By: Sofiqua Yesmin, Research Analyst, GSDN

Nestled in the eastern Himalayas, the Kingdom of Bhutan has long maintained a delicate balance between its two giant neighbors, India and China. Historically, Bhutan has cultivated a special relationship with India, rooted in the 1949 Treaty of Friendship and Cooperation, which has shaped its foreign policy and ensured close strategic alignment with New Delhi. Bhutan’s lack of formal diplomatic relations with China, combined with its policy of avoiding ties with any permanent members of the UN Security Council, reflects its cautious approach to international engagement However, recent developments particularly Bhutan’s intensified border negotiations with China and Chinese infrastructure activities in disputed territories have sparked debates about whether Bhutan is tilting toward Beijing, potentially reshaping regional dynamics in the Indo-Pacific. This article explores Bhutan’s evolving relationship with China through recent examples, assesses the extent of any perceived tilt, and examines the implications for Bhutan, India, and the broader Indo-Pacific region, drawing on reliable sources such as academic analyses, think tank reports, and international media.
Bhutan’s Historical Stance and India’s Influence
Bhutan’s foreign policy has been shaped by its geographical position, sandwiched between India to the south and China’s Tibet Autonomous Region to the north. The 1949 treaty, updated in 2007, allows Bhutan greater autonomy in foreign affairs but maintains close coordination with India, particularly on security matters. India remains Bhutan’s primary trading partner, financier of hydropower projects, and provider of military training, with the Royal Bhutanese Army relying on Indian support to secure its borders. This relationship is critical given Bhutan’s proximity to the Siliguri Corridor, a narrow strip connecting India’s mainland to its northeastern states, which is strategically vulnerable to Chinese influence.
Bhutan’s historical ties with China have been limited, marked by a lack of formal diplomatic relations and ongoing border disputes along their 477-km frontier. These disputes, dating back to the 1950s when China annexed Tibet, center on areas like the Doklam Plateau in the west and the Jakarlung and Pasamlung valleys in the north, with China recently claiming Bhutan’s eastern Sakteng region. Since 1984, Bhutan and China have held 24 rounds of border talks, with agreements in 1988 and 1998 to maintain peace and the status quo along the border. Bhutan’s cautious approach stems from its desire to avoid entanglement in great power rivalries and preserve its sovereignty, guided by its philosophy of Gross National Happiness.
India’s influence has historically deterred Bhutan from pursuing closer ties with China. For instance, during the 2017 Doklam standoff, when Chinese troops attempted to build a road in the disputed tri-junction area, Indian forces intervened on Bhutan’s behalf, halting construction after a 73-day confrontation. This incident underscored Bhutan’s reliance on India for security and its reluctance to engage China independently. However, recent developments suggest Bhutan may be reevaluating its approach, driven by domestic pressures and China’s persistent diplomatic and territorial advances.
Recent Developments Signaling a Potential Tilt
1. Bhutan-China Border Negotiations and the 2023 Beijing Visit
A significant indicator of warming Bhutan-China relations is the resumption and acceleration of border talks. In October 2023, Bhutanese Foreign Minister Tandi Dorji made a historic visit to Beijing, the first by a senior Bhutanese official, marking the 25th round of boundary negotiations the first since 2016. The visit followed a 2021 memorandum of understanding (MoU) outlining a three-step roadmap to expedite border demarcation, finalized during a 2020 expert group meeting. During the 2023 talks, Bhutan and China signed a cooperation agreement establishing a joint technical team for border delimitation, signaling progress toward a potential resolution.
Chinese officials expressed optimism about establishing diplomatic relations, with Foreign Minister Wang Yi and Vice-President Han Zheng hosting Dorji warmly. Dorji reportedly indicated Bhutan’s willingness to “strive for an early settlement of the boundary question and advance the political process of establishing diplomatic ties”. This rhetoric alarmed Indian observers, as Bhutan’s traditional policy avoids diplomatic relations with major powers, including China. The timing of the visit, amid strained India-China relations following the 2020 Ladakh clashes, raised concerns in New Delhi about Bhutan drifting toward Beijing.
Bhutan’s urgency to resolve the border issue may stem from domestic pressures. Prime Minister Lotay Tshering, in a 2023 interview with La Libre, emphasized that all three parties Bhutan, China, and India have equal stakes in resolving the Doklam dispute, a departure from Bhutan’s earlier deference to India’s strategic concerns. Tshering’s remarks suggest Bhutan seeks a pragmatic solution to secure its northern borders, possibly involving a land swap where Bhutan cedes Doklam for northern territories like Jakarlung and Pasamlung. Such a deal could grant China strategic access to the Doklam Plateau, threatening India’s Siliguri Corridor.
