The Kingdom of ‘Nan Zhao’ (南诏) or ‘Southern Zhao’ existed between 738-902 CE. I suspect the original Nanzhao rulers had direct contact with the India of the time (c, 8th-10th centuries CE) or might well have been ethnic Indian – as they referred to themselves as ‘Maharaja’ or ‘Great Ruler’. Chinese-language texts state ‘由蒙舍部落首领皮罗阁于开元二十六年（738年）建立 ‘ or ‘the Nanzhao Kingdom was founded by the ‘Mengshe’ (蒙舍) Tribal-Head named ‘Ling Pi Luo Ge’ (领皮罗阁于) during the 26th year of the reign of ‘Kaiyuan’ (开元)‘. The Nanzhao Kingdom existed during the time of the Tang Dynasty. The above find is of what appears to be the largest Medieval Buddhist Monastery ever discovered in the previously ruined (and hidden) capital city of Nanzhao – situated in the forested areas of today’s Yunnan (where elephants still roam). The Nanzhao practiced an elaborate and fully-formed Tantrayana system of Indian Buddhism and seen to have imported it straight from the India of the day. As Nanzhao lies between Tibet and the Chinese hinterland, I suspect this is where the Tantric Buddhist lineages found in both countries originated from.
Chinese Tantra and Tibetan Tantra represent two broad lineages of Nanzhao – at least this is my working theory for an upcoming paper upon subject. Ethnic Chinese people I know who practice Tantra today, emphasis a very strict moral system which negates much of the more elaborate and laterally experimentive Tibet versions. Both pathways were valid in Nanzhao and not contradictory in any way. The difference could have represented developmental ‘steps’ in one’s practice and was not intended as a dogmatic statement about Buddhist practice or the nature of the world. Within Nanzhao, a devout Buddhist may well have had to practice both paths – one after the other – when the time was right.
The Nanzhao conquered large swathes of South East Asia – introducing Tantra into those areas. This was often replaced at a later date by the Theravada Buddhism of Sri Lanka. When the Nanzhao Empire collapsed – this allowed the violent (non-Buddhist) Tibetan tribesmen to sweep in and invade large areas of what is today Southwest China – and there they have stayed! The Tibetans eventually converted to a type of Nanzhao Buddhism and made it their own.
What we know is this; Chinese Tantra emphasises moral control and restraint whereas Tibetan Tantra advocates the use of the imagination and certain modes of expressed behaviour. Now, if we assume that both paths are correct in and of themselves, it would appear that they formed two steps in a highly developed and vibrant Tantric transmission of Buddhism from India. The ethnic Chinese chose the aspect that best suited their Confucianism, and the Tibetans sided with the version that suited their highly mobile and free social (tribal) existence.
Indeed, when viewed separately, they appear to be two unrelated schools! This is because the contextuality of Nanzhao culture is missing. This religious-spiritual framework would show exactly how both pathways fitted together, the history of said association, and how both became extracted from mainstream Nanzhao culture and transplanted into the very different cultures of China and Tibet. Of course, this does not negate the idea of direct contact with India between China and Tibet – but as Nanzhao culture was local to both cultures, expansively aggressive, militarily capable and highly organised – it is more likely that its Buddhist influence was felt near to home.
Furthermore, the Chinese people very much like the purity of their lineages, and it seems to me that Nanzhao was more than well connected to India in this regard. Finally, the indigenous Bon religion of Tibet has been linked to Confucianism as unlikely as that sounds!