China Daily via Reuters, file

Chinese Premier Wen Jiabao shakes hands with local workers in earthquake-hit Mianzhu, Sichuan province in this Jan. 25, 2009 file photo.

BEIJING – When news broke earlier this year that the family of disgraced Chongqing party boss, Bo Xilai, had amassed $160 million in ill-gotten earnings, the story was seen as a proverbial pin in the balloon China’s ruling Communist Party has long floated to its people about its leadership.

In China the storyline went something like this: local-level officials could be and have been corrupted. But China’s highest leaders were incorruptible, pious men who were sympathetic to the plight of the country’s citizenry.

Bo’s corruption and the transgressions of his inner circle have been very publicly renounced by the Communist Party. His wife, Gu Kailai, was found guilty of the murder of British businessman Neil Heywood while his former deputy police chief, Wang Lijun, was jailed and held up as a traitor after his now infamous flight to the American Consulate in Chengdu this past winter.

News Friday that Bo had been stripped of his last party title appears to pave the way for a convenient resolution of the scandal before a critical once-in-a-decade leadership changeover on Nov. 8 at the 18^th Communist Party Congress.

But the revelation in Friday’s New York Times that the family of Chinese Premier Wen Jiabao controlled assets of at least $2.7 billion dollars posed a grave threat to the Party’s preferred narrative of being the honest broker that brings prosperity to all.

NYT report: China leader Wen Jiabao's family has amassed billions in assets since '98

So much so that Beijing was forced Friday to kick the censorship gears up a notch, blocking the English- and Chinese-language websites of the New York Times, blacking out mentions of the story on independent cable news channels carried in China, and censoring the names of Wen’s family and other mentions of the story on China’s Internet.     

At a Foreign Ministry briefing Friday, a spokesman gruffly stated that the Times’ report "blackens China's name and has ulterior motives." When asked why the paper’s website was being censored, he said, "China manages the Internet in accordance with laws and rules."

One piece of information not censored, however is a report released Thursday by the research group, Global Financial Integrity, which estimated $3.7 trillion dollars had been pilfered and smuggled out of China from 2000 through 2011.

The report also estimated that $472 billion -- or 8.3 percent of China’s 2011 gross domestic product -- had been stolen last year alone.

Just how guilty Wen is in his family’s nationwide money grab is up for debate. As the Times’ report noted, a 2007 diplomatic cable published by Wikileaks quoted an executive who noted that the premier was aware of his family’s lucrative business ventures: “Wen is disgusted with his family's activities, but is either unable or unwilling to curtail them."

Wen’s failure to reign in his family’s financial activities threatens to undermine the carefully scripted public persona he has cultivated over the years.

Slideshow: The dance of two giants

AFP - Getty Images

A click-through history of modern relations between the United States and China.

Launch slideshow

Nicknamed “Grandpa Wen” by state media, the premier has relished opportunities to be photographed connecting with members of rural communities and blue-collar workers. During the 2008 Sichuan earthquake, he was a near-daily presence in news reports about the disaster and government rescue and recovery efforts.

He has also been dogged in his calls for economic reform and greater income equality. At this year’s National People’s Congress, during what was likely his last major press conference in a 45-year-long political career, Wen called for reform.

“Even with a single breath left, I am ready to dedicate myself fully to the cause of China’s reform,” he was quoted as saying.

Although Wen was speaking months before the release of the Times piece, he still apparently felt the need to address whispers about relatives trading on the family name. “I have never pursued personal gain,” declared Wen, before adding, “History will have the final say.”

Communist Party officials hope to control the writing of history. But the institution is starting to feel the strain of having to push an ever heavier stone uphill. The Internet has made information more widely available than ever before on the mainland; what censors just 10 years ago could make disappear – sometimes literally -- has become more problematic today.

Still, while completely squashing a story in China seems to no longer be possible, it may not be Beijing’s intention or even in its best interest to stifle information. Some Chinese have found ways to circumvent the Great Firewall, while millions have gone abroad, where they have been exposed to the world beyond. Allowing them the safety valve of relatively free information does not pose an immediate threat to Party rule for now.

That’s because the vast majority of China’s population appears to be apolitical, disinterested in or unwilling to engage in any meaningful political discourse. This situation is changing, quickly at times.

For now, however, the censorship of unpalatable stories is an effective albeit cumbersome tool for the Party to wield.

As for the New York Times, its fate in China looks dim. Just two months ago, Bloomberg ran a similar story that showed how the family of China’s likely future president, Xi Jinping, had also accumulated a vast business fortune – though unlike Wen’s kin, Xi’s immediate family did not appear to be reaping the same economic benefits.

Bloomberg’s website has since been blocked on the mainland. 

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CHENGDU, China -- A former police chief at the center of China's biggest political scandal in decades admitted attempting to defect to the United States, and did not contest charges of bribery and illegal surveillance at his trial on Tuesday, a court official said.

Wang Lijun, ex-police chief of southwestern Chongqing municipality, sought to conceal the murder of a British businessman by the wife of one of the nation's most senior and ambitious politicians, Bo Xilai, according to an official account of the trial.

But prosecutors acknowledged that Wang's cooperation was central to cracking the murder case and exposing leads to major crimes committed by unnamed others, indicating he will likely get a lenient sentence when the verdict is announced in about 10 days.

"The accused Wang Lijun voluntarily gave himself up after committing the crime of defection, and then gave a truthful account of the main crimes involved in his defection," court spokesman Yang Yuquan said, referring to Wang's dramatic flight to the U.S. Consulate in Chengdu in February.