2. Chinese Infrastructure in Disputed Territories
China’s construction activities in Bhutanese-claimed territories provide compelling evidence of Beijing’s assertive approach and Bhutan’s constrained response. Since 2015, China has built over 22 villages, roads, and military outposts in Bhutan’s northern Beyul Khenpajong region, particularly in the Jakarlung and Menchuma valleys, covering areas revered for their cultural and religious significance. Satellite imagery from September 2023 revealed new outposts in Jakarlung, suggesting China’s intent to establish permanent control. These actions violate the 1998 agreement to maintain the status quo, challenging Bhutan’s sovereignty.
In 2020, China escalated tensions by claiming the Sakteng Wildlife Sanctuary in eastern Bhutan, a region never previously disputed, during a Global Environment Facility meeting. This claim, alongside construction in the west and north, is seen as a pressure tactic to push Bhutan toward a border deal favorable to Beijing. For example, the village of Gyalaphug in Beyul, developed since 2015, includes extensive infrastructure, indicating long-term Chinese presence. Bhutan’s response has been notably restrained, with officials maintaining “disciplined silence” to avoid antagonizing China or India. This reticence, coupled with ongoing talks, suggests Bhutan may be open to conceding some territories to secure peace, a move that could align it closer to China.
3. Bhutan’s Domestic and Economic Pressures
Bhutan’s evolving stance is also driven by internal factors. Since transitioning to a constitutional monarchy in 2008, Bhutan has faced growing economic challenges, including youth unemployment (19% in 2024) and outmigration, exacerbated by the COVID-19 pandemic (World Bank, 2024). Hydropower exports to India remain a key revenue source, but non-hydro sectors lag due to high trade costs and a small domestic market. The 13th Five-Year Plan (2024–2029) and the ambitious Gelephu Mindfulness City project aim to diversify the economy through foreign investment and tourism, but these require regional stability.
China’s economic success and Belt and Road Initiative appeal to some Bhutanese elites, who see engagement with Beijing as a path to development. The 2021 MoU and 2023 talks reflect Bhutan’s pragmatic approach to resolving border disputes to unlock economic opportunities, such as trade routes through Tibet. However, Bhutan’s democratic government faces pressure to balance economic growth with sovereignty and India’s security concerns, complicating its China policy.
Assessing the Extent of Bhutan’s Tilt
While recent developments suggest warming Bhutan-China ties, the notion of a significant “tilt” toward Beijing must be qualified. Several factors indicate Bhutan is navigating a delicate balance rather than aligning with China:
1. Continued Reliance on India
Bhutan’s strategic and economic dependence on India remains robust. India finances 70% of Bhutan’s hydropower projects, which account for 30% of GDP, and provides critical security support. The election of Prime Minister Tshering Tobgay in January 2024, whose People’s Democratic Party is seen as pro-India, signals continuity in Bhutan’s India-centric policy. Tobgay, who served as prime minister from 2013 to 2018, is expected to prioritize India’s interests, particularly regarding Doklam, and maintain close consultation with New Delhi. Indian Prime Minister Narendra Modi’s swift congratulations post-election underscored the enduring partnership.
Bhutan’s historical perception of China as a threat, rooted in the 1950 Tibet annexation and subsequent refugee influx, persists among its leadership and Buddhist populace, who share cultural ties with Tibet. The 2017 Doklam intervention by India reinforced Bhutan’s trust in New Delhi as a security guarantor, making a full pivot to China unlikely.
2. Bhutan’s Strategic Silence and Non-Alignment
Bhutan’s approach to China reflects its long-standing policy of strategic silence and non-alignment. By engaging China in border talks, Bhutan seeks to reduce tensions without committing to formal diplomatic relations, which would provoke India. Analysts like Yun Sun from the Stimson Centre argue that Bhutan is unlikely to negotiate without India’s involvement, especially on Doklam, which requires tripartite consent. Bhutan’s rejection of China’s Sakteng claim in 2020 and its cautious rhetoric during talks demonstrate its intent to protect sovereignty while avoiding confrontation.
Bhutan’s “disciplined silence” on Chinese construction, as noted by commentator Tenzing Lamsang, is a pragmatic strategy to avoid escalation while maintaining dialogue (India Today, 2023). This approach allows Bhutan to explore economic benefits from China without alienating India, aligning with its GNH philosophy of balanced development.
3. China’s Aggressive Tactics and Bhutan’s Constraints
China’s territorial encroachments, such as the construction of Gyalaphug and Pangda villages, place Bhutan in a difficult position. With a population of 727,145 and a small military, Bhutan lacks the capacity to counter China’s actions directly. Beijing’s “salami-slicing” strategy gradual territorial expansion through infrastructure mirrors its tactics in the South China Sea and along the India-China border, pressuring Bhutan to accept a deal that legitimizes Chinese gains. For instance, China’s offer in the 1990s to cede 495 km² in the northern valleys for 269 km² in Doklam was rejected due to India’s concerns, but recent talks suggest Bhutan may revisit this swap.
