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Answer should be C. The Panda is singular
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Mahmud6
The panda, which is an Asian animal related to bears, live in tropical forests where they eat bamboo shoots as staple food.

A. which is an Asian animal related to bears, live in tropical forests where they eat bamboo shoots
B. an Asian animal related to bears , live in tropical forests where they eat bamboo shoots
C. an Asian animal related to the bear, lives in tropical forests where it eats bamboo shoots
D. an Asian animal related to the bears, lives in tropical forests where they eat bamboo shoots
E. a South American mammal in relation to the armadillo and the anteater, lives in tropical forests where it travels

Source: QS LEAP

IMO C

Meaning :

1. The Panda(s)
1.1 an Asian animal(s) related to bears
2. lives (live) in tropical forests where it eats bamboo shoots as staple food.

Split #1 live/lives
The panda - singular noun - A&B are out

Split #2 it/they
The panda - singular noun - B D are out

we're left with C and E
E - awkward not related to the original meaning

C it is.
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