third-quarter revenue came from domestic online gaming, plunged 24.6% to close at HK$122. Friday’s losses wiped out about 115.1 billion Hong Kong dollars ($14.7 billion) off NetEase’s market capitalization.

Bilibili, a social media site that derived 17.1% of its total third-quarter net revenue from Chinese domestic gaming, saw its shares slide 9.7% to close at HK$80.30, its lowest since November 2022 — shaving about 2.4 billion Hong Kong dollars ($307 million) off its market capitalization.

The Hang Seng Index closed down 1.7% on Friday ahead of a four-day holiday weekend, while the China Enterprises Index of the largest offshore mainland blue-chip names listed in Hong Kong ended down 2.3%.

“I’m confident we’ll get more clarity on these new rules in the coming days and weeks. But investors don’t want to wait around for the dust to settle. Better coordination between industry and regulators will benefit everyone in the future,” Tycangco said.

New draft guidelines released by China’s top gaming regulator require owners of online games to abstain from providing or condoning high-value or expensive transactions in virtual entities whether by auction or speculative activity, among other things.

Daily login rewards will also be banned, while recharging limits must be imposed with pop-up warnings issued to users who display “irrational consumption behavior,” the National Press and Publication Administration said.

“These new measures do not fundamentally alter the online gaming business model and operations,” Vigo Zhang, vice-president of Tencent Games, told CNBC. “They clarify the authorities’ support for the online gaming industry, providing instructive guidance encouraging the innovation of high quality games.”

These latest draft rules come at a time, given the broader China technology industry was just emerging from a broader crackdown that started in late 2020.

Just over a year ago, Tencent secured rights to five of the 45 foreign game licenses approved by the National Press and Publication Administration in the first batch of approvals since Beijing’s crackdown on the video-games sector that started in August 2021.

At the country’s annual legislative meetings in 2021, China President Xi Jinping blamed addiction to online gaming for rising myopia and the adverse psychological well-being of the country’s young.

Later that year, the National Press and Publication Administration proposed that children under 18 be should not allowed to play online games for more than three hours a week, limiting them to legal game time only between 8 p.m. and 9 p.m. on Fridays, weekends and public holidays starting in early September.

In August, the Cyberspace Administration of China proposed rules to limit the smartphone screen time of people under the age of 18 to a maximum of two hours per day.

— CNBC’s Lim Hui Jie and Arjun Kharpal contributed to this story.

(Correction: An earlier version of this story misstated the milestone after the slide in Tencent’s share price.)

Ratings agency Moody’s downgraded its outlook on China’s government credit ratings to negative from stable, expecting Beijing’s support and possible bailouts for distressed local governments and state-owned enterprises to diminish China’s fiscal, economic and institutional strength.

Moody’s though retained China’s “A1” long-term rating on the country’s sovereign bonds, while expecting China annual GDP growth to slow to 4% in 2024 and 2025 and average 3.8% from 2026 to 2030.

Structural factors including weak demographics will drive a decline to 3.5% by 2030, it said.

The move underscores concerns over rising debt levels and the impact on broader growth in the world’s second-largest economy as Beijing resorts to fiscal stimulus to support local governments and contain the spiraling debt crisis among the country’s property developers.

“The outlook change also reflects the increased risks related to structurally and persistently lowermedium-term economic growth and the ongoing downsizing of the property sector,” Moody’s said in a statement issued Dec. 5.

“These trends underscore the increasing risks related to policy effectiveness, including the challenge to design and implement policies that support economic rebalancing while preventing moral hazard and containing the impact on the sovereign’s balance sheet,” Moody’s added.

China credit default swaps (the cost of insuring against a government default) rose 4 basis points from Monday’s closing level, according to Reuters data.

China’s Finance Ministry expressed its disappointment with Moody’s downgrade decision.

“Moody’s concerns about China’s economic growth prospects and fiscal sustainability are unnecessary,” the ministry said in a statement Tuesday.

“Since the beginning of this year, in the face of the complex and severe international situation, and against the background of unstable global economic recovery and weakening momentum, China’s macro economy has continued to recover and high-quality development has steadily advanced,” the ministry added.

The central government said Oct. 24 that it had formalized a process allowing local governments to borrow funds for the year ahead — starting in the preceding fourth quarter, according to an announcement published by state media.

Beijing also announced a rare mid-year fiscal revision, which included the issuance of 1 trillion yuan in ($137 billion) in government debt — one of the biggest changes to the national budget in years. The amount was for the reconstruction of areas hit hard by natural disasters — such as this summer’s historic floods — and for catastrophe prevention.

