Even before taking over as leader of the British team in the last Joint Liaison Group before the handover - a job he described as 'Hobson's choice' - Hugh Davies had met Chinese opposition head-on. In Beijing in 1969 at the end of the most intense phase of the Cultural Revolution, arriving for his first embassy posting in deep winter, he found the place austere and unwelcoming. 'The first thing we did was to paint over the slogans chalked at the entrance,' he recalls. 'My wife said she was not going to live in a flat with 'Down with British imperialism' on the door. Everyone said: 'Don't do it. They'll be back to paint it again', but they weren't. 'That was my first experience of standing up to the Chinese. Don't take it lying down; you can't be pushed around.' Recounting the incident, he punches the air with his fist, but the gesture is without rancour, his smile ironic. A sense of humour is a useful quality for any diplomat, but an absolute prerequisite for what many regard as the second toughest job in Hong Kong. In this perpetually changing city, one thing has remained constant: the newspaper headlines. 'Talks run into intractable problems' and 'Appeal court plan hits problems', to cite but two. Received wisdom is that such problems were probably inevitable after 1989's Tiananmen Square massacre. In fact, the two examples are a random selection from 1984-1988. Even the most cursory glance through newspapers of that troubled decade suggested China had already mapped out its agenda for Hong Kong and that, minus a few concessions, it got what it wanted. Mr Davies demurs. 'There was a period after the signature of the Joint Declaration when there was a lot of goodwill,' he says. 'But the differences about the pace of constitutional reform began to become an issue as soon as the ink was dry on the paper.' By the time he took over in 1994, those differences were well entrenched. The arrival of Chris Patten as the last governor two years previously had provided China with the perfect justification for intransigence. Five years before Mr Patten set foot in the territory, Beijing was adamant it wanted an executive-led government after 1997. The clear message was that Beijing regarded a legislative government as a possible threat to China's exercise of sovereignty over Hong Kong. The irony, according to Mr Davies, was that Mr Patten thought he could change all that. 'I happen to know that his intention was to cut through all the differences we'd been having and try to settle things man to man with [China's top man on Hong Kong affairs] Lu Ping. Unfortunately the situation didn't develop that way. It could have worked if the Chinese had shown any imagination but their system, unfortunately, is not geared to [do] that.' Mr Davies' fascination with the country developed after a trip to Singapore as a schoolboy. Chinese art is a particular interest and when he joined the Foreign Office and they asked for volunteers to learn languages, 'rather to my surprise' he found himself selected and sent on a course in Hong Kong. Two stints in China, the second as commercial counsellor in 1984, prepared him for his most rigorous appointment. But he dismisses the idea that only Sinologists can parley with Beijing. 'There is an element of truth in that Mr Patten wasn't used to dealing with China as diplomats are, but that doesn't mean you can't deal with them,' he says. 'The Chinese cannot expect everybody to operate by their rules. They are an important power these days and other countries will want to operate within more internationally accepted norms. 'It is perfectly understandable and right that Mr Patten shouldn't have wanted to follow the Chinese rules of the game. In some respects I think the way matters have been handled here in recent years is probably a healthy step for the Chinese in dealing with other countries.' Hong Kong has been fundamental to China's emergence but not always beneficial, says Mr Davies. 'When I was in the embassy in the 80s it used to worry me that Hong Kong businessmen in the early days of the reform movement were coming to Beijing to get their deals, bringing new TV sets and cars and so forth, and giving them away as presents. 'They were diluting the old Chinese propriety about dealing with these things. China was relatively uncorrupted for a period under communism. There was certainly hidden corruption for people on the inside track, but it wasn't obvious. 'As far as the outside world was concerned, they were uncorrupted. It was unfortunately Hong Kong influence which reintroduced bribery and corruption there.' Other effects have been positive. 'Hong Kong has provided a model for urban construction and lifestyle. Even in the 80s, Guangdong and Guangzhou were beginning to resemble Hong Kong of 20 years earlier. That influence has continued, but it has become diluted by mainland characteristics - very brash, florid and out of control.' More important, he considers, are the administrative influences. 'Shenzhen has adopted a lot of commercial laws from Hong Kong. The ideal thing would be if, with the disappearance of British administration, the Chinese no longer feel that sense of national disgrace,' he says. 'It would be enormously beneficial to China if they could adapt from Hong Kong the best part of the British system - the rule of law, an independent civil service - and see it as a way of integrating with the rest of the world. 'Germany, for instance, has friendship and co-operation with China but I don't think that has anything to do with their commercial success. They are very good exporters, but the substance of the relationship is thin. Hong Kong has been absolutely essential to the Britain-China relationship. 'It has invigorated and complicated it but we have had to develop an understanding with each other which no other European country has [with China].' To date, the animosity shows few signs of diminishing. Beijing still insists Hong Kong is the business of the British and Chinese until the handover, but only China's business thereafter. 'In a legal sense that is wrong,' he says. 'They have signed something in which they gave certain promises, and we have the right to expect them to deliver on those commitments. 'For the first 12 years after signature we had an obligation to live up to our commitment to return Hong Kong to China. On the midnight hour we will have completed that, and from that moment onwards they have an obligation to deliver on theirs. 'For 50 years we will go on saying that, although we want to do it in a constructive way; we won't be criticising for the sake of it. We hope there won't be any reason to criticise. We hope the Chinese will stand back and allow the high degree of autonomy they have promised.' The JLG will continue until the millennium but Mr Davies leaves for a new posting in autumn. 'I will be sorry to go. I like Hong Kong very much. I met my wife here, married here, and we still have friends we made in Hong Kong in the 60s.' But the cordiality overlying contacts with his counterpart on the JLG, Zhao Jihua, is unlikely to continue once he leaves. 'On a human level we get on perfectly well, but we don't see much of each other socially. We do occasionally have them round to our house but they don't have the same facilities so, when they invite us, it tends to be a banquet.' Lighter moments have punctuated the rows. When the Chinese insisted on a comprehensive list of Hong Kong government assets, the British protested it was impossible to itemise them all, but it produced two lists, the second one documenting every public convenience. China was not amused: 'They thought we weren't taking them sufficiently seriously.' Occasions when formal socialising came to a halt marked the low points in negotiations. 'It only happened once during my tenure. If you are having such major disagreements, to sit down at a meal as if nothing had happened would be stretching one's imagination pretty far.' Overall, the chief British negotiator judges the JLG to have been a worthwhile exercise. 'It has been a long and frustrating road, but generally speaking you could say we have exceeded our brief. We have been able to put a lot of flesh on the rather sparse bones of the Joint Declaration.' Failure to get more than one foreign judge on the Court of Final Appeal may be put down to interpretation, he says: 'In Mandarin the phrase can be translated as 'a judge' rather than 'judges'.' On handover night, Hugh Davies can take satisfaction in the fact that the ceremony is even taking place. China would have preferred low-key formalities, similar to those that surrounded the signing of the unequal Treaty of Nanjing. 'But it was very much in our interest to ensure that this moment was recorded in front of an international audience. It would give it a much better chance of surviving.' His biggest regret concerns the Legislative Council. 'So many of our problems in the last three years have been caused by our failure to reach agreement on that. It is atrocious that at this juncture we are about to see the last of the democratically elected Legislative Council to be replaced by people they have appointed. That's bad.' Other failures were perhaps inevitable. 'If there have been any, it is not because we have given in, but because they are controlling the levers. The important thing is to know your principles and stick to them very firmly. At the end of the day it is better to go down knowing you have handled matters correctly and come out with principles intact.'