The bilateral relations between China and Nepal are defined by the Sino-Nepalese Treaty of Peace and Friendship signed on 28 April 1960, by the two countries. Though initially unenthusiastic, Nepal has been of late making efforts to increase trade and connectivity with China. Relations between Nepal and China got a boost when both countries solved all border disputes along the China–Nepal border by signing the Sino-Nepal boundary agreement on 21 March 1960, making Nepal the first neighboring country of China to conclude a border treaty with China. The governments of both Nepal and China ratified the border treaty on 5 October 1961. From 1975 onward, Nepal has maintained a policy of balancing the competing influence of China and Nepal's southern neighbor India, the only two neighbors of the Himalayan country after the accession of the Kingdom of Sikkim into India in 1975.

In recent years, China has been making an effort to gain entry into South Asian Association for Regional Cooperation (SAARC), and, Nepal has continuously backed and supported the proposal to include China as a member in the regional grouping. Since 1975, Sino-Nepalese relations have been close and grown significantly, with China overtaking India as the largest source of total Foreign direct investment (FDI) since 2015.

Nepal, Tibet and China

The relationship between Nepal and Tibet are centuries old, with the Sherpa people, the Gurung people and the Thakali people of Nepal sharing close linguistic, cultural, marital, and, ethnic ties with the Tibetan people of Tibet.

Around 600–650 CE, Nepalese Princess Bhrikuti (Bal-mo-bza' Khri-btsun in Tibetan) married Songtsän Gampo, the earliest known Emperor of Tibet.Tenzin, Ahcarya Kirti Tulku Lobsang. "Early Relations between Tibbet and Nepal (7th to 8th Centuries)." Translated by K. Dhondup. The Tibet Journal, Vol. VII, Nos. 1 &2. Spring/Summer 1982, p. 84.Josayma, C.B. Gsaya Belsa: An Introduction, The Tibet Journal, Vol. XVIII, No. 1. Spring 1993, p. 27. Princess Bhrikuti, as a part of her dowry, is widely believed to have brought Buddhists relics and Thangkas to Tibet, and therefore, is attributed for establishing Buddhism as the Royal religion in Tibet. Bhrikuti is usually represented as Green Tara in Tibetan iconography. The Red Palace (Mar-po-ri Pho-drang) on Marpo Ri (Red Mountain) in Lhasa, which was later rebuilt into the thirteen storey Potala Palace by the Fifth Dalai Lama, was constructed by Newari craftsmen according to her wishes, who came to Tibet from Kathmandu with her, as a part of her dowry. She also instructed her craftsmen to construct the Tub-wang and other statues in Samye, the first Buddhist gompa in Tibet.Yeshe Tsogyal (2004). The Lotus-born: The Life Story of Padmasambhava. Rangjung Yeshe Publications. p. 290. . One of her craftsmen, Thro-wo, also carved the revered statue of Chenresig (Avalokiteshvara), Thungji Chen-po rang-jung nga-ldan.

During the Tang dynasty, the Chinese envoy Wang Xuance led an army of Nepalese and Tibetans to defeat an usurper in the Indian Kingdom of Magadha at the Battle of Chabuheluo. In 1260 CE during the Yuan dynasty, Nepalese craftsmen Araniko, on the decree of Chinese/Mongolian Emperor Kublai Khan, traveled to Shangdu and built the White Stupa of Miaoying Temple in Beijing, which was the largest structure in Beijing at that time.Kesar Lall. A Nepalese Miscellany, p.32 Taking almost ten years (1279–1288 CE) to complete, the Stupa better known as White Dagoba, is still standing today and is considered to be one of the oldest Buddhist Stupa in China.

In 1789, the Tibetan government stopped the usage of Nepalese coins for trade in Tibet, citing purity concerns over the copper and the silver coins minted by the Nepalese government,Historical money of Tibet which led to the first Tibet-Nepal War. A resounding victory of Gorkha forces over Tibetans in the first Tibet-Nepal War left the Lhasa Durbar with no choice but to ask for assistance from the Qing Emperor in Peking which led to the first Sino-Nepalese War. In the immediate aftermath of the Sino-Nepalese War (1789–1792), Nepal was forced to sign the 'Treaty of Betrawati' which stipulated that the Government of Nepal was required to make payment of tribute to Qing court in Peking once every five years, after the defeat of Gurkha forces by the Qing army in Tibet.

The 'Treaty of Betrawati' signed by Nepal and Tibet on October 2, 1792, stipulated that both Nepal and Tibet recognize the suzerainty of the Qing Emperor Jiaqing, and further, stated that the Qing court would be obliged to help Nepal defend against any external aggression.Sino-Nepalese War However, during the Anglo-Nepalese War (1814–16), the Qing Emperor refused the Nepalese government's request to provide support to Nepalese forces, and, the latter's defeat led to the establishment of the British Empire in India. Then after, Nepal initiated a policy of balancing the influence of Imperial China and British India. Through the tenth quinquennial mission to China (1837), under the leadership of Chautariya Pushkar Shah, the Nepalese government again requested the Daoguang Emperor court to either send troops or a subsidy of Twenty million rupees to oppose the British. However, the Nepalese delegation was said to have been met with a stern refusal of its petition for monetary support, and instructed by the Qing court to stop further hostilities against the British.Hodgson to Gov of India, 26 May 1838, Foreign Dept Sec, 13 June 1838, No 10, NAI