Moody’s also cited the 1.6 trillion yuan increase in central government transfers to regional and local governments in 2022 from 2021, which partly but only temporarily offset the 2 trillion yuan in lost land sales revenue, as a key development that factored in its thinking.

BEIJING — Chinese tech giant Huawei reported revenue figures Friday that showed only a 1% increase in the third quarter from a year ago, according to CNBC calculations.

That’s despite the company’s release of a popular new smartphone in late August and growing sales within its electric car venture.

Huawei said revenue for the first three quarters of the year rose by 2.4% year-on-year to 456.6 billion yuan ($62.33 billion) — the highest for the period since 2020. U.S. sanctions on the Chinese telco maker started in 2019.

Despite those restrictions on Huawei’s ability to access high-end tech, reviews indicated the company’s new Mate 60 Pro smartphone offers download speeds associated with 5G — thanks to an advanced semiconductor chip.

Huawei quietly launched the phone in China in late August, and declined to share more during a seasonal product launch event in late September.

More than 1.6 million Mate 60 series devices were sold during the first six weeks of sales, according to Counterpoint Research.

The research firm estimated that the majority, about 75%, of units sold were Pro models — that’s about 1.2 million units sold.

Apple, which launched its iPhone 15 in September, is expected to sell 10 million units of the new phone in China this year, for an expected total of 45.5 million iPhone sales in the country, according to Shanghai-based CINNO Research estimates.

The U.S. company saw smartphone sales fall by 10% in the third quarter from a year ago, while Huawei’s sales surged by 37%, Counterpoint Research said Thursday.

Huawei has also built up a presence in China’s fast-growing new energy vehicle market, which includes hybrid and battery-powered cars.

The company sells its operating system and components, such as for driver-assist tech, to car manufacturers.

In December 2021, Huawei launched its own car brand Aito in collaboration with manufacturer Seres.

Orders for Aito’s latest M7 topped 60,000 as of Oct. 16, just about a month after its release, according to a social media post from Richard Yu, who heads Huawei’s car-related and consumer business.

On Wednesday, Aito said pre-orders for its forthcoming M9 SUV had topped 15,000.

Huawei is not publicly traded and did not break out revenue by business segment in its latest update.

The telecommunications giant said it recorded partial gains from the sale of certain businesses, but did not specify which ones.

Huawei said its net profit margin for the first three quarters of the year was 16%. That’s up from a profit margin of 15% reported for the first half of the year, when revenue grew by 3.1% to 310.9 billion yuan.

Third-quarter revenue was 145.7 billion yuan, up by 1% from the 144.2 billion yuan in the year-ago period, CNBC calculations of Huawei figures showed.

Huawei continued its efforts to expand its patent licensing business during the third quarter with Xiaomi and Ericsson deals, which covered 5G connectivity.

The telecommunications giant has rolled out 5G-based business applications in mining, ports and manufacturing, but it was unclear from Friday’s release how much revenue, if any, they generated for the company in the third quarter.

Huawei also pressed ahead in international markets by expanding its cloud business to Saudi Arabia in September. The company said this week it opened a research lab in Finland for testing health and fitness wearables.

The U.S. has maintained the Chinese telecommunications giant is a national security risk due to alleged links to the Chinese Communist Party and the country’s military. Huawei has repeatedly denied the existence of any such risk.

— CNBC’s Arjun Kharpal contributed to this report.

China faces a “daunting” challenge when it comes to attempting to broker a peace deal between Ukraine and Russia, according to political analysts, with the country walking a diplomatic tightrope between appearing neutral enough to gain Kyiv’s trust and ensuring any deal doesn’t hurt its allies in Moscow.

Beijing — which has sent representatives to Ukraine, Russia and several European countries this week in a bid to lay the groundwork for peace talks — has a particular vested interest in Moscow not looking like it has been “defeated” in any settlement as this could backfire on Beijing, analysts note.

“A total Russian defeat does not serve Chinese interest, especially if it leads to [President Vladimir] Putin’s demise,” Bonnie Glaser, director of the Asia Program at the German Marshall Fund (GMF) of the United States, told CNBC Tuesday.

“Russia is an increasingly important partner for [Chinese President] Xi Jinping. There is no other country that can help weaken U.S. leadership in the world and revise the international order,” she added.

