HONG KONG (AFP) - The unprecedented wave of anti-government protests in Hong Kong has sparked a rapidly escalating diplomatic feud between China and the city's former colonial ruler Britain.

Hong Kong was returned to China in 1997 under a handover agreement that guaranteed the territory certain levels of autonomy and freedoms unseen on the mainland - and that "one country, two systems" deal is at the centre of the row between London and Beijing.

What is 'one country, two systems'?

Hong Kong was ceded to Britain in perpetuity by China in the mid-1800s. But following lengthy negotiations more than a century later, London and Beijing agreed on a deal that would see it handed back to China.

A joint declaration was signed by then British Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyang in 1984, under which Hong Kong would return to China in 1997 and governed under a "one country, two systems" doctrine that would give it a special status for 50 years.

What is special about Hong Kong's status?

The joint declaration said Hong Kong "will enjoy a high degree of autonomy, except in foreign and defence affairs", and would have its own judicial, executive and legislative system.

Pre-1997 laws would "remain basically unchanged", and locals would make up the city's leadership structure.

It would also have an independent trade, finance and customs status, and there would be "free flow of capital" - unlike the mainland.

Private property and foreign investments would have legal protection.

What about freedoms?

The declaration stated explicitly that the "social and economic systems in Hong Kong will remain unchanged" and rights would be guaranteed.

These included freedoms of speech, the press, of assembly and association, of strike, and of academic research and religion.

This meant Hong Kong, while a part of China, would have a degree of freedom unseen by citizens of the mainland.

Has the agreement held?

Hong Kong continues to enjoy its special status more than two decades after its return to China, but criticism of Beijing's policies in the city has grown.

Pro-democracy campaigners accuse the Chinese government of encroaching on the freedoms enshrined in the handover agreement by interpreting Hong Kong's Constitution - the "Basic Law" - to muzzle criticism and keep opponents out of the city's legislature.

Fear and anger among many over the Chinese government's tightening grip spilled over last month as millions marched to oppose a proposed law that would allow extraditions to the mainland.

What sparked the current diplomatic feud?

The 1984 declaration was registered with the United Nations as a treaty, but Beijing has described it in recent years as a "historical document" that is not binding.

Britain, however, insists that it is.

Following violent clashes between protesters and police in Hong Kong in recent weeks, Britain reminded China of its obligations to protect freedoms in Hong Kong, and to not use the protests as a "pretext for repressions".

Foreign Secretary Jeremy Hunt warned of "serious consequences" if the handover terms were violated.

China, however, has swatted away expressions of concern and criticism from Britain as "gross interference" in its internal affairs.

The Foreign Ministry in Beijing accused Mr Hunt of "fantasising in the faded glory of British colonialism".