Soon after Nepal's defeat in the Anglo-Nepalese war, from 1840 onward, Tibetan government again stopped the use of Nepalese coins for trade. In an attempt to preserve the lucrative coin export business and trade advantages, the Nepalese Kingdom, under the leadership of Jung Bahadur Rana again invaded Tibet in 1855 during the second Nepalese-Tibetan War, and raided the Tashilhunpo Monastery in Shigatse, home to the Panchen Lama at that time. The invading Nepalese army was ordered to vacate the occupied Tibetan territories by the Qing Court, which was rapidly losing its hold over frontier territories due to turmoil inside China proper. Nepal's refusal to hand back the control of Tashilhunpo Monastery led to the second Sino-Nepalese War which resulted in a stalemate; a major setback for Tibetans, ultimately culminating into the Treaty of Thapathali on March 24, 1856.Treaty of Thapathali Through the Treaty of Thapathali, Nepal expressed commitment to help Tibet in the event of foreign aggression while authorities in Tibet were obliged to pay the Nepalese government a sum of Nepalese Rupees 10,000 every year. Further, Nepalese government stopped paying tribute to the rulers in Beijing after signing the Treaty of Thapathali. The withdrawal of Nepalese forces from Tibetan areas adjacent to Tibet-Nepal border in 1856 provided the Qing court with the opportunity to firmly tighten its grip in and around Lhasa and throughout Tibet. Soon after the Treaty of Thapathali, the Qing court also issued an edict which among other dispositions stipulated the introduction of a new silver coinage in Tibet, struck in the name of the Qianlong Emperor, the then ruler of China,Rhodes, Nicholas G. (Winter 1990) The first Coins struck in Tibet, Tibet Journal, Vol. 15, No. 4, Dharamsala, pp. 115–134. while at the same time, Nepalese coins were completely forbidden in Tibet from then onward.Bertsch, Wolfgang (Spring 2008) The Kong-par Tangka of Tibet, Journal of the Oriental Numismatic Society, No. 195, Croydon & Ringwood, pp. 35–46.

During the late 19th century (1899–1901), after the destabilization of Qing Imperial Court due to the Boxer Rebellion, the British Raj as the unchallenged and the dominant power in the sub-continent exerted total control over China's frontier regions including Nepal. Left with no support from the weakened Qing Court, in the immediate aftermath of Qing Empire's defeat at the hands of an 8-nation alliance, Nepal aligned itself with the British Raj in India and supported the British expedition to Tibet. When China sought to claim Tibet in 1910, Nepal sided with Tibet and Britain and broke relations with China after Tibet drove Chinese forces out in 1911.

The people-to-people ties between Nepalese and Tibetan groups has been affected since 1950, after the annexation of Tibet by the People's Republic of China resulting in the regulated border between Nepal and Tibet (as a part of China). Despite the fluctuating political scenarios in Nepal's neighborhood and within Nepal itself, the influence of Buddhism still remains strong in the day-to-day life of Nepalese people living in the Himalayan Region. The Buddhist monarchy in The Kingdom of Lo (Upper Mustang), previously a part of the Tibetan Empire but now in Nepal, was terminated only in 2008.Raffaele, Paul (April 1998). "Into the Forbidden Kingdom of Mustang". Reader's Digest. 421. 71. The area of Lo Manthang, however, still remains quasi-restricted to foreigners.

Diplomatic relations and Nepalese neutrality

Nepal's Diplomatic relations with China has a long history. One of the famous and most talked about result of such diplomacy is the introduction of pagoda architecture to China by Nepal. In 1260 CE during the Yuan dynasty, Nepalese craftsmen Araniko, on the decree of Emperor Kublai Khan, traveled to Shangdu and built the a stupa better known as White Dagoba in Beijing, which was the largest structure in Beijing at that time. This Stupa built on pagoda architecture was a milestone for the introduction of the architecture. The other result is the introduction of Spinach to China. It is said that Spinach was introduced to China via Nepal. Spinach seeds were first gifted by Narendra Dev, a king of Licchavi Dynasty of Nepal to Emperor Taizong of Tang. Nepal was historically influenced by India, including the period 1842 to 1945. As the strength of the People's Republic of China grew, Nepal developed greater room for diplomatic maneuver.However, the 1950 military occupation of Tibet by the People's Liberation Army raised significant concerns of security and territorial integrity in Nepal, drawing Nepal into a close relationship with extensive economic and military ties with Republic of India.Dick Hodder, Sarah J. Lloyd, Keith Stanley McLachlan. Land-locked States of Africa and Asia. page 177. Routledge, 1998. China ordered restrictions on the entry of Nepalese pilgrims and contacts with Tibet. The 1950 Indo-Nepal Treaty of Peace and Friendship that had established a close Indo-Nepalese relationship on commerce, and foreign relations, was increasingly resented in Nepal, which began seeing it as an encroachment of its sovereignty and an unwelcome extension of Indian influence; the deployment of an Indian military mission in Nepal in the 1950s and unabated migration of millions of bihari Indians into Nepal's Terai region increased these concerns.

In 1955, Nepal restored diplomatic relations with the People's Republic of China and exchanged resident ambassadors by 1960. In 1956, both nations signed a new treaty terminating the Treaty of Thapathali of 1856 and Nepal recognized Tibet as a part of China. In 1960, Nepal and China signed a boundary settlement agreement and a separate 'Sino-Nepal Treaty of Peace and Friendship'. Nepal also began supporting the change of China's seat in the United Nations.

In December 1960, Nepalese King Mahendra executed a coup and dismissed the parliamentary government of Nepal. India supported the deposed parliamentary government, and blockaded Nepal in fall 1962. Soon afterwards, the Sino-Indian war broke out, and Indian losses to China made it unwilling to risk further confrontation with Nepal; India lifted the blockade.