Wang "exposed leads concerning major criminal offences by others, and played an important role in investigating and dealing with the cases concerned," Yang said. "According to law, his punishment may be reduced."

The charges against Wang carry sentences ranging from a lengthy jail term to the death penalty.

Foreign reporters were barred from attending the trial amid tight security around the courthouse on a busy Chengdu street, and instead were briefed by a court official at a nearby hotel.

Strong arm of the law
As police chief of Chongqing, Wang was known as the strong arm of the law, energetically carrying out Bo's crackdown on crime and gangs.

But "he conducted technical surveillance on many people many times without getting permission, or by falsifying permission," Yang said. "This gravely jeopardizes socialist law and violated legal rights of Chinese citizens."

With wife's conviction, what is next for China's Bo Xilai?

Wang, shown on state television looking relaxed during the hearing, was also charged with receiving some $484,000 in unspecified "money and property" in return for securing benefits for unidentified people. Yang did not give details of the gifts or from whom Wang received them.

Wang's trial was closely watched for any evidence that Bo had ordered Wang to cover up his wife's involvement in the murder -- a sign that Bo himself could be next to face trial.

Though the official accounts of the trial did not mention Wang's disgraced former boss Bo, the broad range of charges against Wang and the mention that he had exposed the crimes of others might mean that Bo is not off the hook.

So far, Bo has only been accused of breaching internal party discipline.

The Bo scandal has rocked Beijing, exposing rifts within the party -- elements of which are strong supporters of Bo's populist, left-leaning policies -- at a time when China is preparing for a once-in-a-decade leadership change.

Wife of disgraced Chinese leader gets death sentence with reprieve

Wang, 52, lifted the lid on the murder and cover-up of a British businessman in February when he went to a U.S. consulate and, according to sources, told envoys there about the murder that would later bring down Bo.

Within two months of Wang's 24-hour visit to the consulate, Bo was sacked as party boss and from the ruling Communist Party's Politburo and Bo's wife, Gu Kailai, was accused of poisoning the businessman. Gu has since been given a suspended death sentence for the killing in late 2011.

Shrouded in secrecy
Wang's trial started on Monday in Chengdu, the city where Wang staged his dramatic flight to the consulate, with an unannounced closed-door session to hear charges of defection and abuse of power, which involved states secrets, Yang said.  

More China coverage from NBCNews.com's Behind The Wall

The trial continued behind closed doors on Tuesday in the imposing, gray stone Chengdu City Intermediate People's Court.

Prosecutors said Wang "clearly knew that Bogu Kailai was a major suspect in a case of intentional homicide, and deliberately concealed that so she would not be prosecuted," Yang said. Bogu is Gu's official, but rarely used, last name.

However, Wang decided to later reopen the investigation.

"The defendant exposed other people's serious crimes and played a crucial role in the investigations of relevant cases, making a major contribution," Yang said.

Chinese experts believe Wang may receive a jail term from 15 years to life, but if the death penalty is imposed it would be commuted, as in the Gu Kailai case.

Scandal sends China's netizens into feeding frenzy

"Wang Lijun is a hero," said a Chengdu shopkeeper who gave his name as Zhong. "He's like heroes of the Song dynasty, fighting crime and corruption."

Bo had been considered a strong candidate for the next top leadership body, which is expected to be unveiled at the party's 18th congress next month. Vice President Xi Jinping is seen as all but certain to take over as party chief and inherit the challenge of trying to heal internal wounds.

Xi is expected to succeed Hu Jintao as president in March.

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Jason Lee / Reuters

Chongqing Municipality Communist Party Secretary Bo Xilai waves as he attends the opening ceremony of the Chinese People's Political Consultative Conference at the Great Hall of the People in Beijing in March 2012.

BEIJING -- Monday's murder conviction for the wife of Bo Xilai, once one of China's most powerful men, may have brought to an end the investigation into the death of British businessman Neil Heywood but it left in question the fate of her husband, who is being pursued for party "disciplinary violations."

Is Bo the next target of a deepening struggle? Or will he be spared from harsher punishments? Leading China analysts have varied responses but there is unanimity that Gu Kailai's conviction was also a nail in the coffin of her politician husband's career.

Wife of disgraced Chinese leader gets death sentence with reprieve

'Politically carbonized'
To counter Bo's "continuing popularity" among some segments of the population, China's Communist Party attempted to depict the case in terms of the most heinous of crimes -- murder, said Joseph Fewsmith, a leading expert on Chinese politics at Boston University and author of several books on China.

"It certainly is a case of murder, but in a sense, the killing of Heywood allows the party to sidestep all the other issues -- the way Bo conducted his 'strike black' campaign, the so-called Chongqing model and his political ambitions -- by focusing on the murder," Fewsmith said.

Strike black refers to Bo's anti-corruption and anti-crime campaign that implicated millionaires, local officials, police officers and gangsters. Under the Chongqing model that Bo advocated, the state increased its role in society and led huge public projects.

"Despite the strong evidence of criminal activity (murder), it seems likely that many will continue to read this case as part of a political struggle," Fewsmith said.

And in this political struggle, China's leftist elite -- known as neo-cons -- are the likely losers, said Professor Jean-Pierre Cabestan, head of government and international studies at Hong Kong Baptist University and a prominent scholar on China.

Closed-door murder trial: Wife of ousted politician Bo Xilai faces China court

"Some neo-cons may have tried or be willing to save Bo Xilai, in order to serve their own interests. I am inclined to think they will fail, because both the outside world and the Chinese blogosphere know too much about this terrible couple, their family and their wealth," Cabestan told NBC News.

