A plateau region north-east of the Himalayas, Tibet was incorporated by China in 1950 and currently an autonomous region within China. The conflict between many Tibetans and Chinese government has been nonstop as many demand religious freedom and more human rights. In March, 2008, a series of protests turned into riots in different regions across Tibet. Rioters attacked Han ethnic inhabitants and burned their businesses, resulting dozens of death.
Tibet win in Britain stiffens Beijing's resolve with EU over Dalai Lama
Freeze after Cameron met Dalai Lama shows China is willing to wield its growing clout
Danny Lee and Olivia Rosenman
Emboldened by its successful efforts to get Britain to toe the line on Tibet, China is expected to increasingly use its economic heft to pressure European countries on its core national interests, analysts say.
The 14-month diplomatic deep freeze imposed on London after Prime Minister David Cameron met the Dalai Lama last year stands as a warning that Beijing is prepared to wield its growing clout.
Relations only began to warm in May, after Cameron reiterated in Parliament that Britain did not support Tibetan independence. Shortly thereafter, Foreign Minister William Hague and his counterpart, Wang Yi, shared a phone call described as a truce.
Lest there be any doubt about the reason for the détente, the ambassador to Britain, Liu Xiaoming , wrote an op-ed in the Daily Telegraph late last month expressing satisfaction that Britain understood "Chinese sensitivities and concerns about Tibet".
"I hope we are getting over the difficult times," Liu said.
The director of the modern Tibetan studies programme at Columbia University, Robert Barnett, said Cameron's move amounted to caving in to pressure and would encourage China to lean on other countries in the future.
"The whole episode is very striking and suggests a fundamental difficulty in western European diplomacy in working with China on diplomatic issues," Barnett said. "This will be troubling for other [European Union] members. It opens up the gate to more pressure."
France and Germany have experienced a similar response from China after meeting the Dalai Lama in 2009 and 2007, respectively. Both countries later issued statements reaffirming their opposition to Tibetan independence.
The economic benefits to Britain's relationship with China are clear. Britain's monthly exports to China reached £1 billion (HK$11.5 billion) in June, a new record, while Beijing injected HK$92.3 billion into British investment projects.
Late last month, the Bank of England and the People's Bank of China reached a three-year deal to swap sterling and yuan when needed. It was China's first such pact with a Group of Seven economy and was considered key to boosting London's position as an offshore hub to trade yuan.
Cameron is expected to push for greater economic ties during a visit to Beijing, a possible meeting that has only been under discussion since relations between the two countries improved.
A visit planned for April was reportedly cancelled because London was told it would not be granted meetings with senior figures. The message was driven home by the warm welcome Beijing gave to French President Francois Hollande that same month.
Experts are divided over what the diplomatic reset of relations means for China and Britain.
"The telephone call and other recent communications are significant signals that the relationship has improved," said Professor Ding Chun , director of the centre for European studies at Fudan University.
A research fellow in the European division of the China Institute of International Studies, Liu Jiansheng , was more cautious. "It's the start of a new beginning; it will take at least until the end of the year for things to get back on track," he said.
The director of the University of Nottingham's China Policy Institute, Dr Steven Tsang, said that when China threw its weight around, it could grind down smaller economic powers such as European nations.
But Tsang said economic priorities override political issues for the world's second-largest economy and that little permanent damage had been done to the Sino-British relationship.
Despite the diplomatic spat, Britain has been one of the European Union's big winners in China. British exports to China grew by 13.4 per cent last year, more than any other EU country.
The director of the China studies centre at the University of Sydney, Professor Kerry Brown, said the political freeze had not affected the bottom line at all. "The financial impact has been limited to non-existent," he said.
Ding Chun said both sides stood to gain from restored political relations. "Britain has a lot of experience to share with China in modernising its economy, agriculture, financial system and environmental sustainability," Ding said. "The Chinese market and Chinese demand could be very beneficial for the UK's economic recovery. Both sides can now have a win-win game."
Some had chosen not to bow to pressure from Beijing, such as Norway, Barnett said. The Scandinavian country ran afoul of Beijing when the Nobel Peace Prize was awarded to jailed dissident Liu Xiaobo in 2010. Relations between the two have slowly improved, even though Norway has not formally apologised. China still excludes Norway from a new 72-hour visa-free programme which includes all other EU states except Croatia.
"Norway realised China needed them as much as they needed China," Barnett said.