In the 68th year of the serpent, around the 21st century, near the beginning of the rule of the Red Emperor, the Second Doctor visited Draconia. While there, he helped the empire to survive a Space plague, with the result being that the empire had to isolate itself from its galactic empire, becoming confined from their planet for a time. (TV: Frontier in Space, PROSE: The Dark Path, AUDIO: Paper Cuts)
In the 80th year of the blood, 60 years after the Second Doctor's visit, with the empire still without a galactic provinces, the Red Emperor was taken up to Imperial Heaven. He invited several individuals to his tomb, including the Sixth Doctor, who arrived with Mila. (AUDIO: Paper Cuts)
By the 26th century, Draconia had become a galactic power once more, it occupied one part of the Milky Way galaxy, and the Earth Empire occupied another. There was, at one time, a war between the two powers, ending with Articles of Peace that guaranteed a "frontier in space" between the two. Trade agreements and cultural exchanges were made to lessen tensions.
It was believed[by whom?] that the Draconian Empire aided the Earth Empire in small numbers during the Second Dalek War: at least one Draconian — Prince Salander — aided the Dalek Killer Abslom Daak's fight against the Daleks. (COMIC: Star Tigers) Human historians believed that the Draconian Empire had quickly fallen to the Dalek Empire in the opening segments of the Dalek Wars. (PROSE: Dalek: The Astounding Untold History of the Greatest Enemies of the Universe)
After building an army, the New Dalek Paradigm constructed a series of space fortresses along their border with the Draconians. (PROSE: Dalek: The Astounding Untold History of the Greatest Enemies of the Universe)
In theory the Draconian empire was an absolute monarchy with the emperor having the final say on all decisions. In reality the monarchy relied on the support of the nobles and it was rare but not unheard of for the nobles to overthrow an unpopular emperor. (PROSE: Doctor Who and the Space War)