The 14th Dalai Lama’s April 4-13 visit to Tawang in the northeastern Indian state of Arunachal Pradesh, over which China lays claim, drew thousands of followers. Among these were some 3,000 Bhutanese, who trekked across mountains to see the Tibetan spiritual leader (India Today, April 9). Bhutan shares a disputed border with Tibet and has close ties with Tibetan Buddhism, complicating its relationship with China.
The Sino-Bhutanese border dispute involves 764 square kilometers (sq km) of territory. Beijing claims 495 sq km of territory in the Jakurlung and Pasamlung Valleys in north-central Bhutan and another 269 sq km in western Bhutan, comprising the Doklam Plateau (Bhutan News Service, January 1, 2013). Doklam Plateau abuts Chumbi Valley, which like the Tawang salient that adjoins Bhutan’s eastern border has enormous strategic significance for China, Bhutan as well as India. India’s defense of its northeast would be undermined should Bhutan cede control over it to China.
Although this dispute is over a small area of land, a settlement has proved elusive since it is entangled in the region’s geopolitics and the India-China border dispute. Indeed, of its land border disputes with 14 countries it is only those with Bhutan and India that Beijing is yet to resolve. Bhutan is also China’s only neighbor with which Beijing does not have official diplomatic relations.
China and Bhutan became neighbors only after the Chinese annexation of Tibet in 1951. Prior to that, it was Tibet and Bhutan that shared borders, “had a close, although often conflicting” political relationship and strong cultural, religious and trade ties. Interaction between Chinese and Bhutanese officials began only in the early 18th century, when the Qing dynasty extended its rule to Tibet and sent its ambans (resident commissioners) there. It was during this period that Bhutan, according to Chinese sources, became a vassal of China when “the Tibetan ruler Polhane’s alleged suzerainty on Bhutan…was supposed to have been passed on to Tibet’s Chinese overlord.”  It is on this basis that China makes its historical claim to Bhutanese territory. 
With British influence in Bhutan growing in the latter half of the 19th century, China began asserting its suzerainty over the Himalayan kingdom, intervening in its affairs and even sending its troops to emphasize its claims there.  In 1910, China laid claim to Bhutan along with Nepal and Sikkim and in 1930, Mao Zedong named Bhutan and Nepal, among other countries, as falling within the “the correct boundaries of China.” The People’s Republic of China asserted its claims over Bhutan even more aggressively. Maps in official publications showed parts of Bhutan as Chinese territory. During its annexation of Tibet, China occupied eight Bhutanese enclaves in western Bhutan. Such actions “scare[d] the small state of Bhutan.” 
Bhutan Turns to India
China’s assertive claims over Bhutan prompted it to pull away from its long association with Tibet and draw closer to British India and subsequently, to independent India. In 1949, Bhutan signed the Treaty of Perpetual Peace and Friendship with India, under which it agreed “to be guided by the advice of the Government of India in regard to its external relations” (Ministry of External Affairs [MEA], India). This legitimized India’s advisory role in Bhutan’s foreign policy making, including relations with China, providing Beijing with reason to castigate India for treating Bhutan as a “protectorate” (Global Times, August 4, 2013).
Bhutan’s anxieties vis-à-vis China deepened following China’s brutal suppression of the Tibetan uprising in 1959. The flight of the 14th Dalai Lama and his followers from Tibet impacted the Bhutanese immensely. Refugee accounts of Chinese atrocities against the Tibetans convinced them that the Chinese were “out to destroy Buddhism and Buddhists.” There were “real fears that Chinese troops would pursue the Tibetan refugees into Bhutan.” 
This and Chinese incursions prompted Bhutan in 1960 to accept India’s offers of economic and military aid. The defense of Bhutan, which was a “key component of the unwritten portion of the 1949 treaty,” received a boost with India establishing in Bhutan a 1,000-member-strong Indian Military Training Team (IMTRAT) to train the Royal Bhutan Army (The Pioneer, July 24, 2013). Bhutan also snapped all ties with Tibet and thus China, shut down its northern borders with Tibet and banned trade with it.
Events in the 1960s and 1970s prompted Bhutan to rethink its policy of distancing itself from China. Although the 1962 Sino-Indian border war reaffirmed its concerns over China’s territorial ambitions in the Himalayas, India’s defeat in that war raised doubts in Thimphu over Delhi’s capacity to defend itself, let alone Bhutan in the event of a Chinese aggression.  Additionally, India’s assimilation of Sikkim, another Himalayan kingdom lying between China and India, in 1973–75 “created considerable apprehension in Thimphu over India’s territorial ambitions as well.  These developments led Thimphu to seek some distance from India by engaging China too. It culminated in Bhutan reaching out to Beijing and preferring to settle the border with China directly through dialogue.
