Excuse me for replying in English, as I don't have any Chinese input at the moment.
You are not meant to be considered not meeting the requirement of residency, as you have spent months in China directly preceding to your application.
In terms of the first challenge, you have to wait for the decision from INZ and I don't think there is anything you can do about it. However, I'm sorry to tell you that for China WHV scheme, IELTS is in prinple the only way to prove your English proficiency. Please refer to the official webpage for details (see the Notes in bold)