Bhutan is officially known as the Kingdom of Bhutan. Bhutan is a landlocked country in Asia, and it is the smallest state located entirely within the Himalaya mountain range. It shares its borders with China (in the north) and India (in the south). Bhutan is geopolitically in South Asia and is the second least populous nation in this region after the Maldives. Thimphu, is the capital of Bhutan. Phuntsholing or Phuentsholing is its financial center. Other important places are Paro and Punakha. Bhutan was never colonized in its history. The national identity is based on Buddhism. Headed by a spiritual leader known as the Zhabdrung Rinpoche, the territory was governed as a Buddhist theocracy. Bhutan nurtured a strategic partnership with India during the upsurge of Chinese communism and has a unclear border with the People's Republic of China. In 2008, it transitioned from an absolute monarchy to a constitutional monarchy.