"In other words, Bo is a liability, he is worn out, he is politically carbonized," he added.

'Chongqing model' dead or alive?
"But we should not jump to the conclusion that the reformists will enjoy an upper hand in the coming months," Cabestan said, adding that the Chongqing model that Bo championed was not sustainable.

Stringer / China / Reuters

China's former Chongqing Municipality Communist Party Secretary Bo Xilai (R) and his wife Gu Kailai (L), who was found guilty of murdering a British businessman.

"It's too expensive for the state, too hostile to private businesses and too distant from the rule of law," Cabestan said.

"But the pro-state, pro-state-owned enterprises leaders have not been totally defeated and there are so many vested interests around the perpetuation of a strong and entrepreneurial party-state," Cabestan said.

Professor Bo Zhiyue, expert on Chinese politics at the National University of Singapore, agreed that Bo was finished politically, but argued that his governing style was not necessarily dead.

"With Bo as a major competitor out of the way, the new leadership could be more stable," Bo Zhiyue told NBC News.

"However, they can't avoid using some of Bo's programs in its new policies because Bo's Chongqing model has really provided a lot of good experiments for China's future development, in particular with regards to income inequality, public housing, and new growth model."

Scandal sends China's netizens into feeding frenzy

China's leadership is acutely aware of the growing income inequality that the country's economic prosperity has produced, with newly wealthy political and business elites prompting resentment among the majority.

Indeed, official and online media have given coverage to a growing number of grassroots protests driven by the discontent felt by those left behind in the economic race, or those alienated by the corrupt collusion of wealth and power.

"There is consensus that the government needs to allocate more resources to address social injustice and income inequality," according to Li Mingjiang, China politics professor at the S. Rajaratnam School of International Studies in Singapore, noting the efforts of China's leadership in this regard.

"In that sense, the Chongqing model is not dead at all," he told NBC News.

Appeasing the poor
The government has been trying appease many people in undeveloped and poor regions of Western China, for example, by increasing state investments in these regions. Nevertheless, the consensus among China watchers is that Bo went too far in his politics and governing style. 

More China coverage from NBCNews.com's Behind The Wall

"Bo Xilai (was) too extreme in his policy in Chongqing, particularly his Cultural Revolution style political campaign," Li said. "These extreme policies are dead, at least for the coming years."

However, China's ruling elite had to deal with the fact that technology made it impossible to keep the case under wraps.  

"The amount of information and the intensity of discussion that were revealed in the social media exerted a lot of pressure on the party to release more information about the Bo Xilai case partly in order to forestall and clear rumors," Li added.

"The party has to be very careful not to unnecessarily antagonize Bo's supporters and sympathizers because these people are vocal and scrutinizing ... various forms of social media," he said.

To Cabestan, Bo's "political death or carbonization have been in part caused by the Internet and the speed with which outside information and rumors have circulated in China."

In sum, the experts with whom NBC News spoke agreed that while Bo may be neutralized through the case against his wife and the diciplinary measure he faces, the country's leadership will likely tread carefully given Bo's enduring popularity.

So the suspended death sentence handed down to Bo Xilai's wife signifies a "decision made by the highest leadership," said Professor Jerome Cohen, a veteran authority on Chinese law at New York University.

"The state leaders know that Bo Xilai is still very popular and has lot of support, and to that extent, the court's decision is the most popular option and the best compromise they could have come out with," he added.

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Updated at 2:30 a.m. ET: BEIJING — The wife of Bo Xilai, the former high-flying Chinese politician, was sentenced to death with a two-year reprieve after being found guilty Monday of murdering a British businessman, marking the swift descent of a man who was once one of China's most powerful figures.

The sentence means Gu Kailai is likely to face life in prison, provided she does not commit offenses in the next two years, Reuters reported.

Zhang Xiaojun, a Bo family aide who admitted to helping Gu with the murder, received a nine-year jail sentence, a witness to the hearing said. Non-official media were not allowed in the courtroom.

Witnesses said that neither would appeal the decision.

Gu's prosecution in the killing of Neil Heywood was the first step in Beijing's efforts to resolve the biggest political scandal to hit China in decades. Bo, the former party secretary for the southwestern metropolis of Chongqing, had been a controversial figure in Chinese politics with his embrace of Marxist policies and his liberal use of local police to silence critics.

After wife's conviction, what next for Bo Xilai?

The high-profile case shed unwanted light on high-level government corruption and murder by Chinese Communist Party elite. With party leaders already highly sensitive to the public perception of instability and corruption within their ranks, the scandal broke as Beijing prepared for a once-a-decade leadership change.

The conviction of Gu, 53, was all but ensured when the murder charges were released by state media with reassurances from unnamed investigators that there was ample evidence to convict.

Alexander F. Yuan / AP file

Former Chinese Commerce Minister Bo Xilai, right, and his wife, Gu Kailai, at a government ceremony in Beijing in 2007.

Scandal sends China's netizens into a feeding frenzy

"The facts of the two defendants' crime are clear," the investigator told China's official state news agency, Xinhua, late last month. "The evidence is irrefutable and substantial." 

What remained to be seen, though, was how the Communist Party would punish one of its own — the wife of a man many experts once considered a serious candidate for China's all-powerful nine-person standing committee.

The answer was hinted at in the carefully composed narrative that has come out in the Chinese media about the case. During the one-day trial Aug. 9, the premeditated way Gu Kailai planned and carried out the murder of her former business partner was clearly evidenced, but it was steeped in justifications and rationalizations — so much so that by the end of Xinhua's account, Gu came off as a protective mother pushed to the edge.