Direct talks between China and Bhutan commenced in 1984.  China has preferred settlement of the border dispute through a “package deal” rather than a sector-by-sector settlement. It presented the “package deal” in 1996 under which it offered to give up claims on Jakurlung and Pasamlung Valleys in exchange for the Doklam Plateau (Institute for Defense Studies and Analyses [IDSA], January 19, 2010). Additionally, it has pressed for establishment of trade and diplomatic relations and has made that a quid pro quo for a border settlement. In fact, it seems to be willing to give up claims on Jakurlung and Pasamlung Valleys only after Bhutan establishes formal trade and diplomatic relations with Beijing. As for the Doklam Plateau, Beijing appears willing to make only “minor adjustments” here (Chennai Center for China Studies, January 15, 2010).
Doklam Plateau’s strategic value drives China’s bid to wrest control over it via the “package deal.” The plateau has a commanding view of the Chumbi Valley, which lies at the tri-junction of India, Tibet and Bhutan and is near the Siliguri Corridor, the narrow strip of land that links the Indian mainland to its restive northeastern states. A military push down the Chumbi Valley would enable Chinese troops to quickly cut off India’s overland access to its northeast. But Chumbi Valley being narrow makes any military maneuver here difficult. Hence, China wants to extend the valley by incorporating the neighboring Doklam Plateau (South Asia Monitor, May 12, 2016). Given Doklam Plateau’s importance to India’s defense, India has stationed a “sizeable” IMTRAT at Ha and Thimphu. It has built Bhutan’s roads and “provides its inventory of weapons and fire power” (The Tribune, February 15, 2008)
Accepting the “package deal” would bring Bhutan a stable and settled border with China. However, it will not be easy for the Bhutanese government to sell the deal at home. Ceding Doklam Plateau would involve giving up rich pastoral land that supports the livelihoods of people living in the western border districts and Bhutanese legislators from these districts are opposing the “package deal” in the National Assembly (IDSA, January 19, 2010).
More importantly, Bhutan will have to contend with Indian pressure. India is strongly opposed to the “package deal” as its defenses would be significantly weakened if Bhutan cedes control of the Doklam Plateau to China. Bhutan’s acceptance of the “package deal” despite India’s objections would not be illegal; the India-Bhutan Friendship Treaty, which replaced the 1949 Treaty in 2007, does not require Thimphu to be guided by Indian advice on foreign policy matters. It only requires them to “cooperate closely … on issues relating to their national interests” (MEA, India). Still, India would pressure Bhutan if it shows interest in the package deal. Such pressure could involve economic measures. A landlocked country, Bhutan is heavily dependent on India for access to the sea, trade and development aid. Around 79 percent of Bhutan’s total imports are from India and India provides a market for 90 percent of its exports (Embassy of India, Thimphu). India is also Bhutan’s largest aid donor and has financed much of its Five Year Plans; its contribution of US$750 million towards Bhutan’s Eleventh Five Year Plan (2013-18), for instance, represents 68 percent of the total external assistance that Bhutan received (Embassy of India, Thimphu).
While China would extend Bhutan financial and other support should it accept the ‘package deal,’ it is unlikely to be able to match India’s massive economic role in Bhutan. In the Himalayan region, geography favors trade with India, not China (China Brief, November 16, 2015). China’s limited and largely symbolic support to Nepal during the 2015 blockade crisis was noted in Bhutan (The Bhutanese, October 1, 2015). Unlike Nepal and Sikkim (in the early 1970s), Bhutan has avoided playing the ‘China card’ so far. It has seen the impact of this strategy on Sikkim’s fate in 1973 and on Nepal in 1988, when India assimilated Sikkim and imposed an economic embargo on Nepal.
Toward Diplomatic Relations
So far, Bhutan has not accepted China’s package deal “due to India’s pressure and this situation is likely to continue.” However, diplomatic relations seem “a real possibility in the foreseeable future.”  Although there is concern in India over Bhutan establishing diplomatic relations with China as this would increase Chinese presence and influence in the Himalayan kingdom, Indian scholars on Bhutan recognize that Sino-Bhutanese diplomatic relations “cannot be deferred forever.”  Besides, there are “limits” to the kind of “pressure India can bring to bear on Bhutan especially in the era of parliamentary democracy in Bhutan” (Daily News and Analyses, July 6, 2012). It is therefore “unlikely to oppose Bhutan’s diplomatic relations with China” (Indian Express, June 28, 2012).