China is stepping up efforts to bring Russia and Ukraine to the negotiating table with China’s special representative on Eurasian affairs, Li Hui, visiting Europe this week for talks “on a political settlement of the Ukraine crisis,” China’s foreign ministry said.

Russia launched its unprovoked invasion of Ukraine in February 2022 and after months of attritional warfare, the conflict is poised to enter a new phase, with Western-backed Ukraine expected to launch a massive counter-offensive to take back occupied territory in the east and south of the country.

China is widely considered to have backed Russia during the war, refusing to condemn the invasion and committing to deepening its strategic cooperation with the country, although Moscow is seen by most analysts as the subservient, junior partner in the relationship.

One of the main factors that binds China and Moscow is a shared and deeply-held antipathy and distrust of the West, with both critical of the U.S.’ dominance in global affairs.

Against this backdrop, Moscow and Beijing have remained conspicuously close throughout the war with Xi and Putin holding numerous calls and a state visit in March. In contrast, Xi only called his Ukrainian counterpart Volodymyr Zelenskyy for the first time in April.

There’s no doubt that China wants the war to end, seeing it as an unwelcome crisis that is affecting the global economy. But it also contains the potential for political danger for China as well, with a defeated Russia seen to be very vulnerable to political instability, disorder and even regime change.

As such, China’s move to broker peace between Russia and Ukraine is not seen as an altruistic one but motivated by self-interest. That interest stretches to ensuring its neighbor and ally Russia doesn’t look like it has been humiliated and “defeated” in any peace deal with Ukraine. By managing the negotiation process, China can see that it doesn’t, analysts note.

“There will definitely be an important face-saving component to any Chinese peace-brokering efforts,” Etienne Soula, a research analyst with GMF’s Alliance for Securing Democracy focusing on China, told CNBC, adding that “Beijing will likely try to help Russia concede as little as possible while convincing the Ukrainians and their Western supporters to bury the hatchet.”

Crucially for China, a humiliated Russia would reflect poorly on its own ambitions to challenge the perceived hegemony of the West.

“China’s narrative about its own rise to the center of global governance is contingent upon the matching idea that Western democracies, and the United States in particular, are declining irreversibly,” Soula said.

“Having those countries defeat one of the largest autocracies in the world, a nuclear-armed Security Council member, via proxy, without even having boots on the ground, would be a big setback for the story China tries to tell the world about the future.”

CNBC has contacted China’s foreign ministry for a response to the comments and is yet to receive a reply.

China’s latest foray into the arena of global diplomacy comes after a recent success in brokering a deal between Middle-Eastern nemeses Saudi Arabia and Iran in which they agreed to resume diplomatic relations and reopen embassies in each other’s countries.

Replicating that achievement between Ukraine and Russia will be much harder, analysts say, noting that Beijing has a mountain to climb persuading both sides to reach an agreement when there’s such bad blood between them, and when so much is at stake.

Ukraine has said any settlement to the war must center on Russian troops withdrawing from occupied areas and for its territorial sovereignty to be restored, including the return of four regions Russia declared it had annexed last September, as well as Crimea, which was annexed in 2014.

Russia, meanwhile, demands that Kyiv recognizes Russia’s sovereignty over the annexed regions and accepts independence for pro-Russian separatist “republics” in Luhansk and Donetsk in eastern Ukraine. Moscow also wants to see a “de-militarized” Ukraine, including guarantees it will never join NATO.

While there may be some wiggle room for negotiations; Ukraine has said it could consider security guarantees from Western allies instead of NATO membership, for example; both sides have little appetite for concessions, particularly territorial ones.

After all, Ukraine’s sovereignty and territorial existence depends on the outcome of the war, while Putin has arguably staked his whole regime, and Russia’s sense of self, on defeating Ukraine and its Western backers, who he claims want to “destroy” Russia.

“China’s recent success in mediating between Iran and Saudi Arabia shows that it has the ability to navigate between long-term enemies. But, mediating between Ukraine and Russia will be a much more daunting challenge,” Cheng Chen, professor of political science at the University at Albany, State University of New York, told CNBC.

“Since Xi specifically mentioned the importance of sovereignty in his phone call with Zelenskyy, it is unlikely China will side with Russia demanding outright territorial concessions from Ukraine. Nevertheless, China will try hard to make sure whatever deal that materializes would not appear humiliating to Russia in any obvious way,” she added.

China wants foreign investment, but it wants them on its own terms.

However, Beijing’s terms aren’t clear for now — and it’s raised concerns and triggered second guessing in the global business community.