Business dispute?
Heywood, 41, allegedly had become embroiled in a business dispute over a deal he entered into with Gu's son, Bo Guagua. When that business venture fell apart, Heywood allegedly sent a menacing email saying he would "destroy" Gu unless he was paid the tens of millions of dollars he believed he was owed from the deal. 

He then allegedly locked the 24-year old in a house in Britain.

"The few days last November, when I learned my son's life was at death's door, my mind indeed collapsed," Gu said, according to Xinhua. It was then, suffering from "chronic insomnia, anxiety and depression, and paranoia," according to an expert panel, that Gu decided she had to kill Heywood to protect her son.

"To me, that [Heywood's email] was more than a threat. It was real action that was taking place," Gu testified, "I must fight to my death to stop the craziness of Neil Heywood."

Allegedly enlisting the help of Zhang, her former family employee and an ex-soldier, Gu lured Heywood to Chongqing with the intention of poisoning him. On Nov. 13, Gu and Heywood had dinner before driving back to the villa he was staying at in the Nanshan Lijing resort.

China puts cops on trial for 'bending the law' to help wife of ousted politician

There, the two drank whisky and tea until Heywood became drunk and vomited. Zhang then entered the room and helped Heywood to his bed while also allegedly slipping two vials — one filled with a cyanide compound and another of a different drug — of poison to Gu that she had procured earlier. When Heywood asked for water, Gu allegedly poured the poison into his mouth.  

Stringer / China / Reuters

A combination of two photographs shows British businessman Neil Heywood and Gu Kailai.

The next day, Gu told Wang Lijun, Chongqing's police chief and a trusted ally of Bo Xilai, of the killing. 

Wang secretly recorded the conversation but also helped to cover up the murder. In response to inquiries by the British government and the Heywood family, Chongqing police reported the death as an accident due to alcohol poisoning. 

Gu may have gotten away with murder, but she couldn't anticipate what came next: a falling-out between Wang and Bo Xilai that led the police chief to flee in March to the U.S. consulate in Chengdu, where he sought asylum. There, with U.S. officials present, Wang dropped the bombshell about Gu's involvement in Heywood's murder.

Wang's explosive accusation and his taped evidence forced the Ministry of Public Security to reopen the case and may have sealed his own fate. Xinhua's account ominously noted that his entry to the U.S. consulate was "without authorization." 

Wang's trial is expected soon.

City divided by disgraced Communist leader's legacy

More questions than answers
Those who knew Heywood well have raised serious questions about the chain of events laid out by the Chinese courts. Could Heywood, who has been described as a gentleman and generally not violent, have really threatened Gu's son? Did Gu Kailai truly have a mental breakdown? Or was this a convenient way for the Communist Party to distance itself? 

Officials: Chinese serial killer shot dead after massive manhunt

More important, what does the sentence bode for Bo? He's under house arrest while under investigation. Does his wife's show trial signal the end of the public phase of this scandal? Will Bo be disciplined internally by the Communist Party? Or will he also get his day in court? 

The fact that Bo's name doesn't come up in Xinhua's account bodes well for his chances of riding out this storm. But in the opaque world of Chinese Communist Party politics, it will likely be a fruitless endeavor reconciling the official party narrative with what actually happened.

Top China politician's wife named as murder suspect

Professor Jerome Cohen, a leading authority on Chinese law at New York University, called the court decision a "typical Chinese compromise."

"It was a show trial that raised more questions than it answered. The sentence given was anticipated because to execute her immediately would have alienated more numbers of people who still support Bo Xilai or who don't think the trial was telling us the whole story or fair," he told NBC News in a telephone interview.

"This trial demonstrated the need for genuine due process of law in China because this case did not have it, it doesn't show us the involvement of her husband, there are many missing links in the puzzle," he added.

He Weifang, a prominent professor of law at Peking Universitgy, concurs that the court verdict was "absolutely a political decision, not a judicial one." "If the crime were committed by ordinary people, the outcome would have been different," he told NBC News.

Reuters contributed to this report.

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BEIJING -- A fugitive gunman thought to have shot dead nine people since 2004 was himself killed by police in southern China on Tuesday after a massive manhunt that has gripped the country.

Zhou Kehua, 42, who was responsible for nine deaths across several provinces, was finally cornered and shot dead at a Chongqing shoe factory around dawn, the official Xinhua news agency reported.

Keen to put on a show of strength after the sacking earlier this year of Chongqing's controversial Communist Party head Bo Xilai, who led a high-profile crimebusting campaign, authorities mobilized thousands of police to catch the killer.

China cops on trial over alleged murder cover-up

Zhou had been implicated in robberies and killings in three provinces dating back to 2004 and resurfaced last week to shoot dead a woman outside a Chongqing bank, Xinhua said.

Authorities described Zhou, who targeted people withdrawing money from banks, as "ruthless and extremely dangerous," had repeatedly dodged police manhunts. 

"Police ... confirmed that the Chongqing Municipal Public Security Bureau was praised and honored by China's Minister of Public Security Meng Jianzhu immediately after the operation," Xinhua added.

Chinese news portals showed a lurid picture provided by the police of Zhou sprawled on the ground with blood streaming from his head.

Gun crime is rare in China as a result of tight controls over firearms.

The hunt for Zhou has been the most popular topic on China's Twitter-like microblogging site Sina Weibo for the past few days, and has dominated the news.

Reuters contributed to this report.

