Ever since Maoist chairman Pushpa Kamal Dahal resigned from the government, the strategists in Beijing had been trying to reinstate him or at least have a government with Maoist participation. With the election of UML's Jhala Nath Khanal, who is not much liked in Delhi, Beijing can claim its first diplomatic victory for the year. Beijing did not trust ex-PM Madhav Kumar Nepal to address its security issues in Tibet and had always seen him as Delhi's candidate. The state-controlled China Daily even commented on Madhav Nepal as 'a prime minister who works according to Delhi's strategies'. But after Nepal's resignation, Beijing formally thanked him for playing an important role in strengthening mutual ties between the two countries.
The officials of the Communist Party of China, who came to Nepal often, told the Maoists that they had made a mistake by walking out of government. In fact the Chinese leaders even advised Dahal to forge an understanding with Delhi if that was what it took to get back to power. Beijing had taken Dahal's exit from the government as Delhi's victory and therefore has been pressuring the Maoists not to forsake the peace and constitution-writing process at any cost. Beijing has made clear its disapproval of the way Dahal meddled with the army, to the point of losing leadership of government, and has advised the Maoists not to take the risk of a 'people's revolt' again.
Apart from the inability of the parties to reach a consensus, it was also due to geopolitics that the election process remained inconclusive for seven months. Indian Prime Minister Manmohan Singh sent special envoy Shyam Saran to put together a 'democratic alliance' excluding the Maoists. In response, China sent a secretariat member of the communist party, He Yong, to counter the move. "China will not interfere in Nepal's internal matters and will not tolerate it if others try to do so", Yong warned during his visit.
It was after this that the Chinese effort to engineer a Dahal or Khanal-led UML-UCPN (Maoist) government gathered speed. While India was trying to keep the Maoists at bay, China was quietly working to build a leftist alliance. Chinese officials held several meetings with supporters of Dahal and Khanal in UML. In the meetings held with Khanal confidante Yubaraj Gyawali and UML representatives in Beijing, Yong advised forming a UML-UCPN (Maoist) coalition.
Dahal tried hard to win back Delhi's trust. He agreed to send back UNMIN and keep the ex-combatants under the Special Committee. Only after all these moves failed did Dahal decide to back Khanal.