Ethnic rebels and Myanmar’s military agreed Monday to reduce armed tensions after weeks of intense fighting, capping an effort by neighboring China to restore stability along its southern border and protect the investments it has made in the Southeast Asian country.After seven hours of talks in Ruili, a Chinese town that borders Myanmar’s northern Kachin state, both sides issued a statement that stopped short of a peace deal, but agreed to hold more talks at the end of February, to step up communications and to ease military tensions that have spilled over the border.

The meeting between the Kachin Independence Organization, which has fought for decades for autonomy for the ethnic Kachin people in northern Myanmar, and central government authorities was held under China’s assistance, though Beijing demurred on claiming a formal mediator’s role.

“China would like to continue to play a constructive role in the peace talks,” said Hua Chunying, a spokesperson for China’s Ministry of Foreign Affairs. Ruili was described as a “convenient location” for talks.

Kachin state is home to jade mines and other mineral deposits that Chinese companies have invested in extracting or have a market for at home. The town of Laiza, headquarters of the Kachin Independence Organization and where most fighting has occurred, is near the route of oil and gas pipelines between China and Myanmar, a $2.5 billion China-funded project that is due to start operating in June.

Analysts also say China’s involvement aims in part to prevent a situation in which thousands of refugees flood to camps around the border, as happened in 2008 when about 30,000 refugees from the Kokang ethnic group fled to China after attacks by Myanmar forces.

Though it was unclear whether the government or the rebels were “going into the current talks with a changed attitude,” Jan Zalewski, a London-based analyst with IHS Jane’s, said the discussions could serve as a “trust-building measure” to improve the atmosphere for further negotiations.

Beijing has been silent on the role it has played between Myanmar’s government and the myriad ethnic armies that line its rugged borders, many of them along the Chinese frontier.

For decades, the government forces were part of a military dictatorship that kept the country isolated and that brutalized rebellious regions to extend its control, human-rights groups said. The clashes drew international attention recently from a growing list of countries that have backed President Thein Sein’s quasicivilian government, which has opened up the economy and political system over the past two years.

The U.S., which showed support for Mr. Thein Sein with a visit from President Barack Obama in November, said it was “deeply troubled” by the eruption in fighting.

The stakes are perhaps highest for China, which abuts the Kachin territory. Stray bombs crossed its borders as the government forces pounded rebels with airstrikes and mortars in recent weeks, and thousands of people fled their homes, many of them seeking shelter with relatives in China. Beijing sent an unspecified number of troops to “watch” the border.

The talks Monday came less that two weeks after government forces seized several strategic positions, despite declaring a unilateral cease-fire. Analysts say that both sides—particularly the Kachins, who have lost significant ground since fighting began in 2011, ending a 17-year cease-fire—remain cautious and suspicious. The Kachins are the last remaining minority group still fighting the military.

“For the Kachins, they are still unsure of what is going on in the peace process and there is no trust in the government,” said Ko Ko Gyi, a leader of the 88 Generation Student Group, a pro-democracy movement whose members have visited the troubled area several times.

The role of outside observers in peace dealings had long been a prerequisite for the Kachins. The presence of China and other ethnic minority groups that attended Monday could build trust in the peace process, analysts say, potentially laying the groundwork for a long-sought deal.

“China’s primary interest is, of course, stability along its border and it will be actively working to achieve that outcome via a cease-fire between the two sides,” Ian Storey, a fellow at the Institute of Southeast Asian Studies in Singapore, said. He said that China has historically maintained close links with both sides.

—Celine Fernandez in Kuala Lumpur and Laurie Burkitt in Beijing contributed to this article.

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