Despite sharing a border, Bhutan has historically NOT established full formal diplomatic relations with which major neighbouring country?

The correct answer is China. Although Bhutan and China share a direct northern border along the Tibet Autonomous Region, the two countries have never established full formal diplomatic relations, and Bhutan does not maintain an embassy in Beijing nor China one in Thimphu. Relations between the two are managed instead through periodic border talks and technical-level engagement, largely because several stretches of their shared boundary remain undemarcated and disputed, most prominently in the Doklam area, where a prolonged India-China-Bhutan standoff occurred in 2017. Bhutan's foreign policy, closely coordinated with India under their 2007 Friendship Treaty, has traditionally been cautious about opening formal ties with China until border questions are resolved. Nepal is incorrect because Bhutan, despite not sharing a physical border with Nepal, does maintain diplomatic and cultural engagement with it as a fellow South Asian and SAARC country. Bangladesh is incorrect because Bhutan has full diplomatic relations with Bangladesh; notably, Bhutan was the first country in the world to recognise Bangladesh's independence in 1971, making their bilateral relationship historically close. Myanmar is incorrect because, although it is a less prominent partner for Bhutan, it is not the country most notably lacking formal ties with Bhutan in exam context, and this option is included mainly as a plausible-sounding regional distractor rather than a factually strong contender. A common exam confusion is assuming that sharing a land border automatically implies diplomatic relations, which fails specifically in the Bhutan-China case, one of the very few instances in the world of two bordering states without any formal diplomatic channel. The revision takeaway is to remember Bhutan-China as an exception: a shared border without embassies, contrasted with Bhutan's close, treaty-backed relationship with India and its recognition-based friendship with Bangladesh.