'Listen to the people!" Wang Shuhua wrote on a piece of paper pasted inside the windscreen of his three-wheeler electric scooter parked near Beijing's Xicheng district court this week.

"Only this way can we return to the Mao Zedong era and the prestige of the party and the government in the people's minds." Plain-clothes police tried to shoo the disabled protester away and attempted to block journalists from photographing him.

Wang is one of many leftists who lament the loss of Maoist principles and accuse the Chinese Communist Party's leaders of betraying their political roots. The leftists, including many inside the party, support greater state control of the economy or even a return to the extreme socialism of Mao.

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They had pinned their hopes on Bo Xilai, a charismatic party princeling who was, until last week, a member of the party's 25-strong Politburo. His career came crashing to a halt in a scandal which threatens to be the biggest in Chinese politics for a generation when his wife was named as a suspect in the murder of British business consultant Neil Heywood. The fall-out has riven Chinese society and politics in a way never seen before.

Bo made his name tackling corruption and the "black societies" of Chinese organised crime, unveiled local policies designed to benefit ordinary people, and led a campaign to improve public morality through Maoist-inspired "red" cultural activities.

Bo – whose late father, Bo Yibo, was one of the party's "eight immortals" – was one of the most outgoing and publicity-seeking Chinese leaders in recent years.

But although he was the Communist Party leader of Chongqing, a city commanding 30,000 square miles along the Yangtze, he remained highly secretive by Western political standards.

Chongqing is a sprawling metropolitan region of 32 million people created in 1997 as part of administrative changes to facilitate construction of the gigantic Three Gorges dam and hydro power project. The huge sums that poured into the region over the following decade for giant infrastructure projects sparked a property boom – and fuelled bribery, embezzlement, illegal loans and extortion.

Chongqing grew into something like a 1920s Chicago on the Yangtze. It was reportedly one of China's biggest centres for weapons trafficking, while the gangs also controlled prostitution, gambling, drugs, entertainment and many local businesses, including a city bus company.

When Bo arrived in 2007, he declared war on the criminal gangs and their "protective umbrellas" of officials and police. He brought in Wang Lijun, a nationally acclaimed "supercop" with a larger-than-life reputation for personally taking on gangsters.

Bo and Wang had worked together in the 1990s in the north-eastern province of Liaoning, where Bo rose as the "famous-brand mayor" of the prosperous port of Dalian, arguably becoming China's first modern populist politician.

Back together in Chongqing after Bo had enhanced his top leadership credentials with three years as China's commerce minister, he and Wang oversaw the execution of dozens of people during the campaign against gangs, including Wen Qiang, the former deputy police chief. Hundreds of others were sentenced to prison.

Bo's "sing red" drive, which included mass song and dance events in public squares, was praised by most of the leaders in Beijing and by the leftists. Some touted Chongqing as a model of economic control, tough policing and social stability that other regions should copy.

But insiders claimed that behind the self-congratulatory statements of Bo and other officials, organised crime remained entrenched in Chongqing and still reached to the highest levels. Other critics said the crackdown was too draconian, even for China's authoritarian government. Bo's call for public performances of "red" songs also began to be ridiculed by some who feared it could encourage a return to the brutal Maoist fundamentalism of the 1966-76 Cultural Revolution.

There were also signs that the Chongqing model wasn't all it seemed. Allegations of threats and corruption were made against senior Chongqing figures, and supercop Wang Lijun was demoted. Apparently in Bo's crosshairs, Wang went to the US consulate in Chengdu amid speculation that he was either trying to defect or escape the reach of Bo. He later left the consulate. Chongqing government officials later said he had been authorised to undergo "vacation-style medical treatment". The term was mocked by Chinese dissidents who began to refer to "consoling-style rape" and "harmony-style looting".

Premier Wen Jiabao issued a stern rebuke to Bo and other Chongqing officials, saying that political reform must accompany economic reform if China is to resolve chronic problems such as income gaps and corruption, and continue to develop "socialist democracy". Without reforms, "a historical tragedy like the Cultural Revolution could occur again," he warned. "Political reform" refers to grassroots elections, and greater "democracy" within the ruling party – it does not suggest any move towards multi-party national elections.

After Wen's remarks, Bo, 62, was sacked from his post as Chongqing's party leader.