Last Monday, state broadcaster CCTV singled out a consulting company for not complying with China’s national security laws.

Shanghai-based Capvision Partners was just the latest company recently subjected to such investigations in the mainland. In March, U.S. due diligence firm Mintz told Reuters police raided its Beijing office, and detained some of its Chinese staff. In April, U.S. management consultancy Bain & Co reportedly confirmed police visited its Shanghai office.

These firms provide due diligence services, which companies and investors routinely employ to determine whether suppliers are complying with rules and regulations – not just in China, but in other jurisdictions as well. They also audit supply chains, among many other services.

At a time when China is actively encouraging foreign investment into the world’s second-largest economy that has been deeply hurt by the country’s long-held zero-Covid policy, such an escalation in China’s concerns about data is hurting sentiment and seems at odds with its overt claims of openness.

“It may seem a paradox,” said Chong Ja Ian, an associate professor at the National University of Singapore who studies Chinese foreign policy. “But this is consistent with what we have seen of the current China leadership: they want more control over all facets of society.”

“This is a government that built its legitimacy on performance, so they would be anxious to maintain a perception of control when the country is facing more pressures from different directions now,” he told CNBC.

“This is a government that built its legitimacy on performance, so they would be anxious to maintain a perception of control when the country is facing more pressures from different directions now, including demands for more access to information,” Chong added.

At a regular press conference helmed by China’s Foreign Ministry a week ago, Beijing appeared keen to downplay the Capvision probe as an isolated incident.

“These are normal law enforcement actions consistent with Chinese laws that aim to promote sound and well-regulated growth of relevant sector and safeguard national security and development interests,” said ministry spokesperson Wang Wenbin.

“The enforcement actions seem very arbitrary now,” Lester Ross, a foreign lawyer in China, told CNBC. “To have multiple companies involved now in this crackdown and the restriction of financial data to foreigners, it appears that Chinese security departments are on to something larger.”

“A major question about Chinese law generally is the need for greater precision in delineating what’s permissible and what’s not: so much of what is now regarded as national security or state secrets is not sufficiently defined or classified,” Ross added.

The accusations against Capvision included claims the consultancy was among those used by foreign institutions with “complex backgrounds” as a pretext to steal state secrets and intelligence in key sectors while evading the law. Chinese authorities alleged that Capvision accepted more than 2,000 remittances from hundreds of overseas companies totaling $70 million between 2017 and 2020, according to a CNBC translation.

State-owned CCTV claimed that Capvision tapped on a vast “network of experts” of about 300,000 people in areas ranging from domestic policy research, national defense and military technology to banking, finance and medicine.

The CCTV program also claimed to feature one of Capvision’s experts who was convicted of disclosing information relating to the number of unnamed military aircraft on the inventory of a particular institution or company, according to a CNBC translation.

In a sign that last week’s state media report has triggered plenty of reassessment in the business community, the state-owned Securities Times reported last Thursday that Chinese regulators have instructed mainland Chinese brokerages securities firms to strengthen compliance over sensitive information, expert invitation and interviews.

The American and European chambers of commerce in China also expressed concern.

The recent investigations “risk heightening uncertainty at a time when European companies are looking for clear signs that China’s business environment is becoming more reliable and predictable,” the European Chamber of Commerce in China said in a statement. “The European Chamber respects the rule of law and expects it to be followed in these cases.”

Last Wednesday, Capvision pledged to “actively address” demands by Chinese authorities about the company’s negligence of its national security responsibilities, having formed a three-person internal “compliance committee” chaired by its chief executive Xu Rujie.

“We are deeply aware we have failed to fully comply with national security responsibilities in our past business activities and there are major hidden dangers and loopholes that have led to serious danger to the country’s national security,” the Shanghai-based company said in a statement, according to a CNBC translation.

Without more details on what is permissible could make it more difficult for prospective investors to do their due diligence before committing to deals, particularly given the nature of doing business in China.

“In a state-driven economy like China’s, a lot of local Chinese companies would have dealings with the government at various levels,” said Chong from NUS. “So some commercial data would inevitably have political and national security implications.”

“I am not sure if the Chinese government is interested in being more precise about what it means,” the professor added. “After all, ambiguity and lack of clarity is a tool commonly used by authoritarian governments to retain and enhance its control.”

After months of apparent reluctance to engage with Kyiv on the same level as Moscow, China said Wednesday that it will send special representatives to Ukraine and hold talks with all parties on reaching an end to the conflict.

