The keystone of Nepal's China policy was maintaining equal friendships with China and India while simultaneously seeking to decrease India's influence in Nepal and Nepal's dependence on India. Further, Kathmandu felt that the competition between its two giant neighbors--China and India--would benefit its own economic development.

The first recorded official relations with China and Tibet occurred near the middle of the seventh century. By the eighteenth century, Nepalese adventurism in Tibet led to Chinese intervention in favor of Tibet. The resultant Sino-Nepalese Treaty of 1792 provided for tribute-bearing missions from Nepal to China every five years as a symbol of Chinese political and cultural supremacy in the region (see The Making of Modern Nepal , ch. 1).

In the Anglo-Nepalese War of 1814-16, China refused Nepal's requests for military assistance and, by default, surrendered its dominant position in Nepal to the growing British influence. However, it appeared to be expedient for Nepal to retain the fiction of a tributary relationship with China in order to balance China against Britain.

Nepal invaded Tibet in 1854. Hostilities were quickly terminated when China intervened, and the Treaty of Thapathali was concluded in March 1856. The treaty recognized the special status of China, and Nepal agreed to assist Tibet in the event of foreign aggression.

Relations between Nepal and China and Tibet continued without critical incident until 1904, when British India sent an armed expedition to Tibet and Nepal rejected Tibet's request for aid to avoid risking its good relations with Britain. Beginning in 1908, Nepal stopped paying tribute to China.

By 1910, apprehensive of British activity in Tibet, China had reasserted its claim to sovereign rights in Tibet and feudatory missions from Nepal. In 1912 Nepal warned the Chinese representative at Lhasa that Nepal would help Tibet attain independent status as long as it was consistent with British interests. Nepal broke relations with China when the Tibetans, taking advantage of the Chinese revolution of 1911, drove the Chinese out.

When the Chinese communists invaded Tibet in 1950, Nepal's relations with China began to undergo drastic changes. Although annual Tibetan tribute missions appeared regularly in Nepal as late as 1953, Beijing had started to ignore the provisions of the 1856 treaty by curtailing the privileges and rights it accorded to Nepalese traders, by imposing restrictions on Nepalese pilgrims, and by stopping the Tibetan tributary missions.

The break between Kathmandu and Beijing continued until 1955, when relations were reestablished with China. The two countries established resident ambassadors in their respective capitals in July 1960.

In 1956 the Treaty of Thapathali was replaced by a new treaty under which Nepal recognized China's sovereignty over Tibet and agreed to surrender all privileges and rights granted by the old treaty. In 1962 Nepal withdrew its ambassador from Tibet and substituted a consul general. An agreement on locating 10b3 and demarcating the Nepal-Tibet boundary was signed in March 1960. Within a month, another Treaty of Peace and Friendship was signed in Kathmandu.

The Sino-Nepal Boundary Treaty was signed in Beijing in October 1961. The treaty provided for a Sino-Nepal Joint Commission to agree on questions regarding alignment, location, and maintenance of the seventy-nine demarcation markers. The commission's findings were attached to the original treaty in a protocol signed in January 1963.

During the Sino-Indian conflict of 1962, Nepal reasserted its neutrality and warned that it would not submit to aggression from any state. Although the warning was directed at China, Nepal continued to support China's application for membership in the United Nations. A potential source of irritation in Sino-Nepalese relations was relieved in January 1964 when China agreed to release the frozen funds of Nepalese traders from Tibetan banks.

An agreement to construct an all-weather highway linking Kathmandu with Tibet was signed in October 1961--a time when neither Kathmandu nor Beijing had cordial relations with New Delhi. The Kathmandu-Kodari road opened in May 1967 but did not yield any commercial or trade benefits for Nepal. Because of the severe restrictions imposed by Beijing even before the road was opened, Kathmandu had closed its trade agencies in Tibet by January 1966. Although the highway had no economic or commercial value and was not viable as an alternate transit route, it was of strategic military importance to China. The highway established direct links between two major Chinese army bases within 100 kilometers of Kathmandu to forward bases at Gyirong in Tibet.

Throughout the latter half of the 1960s, Nepal's relations with China remained fairly steady. One exception was the belligerent activities of the Chinese officials in Nepal who eulogized and extolled the successes of the Cultural Revolution (1966-76) during the summer of 1967.

The emergence of a strident and confident India in the early 1970s introduced some new dimensions in Nepal's China policy. King Birendra did not abandon the policy of equal friendship between China and India but wanted to woo China to counter India's growing influence in the region. China had implicitly recognized India's predominance in the region, however, and was willing to oblige Nepal only to the extent of pledging support in safeguarding its national independence and preventing foreign interference.

In an open challenge to India's primacy in Nepal, Nepal negotiated a deal for the purchase of Chinese weapons in mid-1988. According to India, this deal contravened an earlier agreement that obliged Nepal to secure all defense supplies from India.

Nepal's overtures to China also had economic implications. Ever since an economic aid agreement between China and Nepal had been concluded in 1956, China's steadily increasing economic and technical assistance was being used to build up Nepal's industrial infrastructure and implement economic planning. According to a 1990 report, an estimated 750 Chinese workers were in Nepal, most of them working on road-building crews and small-scale development projects. The foreign trade balance also was in Nepal's favor. China reportedly has ceded some territory to Nepal to facilitate boundary demarcation and has endorsed Nepal as a zone of peace.

Data as of September 1991