The Liao Dynasty was not the first Non-Chinese dynasty on north China's soil. During the time of south-north division, many Non-Chinese tribes had ruled over Chinese peasants, and many high officials of the glorious Tang Dynasty were of Turk origin. Probably being offsprings of the 5th century Xianbei people, the Khitan (chin. Qidan) people founded an empire in 907 with the chieftain Yelü Abaoji as emperor of Liao. Their military strategy was no longer simple raids on the peasant villages of northern China, but a conquest war with an armoured cavalry.
In 946 they took Kaifeng (Bian) ,the capital of the Song Dynasty and kept on to attack the weak troops of the civil-oriented Song government. Tired of the ceaseless skirmishes with the nomad people, the Song government proposed a peace treaty in 1005 that promised quiet frontiers to the Chinese government. But they had to pay huge tributs ("peace presents") to the nomadic rulers of the north to ensure a stable relationship at the frontiers.
These high costs turned out to be beneficial in the long run. Because the Liao rulers felt quite comfortable with the luxury granted to them by the Chinese, the "wild" steppe people quickly felt comfortable with the Chinese life style, they appreciated the advanced administration system and engaged in agrarian and manufacturial production.
The Liao-Khitan became Chinese, and with this modification of economical and social attitudes, they lost their spirit of war. Already in the 10th century, they had developed an own script, modeled after the Chinese script, that was in fact not very suitable for an agglutinating language like that of the Khitan.