Chinese state media said that President Xi Jinping told his Ukrainian counterpart President Volodymyr Zelenskyy in a phone call — the first that the leaders have held since the war began in February 2022 — that Beijing will focus on promoting peace talks between Ukraine and Russia.

State media added that Beijing would make efforts for a cease-fire to be reached as soon as possible, in order to end what China called a “crisis” rather than a conflict.

Commenting on the call, which he described as “long and meaningful,” Zelenskyy said he believed it would “give a powerful impetus to the development of our bilateral relation.”

The timing of the call — and China’s decision to send emissaries to Ukraine — has raised eyebrows among political and defense analysts, particularly as Ukraine is widely known to be preparing to launch a large-scale counteroffensive against Russian forces in a bid to retake territory in the east and south.

A number of analysts believe China is eager to halt the conflict before there’s a massive escalation in the fighting as the spring’s muddy season passes, allowing offensive operations to begin again in earnest, and as Ukraine receives more military hardware from its Western allies.

“The spring months are basically coming to an end and it’s time for counter attacks to begin so I think China wants to be seen as immediate mediator before that escalation,” Max Hess, fellow in the Eurasia Program at the Foreign Policy Research Institute, told CNBC Thursday.

That’s a view shared by Oleksandr Musiyenko, a military expert and head of the Centre for Military and Legal Studies in Kyiv. He was, however, surprised at the timing of China’s call, as he expected it might wait and see how the counteroffensive proceeded before intervening.

“I was confident that China would wait for the results of Ukrainian counteroffensive and would then probably propose something [on a cease-fire and peace talks],” he told CNBC Thursday.

“But I think the Russians are afraid of the future Ukrainian counteroffensive, they are afraid that they will lose some territory that they are occupying right now … so I think that they asked Xi to call Zelenskyy to ask him to stop this counteroffensive,” he said.

China has been eager to position itself as a peace broker to end the war, but has appeared to be allied with Moscow throughout, refusing to condemn the invasion, holding frequent calls with Moscow and having no direct diplomatic contact with Ukraine during the war — until now.

And when Xi visited Russia in March, he said he would hold a phone call with Kyiv but no arrangements had been forthcoming, making yesterday’s announcement even more surprising.

NATO Secretary-General Jens Stoltenberg made that point on Thursday when he “welcomed” the call between Xi and Zelenskyy, but he noted it does not change the fact China still hasn’t condemned Russia’s invasion.

The Kremlin, for its part, said it welcomes anything that could bring the end to the conflict closer, but said that it still needs to achieve the stated aims of its so-called “special military operation,” such as the complete takeover of the Donbas in eastern Ukraine.

Analysts are generally skeptical about China’s positioning of itself as a mediator and its ability to help bring an end to the war, questioning how much sway Beijing has over Moscow.

Musiyenko said China doesn’t appear to understand the conflict, noting it’s “unbelievable” for Beijing “to call the war a political crisis.”

He was afraid that any cease-fire or peace agreement deal put forward by China would include Russian-proposed conditions such as territorial boundary changes.

It wasn’t lost on analysts that China’s call on Wednesday took place just days after a diplomatic gaffe last week, when its ambassador to France, Lu Shaye, told French media that countries that were part of the Soviet Union, like Ukraine, lacked status in international law.

The comment sparked indignation in the EU as well as Ukraine and other ex-Soviet states. China was forced to issue a statement distancing itself from Lu’s comments, insisting that “China respects the status of the former Soviet republics as sovereign countries after the Soviet Union’s dissolution.”

After the incident, Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Management, said the timing of Xi’s call to Zelenskyy cannot be overlooked.

“The timing looks very suspicious, coming after that incredible diplomatic faux pas/catastrophe by the Chinese ambassador to Paris, by commenting to the effect that post Soviet states have not right to exist,” Ash said in emailed comments.

“These may have been his actual views about Ukraine but in one interview I think he offended all of the 14 non-Russian states that secured independence from the Soviet Union in 1991. And this includes the states in Central Asia and Transcaucasia that China relies on for critical commodities. They must be absolutely furious, as is most of the post Communist space, ex Russia, in Emerging Europe,” he noted.

Ash said the gaffe could have caused immeasurable damage to bridge-building with former Soviet states and showed a lack of understanding that could be shared more widely by those in Beijing, though it was only shown by one official.

“This one comment has undermined 30-odd years of oh-so-careful Chinese diplomacy in the region,” Ash said, adding that “actually it shows that Chinese officials fundamentally don’t understand Europe.”