Edward Friedman, a China specialist at the University of Wisconsin in the United States, commented: "Bo was a corrupt, ambitious princeling who concluded he could do best for himself and his nation by seeking power at the highest level."

In a sensational twist last week, the party said Bo's wife, Gu Kailai, was "highly suspected" of murdering Briton Neil Heywood – who died in Chongqing in November – over a financial dispute.

Heywood, 41, had reportedly known the Bo family since their time in Dalian, north-east China, in the 1990s. His wife, who was living in China with Heywood and their two children, is from Dalian.

Heywood's relationship with the Bo family is unclear, but he appears to have helped the couple's son, Bo Guagua, 24, arrange a British education at Harrow and Oxford. He is now said to be living in the US.

It was reported yesterday that Heywood's wife, Wang Lulu, had visited the British Embassy in Beijing, where they lived, begging for help to obtain a visa to flee to the UK with the couple's two children. She is said to be worried about her safety after the revelation that her husband may have been murdered.

Chongqing police originally thought he died of alcohol poisoning, or an alcohol-induced heart attack, and his body was cremated without a post-mortem being performed.

There are few online records of Heywood's business consultancy work, but Hakluyt, a business intelligence company founded by a former MI6 officer, said it "sought his advice" occasionally on China.

Kerry Brown, head of the Asia programme at the Chatham House think-tank, met Heywood several times in China over the past decade and found "nothing unusual about him", adding: "He was reticent, he did refer to his link with Bo, but he kept a low profile."

The Chinese government said it had set up a team last week to "reinvestigate the case according to law" after allegations by Wang Lijun.

Prime Minister David Cameron welcomed the investigation. He said: "It is very important we get to the truth of what happened in this very tragic case."

Wang is now branded a traitor. US and Chinese officials declined to say what he did inside the consulate, amid speculation that he might have handed US officials documents implicating Bo or possibly even higher party officials.

Speculation had also surrounded the relationship between the Bo family, Heywood and Zhou Yongkang, the party's security chief and probably Bo's most powerful backer. Zhou was the only one of the nine members of the Politburo's all-powerful Standing Committee to oppose a decision to oust Bo at a meeting on March 7.

In an attempt to curb some of the wilder rumours, over the past week state media have run a propaganda campaign and reported the arrest of six people for spreading gossip and the closure of dozens of websites.

Brown said: "This case raises the issue that, at the end of the day, with a highly sceptical public, with more access to information than ever before, there are very, very limited ways the party can speak and really be believed."

The government suspended two of the most popular leftist websites, Maoflag and Utopia. Another leftist site, Red China, carried an article accusing Wen of hating Mao and the Communist Party. The home page of a fourth Maoist site, Progress Society, www.jinbushe.org, also aired a defiant message next to its icon of a panda carrying a gun: "We support the Chongqing model and Bo Xilai."

Despite the defiance of the leftists, Zhang Ming, a reformist political scientist at People's University in Beijing, said he believes their dream of a return to Maoism via the "Chongqing model" has died.

The trend of reform will be enhanced following Bo's demise, Zhang said. But he conceded that the Communist Party could be facing its biggest crisis since the 1989 democracy movement, when the leadership split before hardliners prevailed and ordered troops using tanks and live ammunition to clear protesters from around Tiananmen Square in Beijing.

Perhaps the most worrying aspect of the Chongqing affair for the party is that the unmasking of someone who was once considered one of its most capable and promising leaders might make the 80 million party members and the rest of China's 1.3 billion people wonder what secrets lie behind the rise of other leaders.

There were violent protests on the same day that Bo was removed in Chongqing, involving thousands of citizens who clashed with police and overturned police cars. There have been unconfirmed reports of a number of deaths, though there is as yet no clear explanation for what sparked the riots.

As the party now strives to persuade the public to accept the first transition to new leaders in a decade, it wants political and social stability. Xi Jinping and Li Keqiang are scheduled to replace Hu Jintao, General Secretary of the Communist Party, and Premier Wen Jiabao, respectively, after a five-yearly party congress in October.

"Of course, the party leadership would no doubt want this to be an end of it, but it won't," Brown said of the efforts to draw a line under the Chongqing scandal.

"It wants everyone to think it will deal with this issue according to rule of law, but that will be a tall, tall, tall order, when you think of the ways in which the Party overrules and pre-empts legal procedure for political ends.

"This story will continue to nag and worry people as they look at the succession process and really wonder what is going on."