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HEFEI, China -- China pressed ahead Friday with an offensive against ousted politician Bo Xilai, a day after the murder trial of his wife, with a separate prosecution of four police officers accused of trying to cover up the killing that she allegedly carried out.

The dismissed officers went on trial for "bending the law to show favoritism" by shielding Bo's wife, Gu Kailai, from an inquiry into the death of Briton Neil Heywood.

Gu stood trial for poisoning the businessman over a financial transaction that went sour, according to a court statement. She did not dispute the murder charge during Thursday's seven-hour, closed-door trial hearing and a verdict will soon be delivered, the statement said.

Heywood's death in November and its alleged cover-up in Bo's stronghold of Chongqing, the southwestern municipality he ran, was central to the torrent of events that toppled him from the upper echelons of Chinese political power and exposed the ruling Communist Party to its worst upheaval in decades.

Legal noose tightens
Bo was one of China's most powerful and charismatic politicians until he was ousted.

The legal noose is tightening fast on Bo's wife and police involved in investigating the murder case, suggesting there is a danger Bo could himself face charges of masterminding a cover-up and could risk a lengthy jail term.

The South China Morning Post said Friday that Bo's former Chongqing police chief, Wang Lijun, would stand trial as early as next week in the southwestern city of Chengdu. Wang sought temporary refuge in Chengdu's U.S. consulate in February after sources told Reuters that he told Bo that Gu was a murder suspect.

Wang's dramatic flight to the U.S. mission triggered the murder scandal that quickly led to Bo's downfall. Until then, Heywood's death had been officially attributed to a possible heart attack brought on by excessive alcohol consumption.

Chinese media stuck to the terse official account of Gu's trial on Friday, despite avid public interest in this scandal that has exposed the fusion of wealth and privilege in China's political elite, and exposed rifts in the party.

Bo, 63, has not been a focus of the proceedings so far. But most experts believe the trial and almost certain conviction of his wife Gu and the four police officers is a prelude to his punishment, which could include a criminal trial.

Reuters

This photo shows Bo Xilai, British businessman Neil Heywood and Bo's wife Gu Kailai.

Little delay likely in announcing verdict
The court in the eastern Chinese city Hefei did not say when it would announce any verdict against Gu. But the usual wait was about two weeks, Chen Guangwu, a criminal defense attorney who has followed the Chongqing scandal closely, told Reuters.

"But they won't delay for too long, because this case is being heard in order to pave the way for dealing with Bo Xilai himself," said Chen, who is based in eastern Shandong province.

"This case is in part about testing the waters for that. That is, they will sentence her and see what reaction there is in society and public opinion," he said.

Wife of ousted China politician charged with Briton's murder

Bo's downfall has stirred more public division than that of any other party leader for more than 30 years. To leftist supporters, Bo became a rallying figure for efforts to reimpose party control over dizzying and unequal market growth. To liberal critics, Bo was a dangerous opportunist who yearned to impose his harsh policies on the entire country.

As the four police officers went on trial, also in Hefei, Chinese authorities cordoned off the courthouse and excluded foreign reporters from the hearing. Vans parked nearby were bristling with video surveillance equipment.

A court spokeswoman said the case would begin at 8:30 a.m. (7:30 p.m. ET Thursday). "It's open to the public but I'm afraid all the places are full at this time," she said, according to Reuters.

It was unclear whether the case began as scheduled.

The four men on trial -- Guo Weiguo, Li Yang, Wang Pengfei and Wang Zhi -- were senior police officers in Chongqing who allegedly sought to stymie an investigation into Heywood's death in a hilltop hotel villa overlooking Chongqing.

On Thursday, a court official said prosecutors believed Bo's wife, Gu, and a family aide, Zhang Xiaojun, killed Heywood by pouring poison down his throat after a business dispute led Gu to believe Heywood had threatened her son, Bo Guagua, then a student at Harvard University.

NYT: Increasingly outspoken military alarms China's leaders

During Gu's seven-hour hearing on Thursday, it was alleged Heywood had written a letter to Guagua, threatening to "destroy" him, a source who had been briefed on the hearing told Reuters. Heywood and Guagua had fallen into dispute over Heywood's demand for a fee to help arrange a $200 million financial transaction, the source told Reuters.

Guagua, believed to be in the United States after graduating this year from Harvard University, denied there was such a deal of that value but appeared to confirm the letter's existence.

"I cannot comment on any of the details (of the letter), but I can disclose that there is no such thing as either possessing or transferring" $200 million, Guagua wrote in an e-mail sent to Reuters.

Scandal sends China's netizens into feeding frenzy

Political infighting
The scandal has drawn attention to political infighting that China prefers to keep secret and comes at a time when the government is preparing for a once-a-decade political transition — at the 18th party congress later this year, where it will install a new generation of leaders.

More China coverage from NBCNews.com's Behind The Wall

Bo, the son of a revolutionary veteran, was once a contender for one of those top jobs. But his overt maneuvering to reach the highest echelons of the Communist Party angered some leaders, as did his bombastic campaigns to bust organized crime and promote communist culture while trampling civil liberties and reviving memories of the chaotic Cultural Revolution.

Bo is in the hands of the party's internal discipline and inspection commission, which is expected to issue a statement about his infractions. That would open the way for a court trial with charges possibly including obstructing police work and abuse of power. Thus far, Bo has been accused only of grievous but unspecified rules violations.

Reuters and The Assiocated press contributed to this report.

