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Conclusion
Negotiation resumed after military operations stalled. The Tibetans feared a rebellion in Kham while Nepalese finances were stretched to their limits. The Nepalese demand for ten million rupees was dropped to a nominal annual payment and Nepalese territorial ambitions were dropped. In the Treaty signed at Thapathali, the Tibetans agreed to pay an annual subsidy of ten thousand rupees to the Nepal Durbar and to allow a Nepalese trading station and agency to be established at Lhasa.

Background
Tibet had been using Nepalese silver coins since the time of the Malla kings. When Prithvi Narayan Shah of the Gorkha Kingdom launched an economic blockade on the Kathmandu Valley during his unification campaign, Jaya Prakash Malla of Kathmandu faced an economic crisis which he tried to alleviate by minting low quality coins mixed with copper. After Prithvi Narayan Shah successfully conquered the Kathmandu Valley in 1769 and firmly established the rule of the Shah Dynasty in Nepal, he reverted to minting pure silver coins. But by then the damage to the confidence of the Nepalese minted coins had already been done. The Tibetans demanded that all the impure coins in circulation be replaced by pure silver ones, a demand that would place a huge financial burden on the newly founded Shah dynasty. Prithvi Narayan Shah was not willing to bear such a huge loss for a matter he was not responsible, but was willing to vouch for the purity of the newly minted coins. Thus two kinds of coins were in circulation in the market. The case remained unresolved due to his untimely demise in 1775, and the problem was inherited by successive rulers of Nepal.

By 1788 Bahadur Shah, the youngest son of Prithivi Narayan Shah, and the uncle and regent of the minor king Rana Bahadur Shah, had inherited an aggravated coinage problem. On the plea of counterfeited coins, Tibet had started to spread rumors that it was in a position to attack Nepal; and the Nepalese merchants in Tibet were likewise harassed. Another sore point in Nepal-Tibet relationship was Nepal’s decision to provide refuge to the 10th Shamarpa Lama, Mipam Chödrup Gyamtso, and his fourteen Tibetan followers. He had fled from Tibet to Nepal on religious and political grounds. Yet another cause for conflict was the low quality of salt being provided by Tibetans to Nepal. In those days all the salt in Nepal came from Tibet. A Nepalese delegation was sent to Tibet to resolve these issues, but the demands made by the Nepalese were rejected by the Tibetans. This left Nepal with no choice but to launch multi-directional attacks on Tibet.

First Invasion
In the year 1789, Bahadur Shah sent Gorkha troops under the joint command of Damodar Pande and Bam Shah to attack Tibet. The Gorkha troops entered Tibet through Kuti and reached as far as Tashilhunpo (about 410 km. from Kuti). A fierce battle was fought at Shikarjong in which the Tibetans were badly defeated. The Panchen Lama and Sakya Lama then requested the Gorkha troops to have peace talks. So the Gorkha troops left Shikarjong and went towards Kuti and Kerung (Gyirong).

When the Qianlong Emperor of China heard the news of the invasion of Tibet by Nepal, he sent a large troop of the Chinese Army under the command of General Chanchu. General Chanchu came to know the situation from the Tibetan Lamas. He decided to stay in Tibet till the dispute was settled.

The representatives of Tibet and Nepal met at Khiru in 1790 to have peace talks. In the talks Tibet was held responsible for the quarrel and were required to give compensation to Nepal for the losses incurred in the war. Tibet had also to pay tribute to Nepal a sum of Rs. 50,001 every year in return for giving back to Tibet all the territories acquired during the war. The Nepalese representatives were given Rs. 50,001 as the first installment. So giving back the territories - Kerung, Kuti, Longa, Jhunga and Falak, they went back to Nepal. But Tibet refused to pay the tributes from the very second year of the conclusion of the treaty. As a result, the war between Nepal and Tibet continued.

