China’s overtures to Bhutan will make India edgy

What’s happened?

Bhutan and China held their 25th round of boundary talks on October 23rd‑24th, during which Bhutan’s foreign minister, Tandi Dorji, met with China’s deputy foreign minister, Sun Weidong, in Beijing (China’s capital). The two leaders held settlement talks focusing on the demarcation of the boundary between Bhutan and China, and working towards resolving the long-standing border dispute quickly.

Why does it matter?

Bhutan and China have been conducting regular talks for almost four decades now, aimed at reaching a consensus on territorial disputes in primarily three areas: Jakarlung and Pasamlung regions in north Bhutan, and the Doklam area in west Bhutan. However, it has been Mr Dorji’s meetings with the Chinese foreign minister, Wang Yi, and the vice‑president, Han Zheng, on the sidelines of the boundary talks, that will raise concerns for India Bhutan’s closest international partner. During these meetings, the Chinese leaders committed to not only accelerating the boundary demarcation process, but also proposed that the two countries establish formal bilateral diplomatic relations soon thereafter, an idea that was welcomed by Bhutan, much to India’s discomfort.

Although Bhutan’s willingness to speed up the process of resolving their border disputes is understandable, its openness to engage diplomatically with China marks a significant shift in Bhutan’s foreign policy stance. Bhutan’s foreign outlook has traditionally been completely India-oriented, allowing the latter country’s unrivalled influence in the strategically located Himalayan kingdom.

Apart from the possible loss of diplomatic dominance, the prospect of closer Sino‑Bhutan ties will be closely watched by India for its remote but probable geopolitical security threats. India will be wary of China eventually using Bhutan’s support in gaining control of the Doklam region and blocking the crucial Siliguri Corridor that connects the north-eastern states of India with the rest of the country.

What next?

Bhutan and China are making steady progress on a speedy conclusion of territorial conflicts, with the first boundary delimitation talks by a joint technical team held earlier this year in August. Although the two countries could strike a deal on some of the less contentious points, resolution on the more sensitive areas such as Doklam, which would require trilateral negotiations involving India, Bhutan and China, will not be achieved within the forecast period (2024‑25). Bhutan’s deference to India’s concerns about growing Chinese influence in South Asia will be a major roadblock. That said, China will continue to woo Bhutan with financial, technical and security assistance, keeping India on its toes to block the former’s attempts at making inroads. Securing favourable terms for repaying these loans will be a key consideration for Bhutan while deciding on how to respond to China’s proposed offer to foster diplomatic ties.

The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.