Chinese Inroads into Bhutan: Diplomatic Gimmick or Strategic Reality?

The past few months have been an exciting phase in Bhutan’s foreign policy. Some political analysts are questioning Bhutan’s resistance to establishing diplomatic ties with China, while others have asserted publicly that Bhutan-China relations are inevitable and would become a diplomatic reality in the years to come. Amidst these competing voices, Bhutan, for its part, has officially maintained silence over the issue. An obvious pointer to this was the way Bhutan chose silence in the wake of media reports in China and India about the interaction on developing Sino-Bhutan relations between the Chinese Premier Wen Jiabao and Bhutanese Prime Minister Jigme Thinley at the sidelines of the Rio+20 summit. Significantly, the official mouth piece of Bhutan, The Kuensel, totally ignored the issue. However, a popular daily, The Bhutanese, mentioned categorically, on the basis of a Press Release issued by the Prime Minister’s office, that the “local Chinese media had misreported that Bhutan and China will establish diplomatic ties.”

Even as the dust was settling on this episode, a controversy about certain tenders being qualified to procure Chinese buses brought the China factor to the fore. According to a media source, in July 2012, a tender was given to Global Traders and Gangjung (GT), which is a supplier of Chinese vehicles. Significantly, the company’s owner is the Bhutanese Prime Minister’s son-in-law. While there has been some controversy about the transparency of the tendering process, the mandated authority, Bhutan Post Corporation Limited (BPCL), has publicly stated in a clarification letter that TATA city buses— imported from India by Samden Vehicles (SV)—had started giving problems in their first year of operation. Though SV has challenged the final decision of BPCL, the episode is however symbolic of Bhutan’s interest in Chinese goods and also speaks of China’s influence on various stakeholders in Bhutan’s domestic politics. However, this is not the first time that such linkages have come out in the public domain.

In 2010, the fifth National Assembly debate in Bhutan had noted that China had already offered to invest in projects related to health and education services. Some scholars have even written about the growing domestic interest in Bhutan to engage with China. Caroline Brassard, for instance, has mentioned the growing pressure put by the private sector, including the Bhutan Chambers of Commerce, on the government to resolve the boundary dispute.1 It can be said that the undercurrent for this pressure is to facilitate the aim of establishing economic relations with China. This became evident during the author’s interaction with the Vice President of Bhutan Chambers of Commerce and Industry who argued that a limited transactional status with China would benefit the Bhutanese economy since at present all the goods imported from China have to pass through the Calcutta port, which adds to the transactional issues and thus increases the costs of imported Chinese goods.2 Further, while local shopkeepers in Thimpu publicly deny that Chinese goods are being smuggled into Bhutan, it was found that Chinese goods are already filtering in through the North-Western borders in an informal (illegal) manner.3 Thus, while the interest to engage with China is very much present in Bhutan, the caveat of an unsettled boundary dispute remains.

Tsering Tobgay, the opposition leader in Bhutan and President of the People’s Democratic Party believes that the demarcation of the boundary is a precondition for establishing diplomatic and economic ties with China. Tobgay, who represents the Haa constituency, argues that for Bhutan, demarcation of the boundary is akin to gaining a respectful place in the international comity. He also believes that the demarcation of the boundary is a precondition for a peaceful neighbourhood since, in the absence of a settled boundary, Bhutan could become a potential flashpoint for the two nuclear Asian powers—India and China.4

Some of these sentiments were recently reiterated by Fu Ying, the Vice Foreign Minister of China. During his visit to Bhutan for the 20th round of the Sino-Bhutan boundary talks, the Chinese minister stated:

“We (China) are willing to work with Bhutan towards early establishment of diplomatic relations. The border dispute between the two countries does not cover a wide area. The two sides should speed up border talks in the spirit of mutual understanding and accommodation, with a view to arriving at a fair and reasonable and mutually acceptable solution. This will contribute to peace and stability in our border areas. We are ready to encourage Chinese businesses to expand their exports to Bhutan and welcome more people-to-people exchanges and tourism, which will help increase the mutual knowledge and friendship between our two people. We believe that Bhutan is well-placed to grasp the opportunity of the development of China and India and benefit from the great historical renaissance of Asia. Maximizing these opportunities will help Bhutan open up a new era of development.”5

Instructive as this statement is about the keen interest in China to engage Bhutan, it also in many ways reveals the confidence and the readiness of the Chinese to settle the boundary dispute with Bhutan.

While Bhutan-China relations are a matter of bilateral concern and should not be filtered through the Indian prism, the nature of the boundary dispute perhaps needs elaboration. This is because a settled boundary dispute is a precondition for facilitating diplomatic ties between China and Bhutan. The very fact that the boundary talks have been prolonged for almost four decades speaks a lot about the nature and the tradeoffs embedded in the dispute. If the dispute were to be settled along the lines of the package deal6 proposed by the Chinese, China could move further South thus occupying the Doklam plateau and attain strategic leverage and an offensive advantage over the Chumbi Valley. This, in the long term, could make the Siliguri corridor—the choke point that connects mainland India to its North East—vulnerable.

The question of Sino-Bhutan diplomatic relations, which is essentially linked to a settled boundary line, thus becomes a matter of strategic choice for Bhutan. The question to be asked therefore is whether Bhutan is prepared to make the strategic bargain. It would not be an exaggeration to state that with huge Indian investments in Bhutan’s economy, such a choice could be difficult at least until 2020 primarily due to the nature of hydel cooperation between India and Bhutan. If China seeks to replace India, is Bhutan ready to be flooded with Chinese goods, more so when its industrial belt essentially lies in the South. Some experts claim that China has interests in the timber resources of Bhutan.7 Will Bhutan be ready to make a ‘green’ sacrifice, given that preservation of natural resources has been a policy priority for Bhutan.

These are some tough questions which Bhutan’s policy makers will have to address. The question of Bhutan engaging China thus needs to be addressed at two levels. First, what will be the nature of a settled boundary dispute and is there a perceived middle way to resolve it? Second, what will be the nature and magnitude of Bhutan’s economic engagement with China and how will this equation impact upon Bhutan’s interaction with India? Addressing these two questions and finding a balance are essential before anything definitive can be said about the inevitability of Bhutan-China diplomatic relations.

Dr. Medha Bisht is Assistant Professor at the Department of International Relations, South Asian University, New Delhi. She can be contacted at medha.bisht@gmail.com.

• 1. Caroline Brassard, “Bhutan: Cautiously Cultivated Positive Perception,” in S.D. Muni and Tan Tai Yong (eds), A Resurgent China: South Asian Perspective, New Delhi: Routledge, 2012, p. 76.
• 2. Author’s interview with Thinley Palden, May 19, 2012, Thimpu, Bhutan.
• 3. Author’s interaction with local shopkeepers and residents in Thimpu, May 14-21, 2012.
• 4. Author’s interview with Tsering Tobgay, Opposition Leader, May 16, 2012.
• 5. Fu Ying, “It is time for China and Bhutan to develop bridges of Friendship and Cooperation,” Kuensel Online, August 9, 2012, at: http://www.kuenselonline.com/2011/?p=35042.
• 6. Medha Bisht, “Sino-Bhutan Boundary Negotiations: Complexities of a Package Deal,” IDSA Comment, January 19, 2010, at: http://www.idsa.in/idsacomments/Sino-BhutanBoundaryNegotiations_mbisht_1….
• 7. Brassard, note 1, p. 83.