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ABC News
ABC News
National
South Asia correspondent Avani Dias and Som Patidar in Thimphu, Bhutan

Nestled in the Himalayas, Bhutan is stuck between India and China as the Asian superpowers rise

Bhutan has long rejected GDP as the only way to measure progress, and instead pursued happiness.  (ABC News: Som Patidar)

The tiny nation of Bhutan is one of the most pristine natural places on Earth.

Known as the forbidden kingdom, it's famous for having happiness as a national goal and for its undamaged environment that has made it a carbon negative nation.

But its stunning geographical location also comes with two very large complications. 

Bhutan is nestled between two Asian giants. 

At a time of brewing tensions in the region, China and India have had repeated skirmishes along their disputed border since 2020.

The clashes have revived bad memories of when the countries were at war in the 1960s.

Part of the disputed border between China and India meets at a triple junction with Bhutan, which also has disputed territory with China.

Lying in-between those tense, feuding superpowers can be both an advantage and a vulnerability for Bhutan.

Bhutan relies on India for most of its trade, particularly oil, and military aid, but having such close ties to Delhi has restricted its ability to work closely with China.

For tourism operator Cheki Dorji, those geopolitical tensions mean fewer tourists from China, a country of keen travellers and a market of more than 1.4 billion people.

"If Bhutan opened up with China and if we started doing marketing and have an economic [partnership] with China, Bhutan can develop at a greater pace," he said.

"China as a global power, I think it will benefit Bhutan a lot … mainly in tourism, in industry, in the agriculture sector, and then with vocational skills." 

China and Bhutan try to settle their dispute 

Relations between Bhutan and China, which share a border more than 470 kilometres long, have historically been tense.

Beijing claims parts of Bhutan, and since 1984 the countries have been negotiating their shared border to reduce the tensions.

In a frank interview, Bhutan's Prime Minister Lotay Tshering told the ABC his country and China were in the process of demarcating, or finalising, their border, saying they had "drawn a time line" to settle the centuries-long dispute.

Lotay Tshering says Bhutan is negotiating with China over disputed land. (ABC News: Som Patidar)

"We are drawing that line and we are drawing in a most harmonious way," he said.

"We are having a very peaceful dialogue, very friendly relations, a friendly dialogue.

"The progress is probably the best in the world … I'm not aware of two countries who have borders that have not been demarcated being demarcated the way we are doing with China. 

"I think we are very positive about this."

Dr Tshering said it was in both Bhutan and China's interests to resolve their border "as soon as possible".

"We had our technical team go to China some two, three months back," he said.

"They had a very good outcome and now we are waiting for the team from China to visit us.

"Then depending on the dialogue … we'll decide whether we need to have another dialogue, or then it's time for the experts to really go on the field and draw the line."

Why the West fears a China-aligned Bhutan

Dr Tshering's comments come as Australia sends its first sitting minister on a diplomatic trip to Bhutan, Assistant Foreign Minister Tim Watts.

Australia has been watching Bhutan's border issues because of its proximity to China.

Australia's Assistant Foreign Minister Tim Watts went to Bhutan on a diplomatic visit.  (Twitter: @TimWattsMP)

"It's a bilateral matter for the Bhutanese government and the Chinese government," Mr Watts said.

"We would just encourage that that's resolved peacefully in accordance with international law.

"We want the region to work in a way that is governed by rules, norms, international law, where countries can make their own decisions, so I won't offer any free advice in that respect."

Mr Watts was greeted in Thimphu with a Bhutanese ceremony and was blessed by a senior monk at the majestic Buddha Dordenma statue which overlooks the capital city from atop a hill.

While celebrating 20 years of diplomatic relations between the two countries, Mr Watts reiterated in speeches to Bhutanese ministers the importance of stability in the Asia Pacific region, without specifically mentioning China.

The Buddha Dordenma statue overlooks Bhutan's capital.  (ABC News: Som Patidar)

"We want to convey to Bhutan that while Bhutan may be a smaller country in the region, all countries play a role in building the kind of region that we want to live in," Mr Watts told the ABC. 

Bhutan's prime minister's optimistic comments regarding the border with China are likely to ring alarm bells in countries such as India and Australia, which have grown closer as they have tried to counter Beijing's growing presence in the region.

An area called the Doklam Plateau is the most contentious part of the negotiations, being close to the meeting point of India, China, and Bhutan.

In Doklam in 2017, Indian and Chinese troops threw stones at each other leading to fist fights after Beijing tried to build a road which was claimed by Bhutan.

That territory is of great strategic importance to both India and China, and if Beijing was to exert control over the region it would give it access to a corridor that extends into mainland India.

"That is the difficulty because the three parties will have to agree, but on that note I was very clear that, first and foremost, it must come to an end. It cannot go on forever," Dr Tshering said.

'Getting richer will not make a country happier' 

While Bhutan is famous for its philosophy of gross domestic happiness, it's among the least-developed countries in the world, with one of the worst gross domestic product (GDP) measures.

That's having repercussions for people living in the country, with some wondering if more trade with China could increase opportunities.

Entrepreneur Kinley Wangchuk says a better relationship with China would improve his business opportunities.  (ABC News: Som Patidar)

Kinley Wangchuk is an entrepreneur who runs many businesses in Bhutan, one of which is exporting organic produce from local farms overseas.

"To export — we are a landlocked country — we have to use air cargo, and air cargo is very expensive," he said.

Without road access along the border, Bhutanese traders in villages near China have historically travelled on foot to sell medicinal herbs and return with other goods.

Mr Wangchuk said Bhutanese businesspeople like him had found solutions to the border issues with China, but a more stable situation would make things easier.

"It does make sense, it will help a lot … the fact that if I order goods from India, it can reach here in a matter of days, the same thing can happen if there was a border connection or connectivity between China," he said. 

Dr Tshering reiterated the need for peaceful and harmonious discussions between countries that could benefit the world.

It's a sentiment that's often lost between major global powers, leaving tiny, developing nations like Bhutan to feel the worst repercussions.

Bhutan's prime minister says he is focused more on peace and harmony than on power and money.  (ABC News: Som Patidar)

Dr Tshering said more trade with China would "happen naturally", but he said his sole hope was for the people of his country to actually feel happy and to uphold their world-famous philosophy.

Whether or not that can happen will rely on Bhutan's neighbours sorting out their differences.

"I think any country's leadership would want to do well … just getting richer and richer will not make that country happier," he said. 

"It's very obvious that it would be any country, any individual's dream to be living in a very, very harmonious society. 

"There is absolutely no denying that fact.

"But at the same time, I'm sure things will fall in place, all misunderstandings ultimately come to an end."

Bhutan is hoping to ease tensions between India and China as it negotiates disputed borders.  (ABC News: Som Patidar)
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