Bhutan’s willingness to negotiate does not necessarily indicate a pro-China tilt but rather a pragmatic response to China’s growing presence. The 2023 Beijing visit and cooperation agreement reflect Bhutan’s attempt to manage this pressure diplomatically, but any agreement ceding Doklam would likely involve India’s approval, limiting the extent of Bhutan’s alignment with China.
Implications for the Indo-Pacific Region
Bhutan’s evolving relationship with China has significant implications for the Indo-Pacific, particularly in the context of India-China rivalry and the broader geopolitical contest.
1. India’s Strategic Concerns
A Bhutan-China border deal, especially one ceding Doklam, would undermine India’s security. Control of Doklam would give China a vantage point over the Chumbi Valley and proximity to the Siliguri Corridor, enhancing its ability to threaten India’s northeast. Indian analysts warn that New Delhi cannot afford to lose Bhutan as a “reliable security partner” in the Himalayas, prompting calls for deeper engagement with Thimphu. India’s response includes increased economic aid, such as $500 million for Bhutan’s 13th Five-Year Plan, and military cooperation to reinforce the partnership.
2. China’s Regional Ambitions
China’s push for a border deal and diplomatic relations with Bhutan is part of its broader strategy to expand influence in South Asia, challenging India’s traditional dominance. By establishing settlements in Bhutan, China seeks to create “facts on the ground,” pressuring Bhutan to concede territory and potentially open the door for Belt and Road investments. A successful deal could embolden China to pursue similar tactics with other neighbors, escalating tensions in the Indo-Pacific.
3. Bhutan’s Small-State Agency
Bhutan’s engagement with China highlights the agency of small states in navigating great power competition. By balancing dialogue with China and loyalty to India, Bhutan asserts its sovereignty while mitigating risks. However, its limited resources and China’s territorial assertiveness constrain its options, underscoring the challenges faced by small states in the Indo-Pacific.
4. Broader Indo-Pacific Dynamics
Bhutan’s border talks occur amid heightened Indo-Pacific tensions, with the U.S., India, and allies like Japan and Australia countering China’s expansionism through frameworks like the Quad. A Bhutan-China deal could weaken India’s position, prompting a stronger U.S.-India alignment to secure the Himalayan frontier. Conversely, Bhutan’s balanced approach could inspire other small states to engage China diplomatically without fully aligning, fostering a multipolar regional order.
India’s Perspective
From India’s perspective, Bhutan’s engagement with China is a cause for concern but not yet a definitive tilt. New Delhi views Bhutan as a critical buffer against Chinese aggression, particularly after the 2020 Ladakh clashes, which killed 20 Indian soldiers. The Doklam Plateau remains a flashpoint, with India wary of any agreement that enhances China’s strategic position. India’s close ties with Bhutan, reinforced by economic aid, military training, and cultural affinity, provide leverage to maintain influence. However, India must address Bhutan’s economic challenges and youth unemployment to prevent Beijing’s economic allure from gaining traction.
India’s strategy includes deepening engagement with Bhutan while countering China’s regional influence. Prime Minister Modi’s visits to Bhutan in 2019 and 2024, alongside increased funding for hydropower and infrastructure, aim to solidify the partnership. India also leverages its role in regional forums like SAARC and BBIN to integrate Bhutan economically, reducing its reliance on China. Nonetheless, India must tread carefully to avoid pressuring Bhutan, which values its autonomy and non-alignment.
Conclusion
Bhutan’s recent engagement with China, marked by the 2023 Beijing visit, accelerated border talks, and China’s territorial encroachments, suggests a pragmatic shift rather than a definitive tilt toward Beijing. Driven by domestic economic pressures and China’s assertive tactics, Bhutan seeks to resolve its border disputes to ensure stability and development, but its deep ties with India and strategic caution limit the extent of alignment with China. India remains Bhutan’s primary partner, with Tobgay’s pro-India government and New Delhi’s economic and security support anchoring the relationship. However, China’s infrastructure activities and diplomatic overtures pose challenges, potentially reshaping Bhutan’s foreign policy and Indo-Pacific dynamics.
For India, maintaining Bhutan’s trust requires addressing its economic needs while reinforcing security cooperation. For Bhutan, balancing India and China demands careful diplomacy to preserve sovereignty and avoid entanglement in great power rivalries. The Indo-Pacific region watches closely, as Bhutan’s choices could influence the balance of power in the Himalayas and beyond. While Bhutan is not yet tilting decisively toward China, its evolving stance underscores the complexities of small-state agency in a contested geopolitical landscape.