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Updated at 8:40 a.m. ET: HEFEI, China -- The woman at the center of China's most politically explosive trial in three decades did not contest charges of murder on Thursday in a hearing that lasted just seven hours and could determine the fate of former politician Bo Xilai.

Bo's wife, Gu Kailai, chose not to contest the charge of murdering British businessman Neil Heywood, whose alleged secretive dealings with the couple fuelled a scandal exposing the intimate nexus between money and power in China's elite.

A formal verdict will be delivered at a later date, a court official said, recounting details of the closed-door hearing.

CCTV via Reuters TV

Gu Kailai, center, appears at the Hefei Intermediate People's Court on Thursday.

The dramatic account of Heywood's death by poisoning is also likely to sound the final death knell to Bo's political career, even as sympathizers cast him as the victim of a push to oust him and discredit his left-leaning agenda.

"The accused Bogu (Gu) Kailai and Zhang Xiaojun did not raise objections to the accusations of intentional homicide," the official, Tang Yigan, said after the hearing, referring also to Gu's co-accused, an aide to the family. 

State television showed Gu, wearing a dark pant suit and white shirt, being led into the courtroom and being seated in the dock. She appeared to have put on weight since she was detained earlier this year. 

Wife of ousted China politician charged with Briton's murder

Reuters

This photo shows Bo Xilai, British businessman Neil Heywood and Bo's wife Gu Kailai.

The court official quoted prosecutors as saying Gu and Zhang had killed Heywood with a poisoned drink in far southwestern Chongqing last November, after a business dispute between Gu and Heywood. Bo ruled the vast municipality until he was sacked in March just before the murder scandal burst into the open. 

As a result of the dispute with Heywood, Gu had become convinced Heywood was a threat to her son, Bo Guagua, the official said without elaborating. 

"Gu Kailai believed that Neil Heywood had threatened the personal safety of her son Bo (Guagua) and decided to kill him," the official added, reading from a statement to a packed news conference of dozens of reporters who had been barred entry to the courtroom in the eastern city of Hefei. 

The aide, Zhang, had driven Heywood to Chongqing last November from Beijing and prepared a poison which was to be put later into a drink of water. Later that day, Heywood met Gu at a hotel, where he became drunk and then asked for water. 

"She poured a poison into his mouth," the official said. 

Gu was represented by government-appointed lawyers. Her trial is seen by many Chinese as part of a push against her husband Bo, who made powerful enemies as he campaigned to join the next generation of top central leaders.

Bo was formerly considered a contender for the inner sanctum of power -- the party's Politburo Standing Committee -- in a once-in-a-decade leadership transition that is currently under way. The new leadership is expected to be unveiled in October.

Earlier, a British diplomat was seen entering the court, but did not comment. International media were not allowed into the court.

Censorship
State censorship of Internet chatter on the trial was swifter than normal on Thursday. Users of China's popular Twitter-like service Sina Weibo played cat and mouse with authorities to discuss the case and used word play to try to get around the controls.

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Police dragged two protesters away from outside the Hefei Intermediate People's Court in eastern China. The two Bo supporters kicked and yelled as they were put into an unmarked car after they had appeared outside the building, condemning the trial as a sham and singing patriotic songs that were the trademark of Bo's populist leadership style.

"I don't believe it. This case was decided well in advance," Hu Jiye, a middle-aged man wearing a T-shirt and baseball cap, told foreign reporters at the rear of the court building, which was cordoned off by dozens of police standing in heavy rain.

Eugene Hoshiko / AP

Police officers stand guard outside a court where the murder trial of Gu Kailai was held on Thursday in Hefei, China.

Hu and his friend were then shoved by police officers into a car. His companion, also a middle-aged man, struggled and yelled, "Why are you taking me? Why are you taking me?"

But many ordinary Chinese citizens were unaware of the trial, or felt that it had little impact on their lives. 

"We are not really interested in the Bo Xilai and Gu Kailai cases because they are far removed from us, we are very busy with our daily lives," Beijing construction manager Ji Jiaminghe told NBC News. 

"The lesson of the Bo Xilai case is that it was wrong to go against the political mainstream," Ji said, even as he acknowledged that he loved to sing and listen to the "Red Songs" that Bo promoted. 

Communist Party aristocracy
The trial of Gu, the glamorous daughter of ruling Communist Party aristocracy, is the most sensational since the conviction of the Gang of Four more than 30 years ago for crimes during the 1966-76 Cultural Revolution.

Gu and family aide Zhang Xiaojun face the death penalty if convicted of poisoning the former family friend.

Police sources initially claimed Gu had poisoned Heywood in a disagreement over an illicit financial transaction she had wanted him to help her complete, and they portrayed Gu as a greedy wife who was translating her husband's connections into dollars.

Sources: Briton killed after threat to expose Chinese leader's wife

But Gu's alleged personal motive for the killing --  that Gu believed Heywood was a threat to her son -- may count as a mitigating circumstance and help Gu avoid execution.

Any hesitance to put Gu to death would make sense, according to Hu Xingdou, an outspoken blogger and frequent government critic, told NBC News. 

Scandal sends China's netizens into feeding frenzy

"The death penalty is not likely precisely because a political struggle is involved and people don't like political rivals being executed," he said.

In announcing the indictment about two weeks ago, the official Xinhua News Agency made clear the government considers the verdict a foregone conclusion.

"The facts of the two defendants' crime are clear, and the evidence is irrefutable and substantial," it said.

The trial and sentencing of both Gu and Zhang are widely seen as a prelude to a possible criminal prosecution of Bo, who is being detained for violating party discipline -- an accusation that covers corruption, abuse of power and other misdeeds.

