BOOK REVIEW / A joint declaration, yes. A British kowtow, no: 'Experiences of China' - Sir Percy Cradock: John Murray, 19.99 pounds

SIR Percy Cradock has devoted most of his diplomatic career to the concept: 'Though Britain and China may not always find it easy to agree, they must, at all costs, understand one another.'

Experiences of China is illuminating, witty and extremely exciting. Cradock's integrity and elegant style clarifies the complexity of diplomacy, the frustrations on the road to the Joint Declaration on Hong Kong no less than those endured after the sacking of the Peking Embassy. Then, after being beaten up by Red Guards, he consoled himself with Virgil: 'Perhaps even these things, it will one day be a joy to recall.'

He went to China for the first time just after the Great Leap Forward, when students under Mao - 'that disastrous old man' - were eating bark and buds to ward off starvation. In August 1967, on Cradock's second tour of duty, the British Embassy came under siege. Outside, 'there was a sound of running feet, of breaking glass, heavy blows, flames from burning cars, shouts of 'Kill, Kill' '. No one was killed, but the staff were badly manhandled. When the authorities explained that the brutality could stop if the British would only kowtow, Cradock 'explained that it could not be done'. Nearly a year passed before all the staff were permitted to leave; Anthony Grey, the Reuters correspondent held in solitary confinement, was not freed until September 1969.

Cradock's First Law of Diplomacy now applied: 'It's not the other side you have to worry about, but your own, the inability to influence London on matters where you have special knowledge and interest.' London's restraint - which continued even as the Cultural Revolution itself was winding down - did nothing to ease Sino-British hostility.

But when Cradock returned in 1978 as Ambassador, the old China had become, under Deng Xiaoping, a modernising state. ('It doesn't matter if the cat is black or white . . . but whether it is good at catching mice.') China was now a country to be dealt with, not just studied.

Modest autonomy was granted to domestic enterprises. Private and collective concerns proliferated. Huge Special Economic Zones were set up and joint ventures started with foreign capital. The Party is still, however, the ultimate authority. Political institutions have changed little since the time of Chairman Mao. Tiananmen illustrated the strains: how does a Communist regime reform its economy without losing political authority? The question, vast and dangerous, remains unanswered, at a time of rising corruption, unemployment and inflation.

For the first time, the real story of the Hong Kong negotiations is presented by the leading British participant. Cradock highlights the vastly superior power of his interlocutors, their nationalist determination to recover their lost territory, the uneasy confrontations between Margaret Thatcher and Deng Xiaoping, Britain's reluctant recognition that Sovereignty and Administration had to go.

Mrs Thatcher understood that 'Deng was not bluffing and would let the Hong Kong economy go to the wall if he had to'. The choice was only between reversion to China on the best terms we could get, or reversion without any protection for Hong Kong. That protection is now embodied in the Joint Declaration. Given Chinese constraints on what could be accomplished, it is better than might have been expected.

The Tiananmen Square massacre in 1989 led to demands for increased Hong Kong immigration into the United Kingdom, and for further elected seats in the Legislature. Now, Chris Patten's good intentions may lead to the total demise of the Legislature in 1997, permanent impairment of democracy and an end to Hong Kong's prosperity - outcomes worse than might have been anticipated before Mr Patten's approach.

Understanding is not everything in politics, but when the alternative is insistence on impracticable principle, leading to breakdown or unwinnable confrontation, expertise has its place. Cradock's First Law is in operation again.