In a dark cellar office guarded by a ferocious-looking German shepherd dog and crackling with the faraway sounds of Chinese provincial radio broadcasts, an old man stoops over a desk piled high with files and contemplates--as he puts it--"our underground work."

A tiny black sign pointing to the front door reads obscurely, "L. la Dany." For the uninitiated, the scene might resemble a spy den in a World War II film. But those in the know realize they have arrived at the headquarters of the Jesuit priest who is Hong Kong's preeminent China watcher.

The Rev. Laszlo la Dany is one of the last of the vanishing breed of hawk-eyed analysts who view the Communist mainland from the comfortable distance of this British colony. His China News Analysis is the oldest and most prestigious journal of its kind, surviving 30 years of arcane propaganda and chronic news blackouts. Even with western reporters and scholars now admitted to China for extended firsthand work, la Dany's newsletter remained a "must" for serious Sinologists.

"It's clearly first-rate scholarship," said an American diplomat based here. "There were many times he's picked up themes we've missed."

"He knows his facts like no one else," said Richard Hughes, an Australian journalist who has gazed at China from the same perspective for decades. "La Dany never pretends to know."

Now 68, la Dany says he knows it is time to give up his life's work. The pace of publishing his seven-page booklet-sized fortnightly has become too taxing for the reedy, gray-haired writer who is--vicariously--to contemporary China what de Tocqueville was to early America.

Since his farewell issue in December, the Hungarian-born cleric has been planning one more return to the mountaintop for a published guide in what he calls "the 10 commandments of China watching."

"The first commandment is, 'Read the small print,' " he said in a recent interview. "The second is to know who is in charge of the media. You have to know this is a programmed press under the propaganda department. Then, you have to realize words don't mean what they say. To the communists, words like democracy don't have the same meaning as they do to everyone else. Every paper should print its own list of vocabulary words."

Thus spake the author of 1,246 carefully annotated reports on things Chinese, from pigs to publications to the Politburo.

It is the voice of prescience, for la Dany has spotted signs of change far ahead of other China hands. He called the Cultural Revolution (which went from 1966 to 1976) a reign of terror while American scholars thought it a romantic social experiment.

He saw the first seeds of the Sino-Soviet split in 1956 when Mao warned against Russian cultural dominance. He pointed out Deng Xiaoping's retreat from reform even before his biggest conservative compromises.

"I always write for myself," said the pipe-smoking la Dany. "They are things I want to record in the development of China."

Like many older Sinologists, la Dany traces his professional roots to pre-Communist China. After studying law as a young man in Budapest, he became a Jesuit and joined their mission in northern China during World War II.

By late 1948, he had arrived in Hong Kong and decided that "the church is bigger than the walls of a chapel." He set out on a career of publishing by devoting himself to a monthly bulletin for missionaries called "Jottings on the Chinese Press."

Four years after the Communist takeover in 1949, he put out his first China news analysis with financial help from a Shanghai film actress. Since then, he has been a constant witness to the history of Communist rule, chronicling every power struggle, economic program and social change.

His periodical, written on Bible paper, has reached opinion-makers, diplomats and students in more than 40 countries. He refused to discuss circulation figures, however, claiming they were very small.

While Chinese events have swirled around him for more than three decades, he never altered his technique--analysis of the written word. He pored over provincial radio transcripts and 40 Chinese publications monthly, eschewing the "informed source" reporting and interview methods of the new breed of Sinologists.

His mightiest resource was a large set of gray, eight-foot filing cabinets jammed with a generation of data.

The historical close-up that has brought kudos to la Dany has soured him on communism--he calls it a "very inhuman system"--and this bias is said by a few critics to taint his analysis of China.

He demurs: "I only write what I can document."

"The Russians have a very stupid system, but steady," he said in summing up Marx's legacy. "The Chinese are thinking but very volatile. The only thing about China you can predict is that every 10 years it will be different."

Now, la Dany hopes to leave the analysis of China's future to young Jesuit scholars who have volunteered to take on the newsletter. In retirement, he will review his work in the hope of writing a multi-volume book on China.

"One of the commandments of China watching," he said, "is to have a view back. The quick answer is usually wrong.