Bo, who was a favorite of party leftists and promoted himself as a friend of the poor and an enemy of corruption, was sacked as Chongqing party chief in March after his police chief, Wang Lijun, identified Gu as a suspect in Heywood's death.

Press behaved 'appallingly'?
On Thursday morning, there was no sign of Gu's elderly mother, nor of any members of Heywood's family in or around the courtroom.

In London, Heywood's mother accused the press of spreading lies about her son. "You've all behaved so appallingly," Ann Heywood said Wednesday outside her home.

British media have suggested Neil Heywood was involved in money laundering, worked for British intelligence or that he was Gu's lover. Ann Heywood claimed to know more about the case than was in the public domain, but she wasn't specific and said the truth would come out eventually.

 More China coverage from NBCNews.com's Behind the Wall blog

Before his ouster in the spring, Bo, also the son of a revolutionary veteran, was one of China's most powerful and charismatic politicians. But his overt maneuvering for a top political job, as well as high-profile campaigns to bust organized crime and promote communist culture -- while trampling over civil liberties and reviving memories of the chaotic Cultural Revolution in the process -- angered some leaders.

Bo is the first Politburo member to be removed from office in five years and the scandal kicked up talk of a political struggle involving Bo supporters intent on derailing succession plans calling for Vice President Xi Jinping to lead the party for the next decade.

Bo is in the hands of the party's internal discipline and inspection commission, which is expected to issue a statement about his infractions. That would open the way for a court trial with charges possibly including obstructing police work and abuse of power. Thus far, Bo has been accused only of grievous but unspecified rules violations.

Reuters and The Associated Press contributed to this report.

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Reuters, file

Gu Kailai is the wife of China's former Chongqing Municipality Communist Party Secretary, Bo Xilai.

Updated at 12:25 p.m. ET: BEIJING -- The wife of ousted Chinese politician Bo Xilai and a family aide have been charged with the murder of a British businessman, the government said Thursday, pushing ahead a case at the center of a messy political scandal that exposed divisions in the country's leadership.

The official Xinhua News Agency reported that the prosecutor's indictment said Bo's wife, Gu Kailai, had a falling out with Briton Neil Heywood over money and worried that it would threaten her and their son's safety. Gu and the aide, Zhang Xiaojun, are alleged to have poisoned Heywood together, the report said. Heywood's death in November was attributed initially to a heart attack or excessive drinking.

"The facts of the two defendants' crime are clear, and the evidence is irrefutable and substantial. Therefore, the two defendants should be charged with intentional homicide," Xinhua said.

It did not give a date for the trial, but a family lawyer told Reuters it was likely to take place on August 7-8.

Thursday's brief report is the first official news that the case against Gu is proceeding since the announcement three months ago that she and Zhang were being investigated and that Bo was being suspended from the powerful Politburo for unspecified discipline violations. The Xinhua report did not mention Bo's case or a separate party investigation into Bo.

Prosecutors have interrogated Bo and Zhang and have "heard the opinions" of their defense lawyers, Xinhua said.

The scandal has exposed the bare-knuckled infighting that the secretive leadership prefers to hide and affirmed an already skeptical public's dim view about corrupt dealings in the party.

City divided by disgraced Communist leader's legacy

Disappeared from public view
Since Bo was dismissed in March, he and his wife Gu, formerly a powerful lawyer, have disappeared from public view and have not responded publicly to the accusations against them.

The charges were filed in the eastern city of Hefei, Xinhua said Thursday. It did not say when exactly the indictment was issued or when the crime occurred and why the case is being prosecuted in Hefei and not in Chongqing, the city Bo ran as Communist party secretary and where the couple lived.

But according to Si Weijiang, a prominent lawyer in China who is followed by 170,000 people on his microblog, Hefei, in eastern China's Anhui Province, was selected due to its political reliability.

Wang Shengjun, who is the chief justice of China's Supreme People’s Court, is from Anhui and the province has, according to Si, built a reputation of being politically reliable and harsh on defendants.

"The case being filed at Hefei, will set Chief Justice Wang's mind at ease," Si wrote Thursday.

Scandal sends China's netizens into a feeding frenzy

In another post, Si noted the intense political ramifications of this case.

"This is a political case. No accidents is success. So it [the court] must be a place that can be trusted," he wrote.

But Fang Hong, a Chongqing resident featured in a piece by NBC News in May, hailed the prosecution move as a "vindication of my criticism" of Bo's rule.

"They tried to destroy the rule of law so as to make it convenient for them to murder people, and now they will get what they deserve," he told NBC News.

"This case is being handled according to the law," he said, adding that "some people with limited understanding wrongly think it is a political striuggle, but it is not. ... What the law says is what they will get."

China.org.cn via Reuters, file

British businessman Neil Heywood, who died in November 2011, was a long-time friend of Bo Xilai and Gu Kailai.

Political ascent stopped
Thursday's announcement comes months before the ruling Communist Party unveils a new top leadership.

Before his ouster, Bo was one of China's most powerful and charismatic politicians. The son of a revolutionary veteran, Bo was seen as a leading candidate for a position in the Politburo Standing Committee, the highest ranks of power, when a younger group of leaders is installed later this year.

Son of sacked Chinese official fights back

On his rise, Bo led high-profile campaigns to bust organized crime and to promote communist culture. In doing so, however, his administration ran roughshod over civil liberties, angered some leaders and alienated others with his publicity seeking.

The removal of Bo has triggered rifts and uncertainty, disrupting the Communist Party's usually secretive and carefully choreographed process of settling on a new central leadership in the run up to its 18th congress.