Second Invasion
As Tibet had refused to pay the tribute to Nepal, Bahadur Shah sent a troop under Abhiman Singh Basnet to Kerung and another troop under the command of Damodar Pande to Kuti in 1791. Damodar Pande attacked Digarcha and captured the property of the monastery there. He also arrested the minister of Lhasa, Dhoren Kazi and came back to Nepal. As soon as this news was heard by the Chinese Emperor, he sent a strong troop of 70,000 soldiers under the leadership of Fuk'anggan to defend Tibet. Thus in the year 1792 the Nepal - Tibet war turned into a Nepal - China war.

The Qing Empire asked Nepal to return the property to Tibet which was looted at Digarcha. They also demanded them to give back Shamarpa Lama who had taken asylum in Nepal. But Nepal turned a deaf ear to these demands. The Qing Imperial Army responded to Nepal with military intervention. The Qing forces marched along the banks of the Trishuli river until they reached Nuwakot. The Nepalese troops attempted to defend against the Qing attack, but were already faced with overwhelming odds. Heavy damages were inflicted on both sides and the Chinese army pushed the Gurkhas back to the inner hills close to the Nepali capital. However, a comprehensive defeat of the Gorkhali army could not be achieved.

At the same time, Nepal was dealing with military confrontations along two other fronts. The nation of Sikkim had began incursions along Nepal's eastern border. Along the far-western side, the war with Garhwal continuined. Within Nepals own borders, the kingdoms of Achham, Doti and Jumla openly revolted. Thus the problems that Bahadur Shah faced made it much harder to defend against the Imperial Army of Qing. The anxious Bahadur Shah asked for 10 howitzer mountain guns from the British East India Company. Colonel Kirkpatrick arrived in Kathmandu, but he put conditions of business treaty for delivery of the weapons. Wary of the British interest, weapons were not received and the war situation became critical for Bahadur Shah.

After a series of successful battles, the Chinese army suffered a major setback when they tried to cross a monsoon-flooded Betrawati, close to a Gorkhali palace in Nuwakot. As the Chinese troops had reached south of the Betravati river, near Nuwakot, it was difficult for the Nepalese troops to wait for them at Kathmandu. At Kathmandu, a Nepalese force of less than 200 soldiers attempted to resisted the Chinese troops at Betravati. On September 19, 1792 Nepalese troops launched a counter attack against the Chinese forces encamped at Jitpurfedi. The Nepalese used a tactic where their soldiers carried lit torches in their hands, tying them to the branches of trees, and tying flaming torches on the horns of domestic animals and driving them towards the enemy. The Qing army suffered a defeat, but the loss failed to dislodge them from Nepal.

A stalemate ensued, and with their resources low and a looming uncertainty regarding how long they would be able to hold on in addition to the need to continue their expansion drive on the western frontier, the Gorkhalis signed a treaty in Chinese terms that required, among other obligations, Nepal to send tributes to the Chinese emperor every five years.

Aftermath
The Qing general Fuk'anggan then sent a proposal to the Government of Nepal for ratifying a peace treaty. Bahadur Shah also wanted to have cordial relations with China. He readily accepted the proposal and they concluded a friendly treaty at Betravati in 1792. The terms of the treaty were as follows:


 * 1) Both Nepal and Tibet will accept the suzerainty of China.
 * 2) The Government of Tibet will pay the compensation of the property of the Nepalese merchants which were looted by the Tibetans at Lhasa.
 * 3) The Nepali citizens will have the right to visit, trade, and establish industries in any part of Tibet and China.
 * 4) In case of any dispute between Nepal and Tibet, China will intervene and settle the dispute at the request of both the countries.
 * 5) China will help Nepal defend against any external aggression.
 * 6) Both Nepal and Tibet will have to send a delegation to pay tribute to the Imperial Court in China every five years.
 * 7) In its return, China will also send friendly gifts to both the countries and the people who carry the tribute will be treated as important guests and will be provided every facility.

While Tibet came under greater control of China right after the war, Nepal still retained its autonomy. However the weakening of the Qing dynasty during the 19th century led to the disregard of this treaty. For instance, during the Anglo-Nepalese War of 1814-16, when the British East India Company launched an invasion of Nepal, not only did China fail to help her feudatory in that conflict, but it also failed to prevent the cession of Nepalese territory to the British. Similarly, during the another Nepalese-Tibetan War of 1855-56, China was conspicuously absent.