There is growing interest in Bhutan for establishing diplomatic relations with China. Democratization has ushered in “expanding space for public debate” and “highly sensitive” issues are being debated in the National Assembly.  Parliamentarians are raising questions on foreign policy issues and the government is under growing pressure from the private sector, including the Bhutan Chambers of Commerce to resolve the border dispute and importantly, establish economic relations with China.  Public access to television and the Internet has enhanced public awareness about China, its robust economic ties with other South Asian countries, including India. Bhutanese would like to benefit from such relations too. Clearly, “more economic opportunities” lie ahead for Bhutan by engaging with China and Beijing “can help significantly” in developing Bhutan’s “very small private sector.” 
In addition to desiring proximity to China for economic reasons, a ‘normal relationship’ with China is seen to be necessary for Bhutan to secure its sovereignty. “Ignoring China at the behest of India” is seen to be “in itself a long-term peril to Bhutanese sovereignty.”  Fear drew Bhutan away from China. That is slowly changing and some Bhutanese are keen to engage China for the economic opportunities it offers and to balance India’s outsize influence in the kingdom. Though few in number, this group is growing.
As small state sandwiched between China and India, Bhutan has borne the cost of their geopolitical rivalry. China, which has generally settled its border disputes with its smaller neighbors in the latter’s favor, has shown little generosity in dealing with Bhutan due to its ‘special relationship’ with India. Given the strategic significance of the Doklam Plateau to China and India, settlement of the Sino-Bhutanese border dispute is likely only as part of or after India and China settle their border dispute.
Emerging pressure from its own population and China could see Bhutan move gradually towards establishing formal economic and diplomatic relations with Beijing. Both Bhutan and China would need to tread carefully. Should this process stir unease in India Delhi can be expected to press Bhutan to pull back. More importantly, any Chinese aggression in the Himalayas, including military crackdowns in Tibet, would reawaken old fears of China in Bhutan. That would slow the establishment of Sino-Bhutanese diplomatic relations.
Thierry Mathou, “Bhutan-China Relations: Toward a New Step in Himalayan Politics,” in Ura, Karma and Sonam Kinga (eds.), The Spider and the Piglet (Proceedings of the First International Seminar on Bhutan Studies) (Thimphu: The Centre for Bhutan Studies, 2004), pp. 390-92. http://www.bhutanstudies.org.bt/publicationFiles/ConferenceProceedings/SpiderAndPiglet/19-Spdr&Pglt.pdf
Bhutanese, Western and Indian analysts reject Chinese claims of Bhutanese vassalage with some even denying that Bhutan was under Tibetan suzerainty.
Srikant Dutt, “Bhutan’s International Position,” in International Studies (New Delhi), vol.20, nos. 3-4, July-December 1981, pp. 605-06.
Pranav Kumar, “Sino-Bhutanese Relations: Under the Shadow of India-Bhutan Relations,” in China Report (New Delhi), vol.46, no.3, 2010, p. 245.
Author’s Interview, Sangey Wangcha, Thimphu-based political commentator, March 25.
Kumar, n. 4, p. 246.
John W. Garver, Protracted Contest: Sino-Indian Rivalry in the Twentieth Century (New Delhi: Oxford University Press, 2001), 181.
India had sought to include the Sino-Bhutanese border question within the ambit of the Sino-Indian border discussions but with China rejecting its claim to speak on Bhutan’s behalf and Bhutan pressing for dealing directly with China, it was forced to make way for direct talks.
Author’s Interview, Mathew Joseph C., Associate Professor at MMAJ Academy of International Studies, Jamia Millia Islamia, New Delhi, March 28; Kumar, n. 4, p. 251.
Caroline Brassard, “Bhutan: Cautiously Cultivated Positive Perception,” in S. D. Muni and Tan Tai Yong (eds.), A Resurgent China: South Asian Perspectives (New Delhi: Routledge, 2012).
D. Muni, “Bhutan’s Deferential Democracy,” in Journal of Democracy, vol. 25, no. 2, April 2014, p.162.
Brassard, n. 12.
Author’s Interview, Caroline Brassard, Adjunct faculty at the Lee Kuan Yew School of Public Policy, National University of Singapore, March 30.
Wangcha, n. 5.