One reason for the recent escalation of the Chinese-India conflict is the struggle between the two powers for influence in Bhutan. Geographically, this small country is sandwiched in between the the two giants. (See Map 3.)
Map 3: Bhutan, China and India 
Bhutan is a very small country in the Himalayan region with a population of less than 750,000. Its capital, Thimpu, is its only city, and has less than 80,000 inhabitants. It has hardly any industry. Its most important source of earnings, beside forestry and tourism, is its selling of hydroelectric power to India.
Politically, Bhutan is very backward, having less than a decade ago witnessed a transition from an absolute to a constitutional monarchy. The country’s first parliamentary elections just took place in 2008. A government ban on television and the Internet was only lifted in 1999.
While Bhutan is a very multi-ethnic country, the regime brutally suppresses various minorities. For example, 108,000 Lhotshampas, meaning "southern Bhutanese," have been forced from their homes and seen their land seized in recent decades. Since then, they are living in refugee camps. 
Bhutan is nothing but a de facto colony of India. Its currency is the ngultrum, which is fixed to the Indian rupee. The rupee is also accepted as legal tender in the country. The Indian Army has permanently stationed a brigade in Bhutan.  Article 2 of the Indo-Bhutan Friendship Treaty, signed in 1949, states: "On its part the Government of Bhutan agrees to be guided by the advice of the Government of India in regard to its external relations." While this formulation was modified in a more recent version of the treaty signed in 2007, one which formally recognizes a higher degree of Bhutan independence, India has continued to exercise a strong influence over the country's foreign policy. Among other things, this is manifested by Bhutan’s having no formal ties with the five permanent members of the United Nations Security Council.
However, India's domination of Bhutan has recently come under challenge due to the regional and global rise of China as an imperialist power.
Since the stepping down of the former absolute Druk monarch in 2007, the government of Bhutan intensified negotiations with China in order to settle their border disputes. Some sources suggest that China has already seized over 8,000 km2 of disputed lands with the result that Bhutan’s total area has been reduced from 46,500 km2 to 38,390 km2 since 2010. 
In reaction to these developments, India interfered in Bhutan’s 2013 general elections, which brought about the defeat of the Thinley government. However, it appears that, since then, no fundamental reversal of China’s increasing control in Bhutan has taken place.
In a position paper which the Chinese Foreign Ministry released on 2 August, Beijing elaborated its stand on the dispute in the Sikkim border region. The document states that China and Bhutan have conducted joint surveys along the border area and have reached a “basic consensus on the actual state of the border area and the alignment of their boundary.” All that remains, according the Beijing, is the formal delineation of the border.
In a sharply-worded passage, the Chinese document states: “The China-Bhutan boundary issue is one between China and Bhutan. It has nothing to do with India. As a third party, India has no right to interfere in or impede the boundary talks between China and Bhutan, still less the right to make territorial claims on Bhutan’s behalf. India’s intrusion into the Chinese territory under the pretext of Bhutan has not only violated China’s territorial sovereignty but also challenged Bhutan’s sovereignty and independence… China will continue to work with Bhutan to resolve the boundary issue between the two countries through negotiations and consultations in the absence of external interference.” 
Indicative of Thimpu's move in the direction of Beijing and away from Delhi is the fact that Bhutan’s ambassador to India, Vetsop Namgyel, attended an event at the Chinese embassy in New Delhi on 1 August to mark the 90th anniversary of the founding of China's People’s Liberation Army. This move is even more telling, given Bhutan’s having no diplomatic ties with China and the extreme rarity of an ambassador attending an armed forces day in a foreign embassy.
In short, one important reason for the recent escalation of the conflict between China and India is their rivalry over the domination of Bhutan. While India has been the traditional hegemon, China has succeeded in challenging this status in recent years. With its armed intervention in the Sikkim border region, Delhi hopes to reverse this trend and to regain its full domination of Bhutan.
 Norwegian Refugee Council: Bhutan: Land of happiness for the selected, 2008; Bill Frelick: For Bhutan’s refugees, there’s no place like home, Human Rights Watch, March 30, 2011, https://www.hrw.org/news/2011/03/30/bhutans-refugees-theres-no-place-home
 Neville Maxwell: This is India’s China war, Round Two, 15 Jul 2017, http://www.scmp.com/week-asia/geopolitics/article/2102555/indias-china-war-round-two
 P. Stobdan: In the Tri-Junction Entanglement, What Does Bhutan Want? The Wire (India), 11/07/2017, https://thewire.in/156180/bhutan-doklam-border-china/
 M.K. Bhadrakumar: China raps India over Doklam standoff, but dogs are on leash, August 3, 2017, http://www.atimes.com/article/china-raps-india-doklam-standoff-dogs-leash/