Left-wing supporters of the charismatic Bo have defended him as the instigator of a much-needed new path for China, and many of them see him as the blameless victim of a plot.

Behind the Wall: Full NBC News coverage from China

The 18th Party Congress, scheduled to be held late this year, will appoint that leadership. President Hu Jintao and Premier Wen Jiabao will then step down from their government posts at the National People's Congress in early 2013, when Vice President Xi Jinping is likely to succeed Hu as president.

Growing credibility gap
Analysts here agree that the legal steps announced Thursday are part of the authorities' effort to dispose of the case and remove a major distraction before the once-in-a-decade leadership succession later this year.

However, this week has been a week of disruptions that have kept government propaganda officials and censors busy.

Full international news coverage from NBCNews.com

Besides the ongoing saga of Bo, Beijing this past weekend dealt with the worst flooding in nearly six decades. Just as news of Gu’s charges came out, word also broke that the death count from the flooding, which previously had stood at 37, had been bumped up to at least 77. Many Beijing residents had been highly dubious of earlier government estimates of the death toll, highlighting the party's credibility gap.

The news also came on the eve of the 2012 Olympics in London, where China hopes again to top the tables in gold medals.

Still, the government was not taking any chances: the comments section on the official Weibo account of popular Chinese state newspaper, People's Daily, was turned off for the post regarding Gu's murder charges.

The Associated Press and Reuters contributed to this report.

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CHONGQING, China – Everywhere you go in Chongqing, you can see traces of the complicated legacy of Bo Xilai, the former Communist party chief who ran this municipality of 30 million people until scandal derailed him. 

At one time destined for a top post in China’s highest echelon of power, the standing committee of the politburo of the Communist Party, Bo aggressively poured money into this municipality in pursuit of his populist agenda.

To drive through the windy roads that snake around this hilly metropolis is to see a city in constant transformation. Towers of low-income housing complexes dot the skyline. These social housing projects were meant to address a major national issue: the lack of affordable housing, and provided homes that cost just a few hundred dollars a year to rent. And Bo had gingko trees, said to be one of his favorites, planted across the city.

But these city improvements came at a cost: His heavy investment in capital construction projects forced the city to borrow so much money to pay for it that Chongqing owes $20 billion to the China Development Bank, according to a news report on Wednesday. The tree planting saddled the city with a $1.5 billion bill just for 2010 alone.  

The improvements weren’t the only controversial aspect of Bo’s reign over this important gateway city to the western half of China, and since his demise his critics have stepped out of the shadows to talk about the darker side of life in what had become the former leader’s personal fiefdom.

Told a Bo joke, got a year in a labor camp

In Chongqing, NBC News spoke with Fang Hong, a 51-year-old former forestry officer who made news earlier this week when he filed an appeal with a local court seeking compensation for what he alleged was an unfair sentence he served at a labor camp.

According to Fang, he was imprisoned for posting a two-line joke about Bo on his microblog that quickly went viral. Soon after, Fang said he was dragged in by police for questioning and later brought before a police tribunal where he was sentenced for “fabricating facts and disturbing public order.” 

Fang served his sentence at a labor camp where he said he was forced to assemble thousands of Christmas ornaments for export for one year.

Released earlier this year, Fang was emboldened by the criticism that has shrouded Bo following his high-profile falling out with his vice-mayor and former police chief, Wang Lijun, who famously sought refuge at the American embassy in Chengdu. That move by Wang sparked an international political scandal that now includes a murder mystery. Bo’s wife, Gu Kailai, is a murder suspect in the death of British businessman Neil Heywood; Bo has been officially disowned by the ruling Communist Party and has disappeared from public view.

Ed Flanagan / NBC News

A crowd gathers around Fang Hong in Chongqing to hear his story on Tuesday.

Boisterous debate on Bo
Fang agreed to do an interview with NBC News on an outside promenade with commanding views of Chongqing’s skyline and the mighty Yangtze River below. Fang spoke confidently, eager to tell his story about the deprivations he faced while interned at the labor camp.

Between the presence of a foreign camera crew and his loud denouncements of Bo Xilai, Fang quickly drew a crowd of onlookers.

The first indication that things were going to get contentious with the crowd was when one short, middle-aged man standing next to the camera started muttering under his breath as he listened to Fang. 

Taking jagged drags from his cigarette and nervously flicking ash between puffs, the man’s voice rose incrementally to voice his protestations of Fang’s opinion about Bo. Those near to the man shushed him as they strained to hear what Fang was saying, but after one particular statement, the man clearly had enough.

“That’s bull---! Bo Xilai has done so much for Chongqing!” bellowed the man as he waved his cigarette at Fang.

The crowd erupted into a loud, boisterous debate on Bo, prompting NBC News correspondent Ian Williams to wrap up the interview so that Fang could quickly leave with his lawyers.

But before he left, Fang feistily told the man what he thought of his opinion, triggering a shouting match. One of Fang’s lawyers and some of the crowd had to separate the pair.

David Lom / NBC News

Angry pro-Bo Xilai supporter voices his opinion to the crowd in Chongqing.

‘Since Bo Xilai took power I feel more secure'
Not everyone had negative feelings about the disgraced former party chief.

 One older woman in the crowd said:, “Before, I was worried to wear earrings because I was worried I’d get robbed, but since Bo Xilai I feel more secure seeing more police on the streets.”

Finally, a line of security guards rolled up and broke up the crowd. The guards were not forceful and they exchanged a few knowing nods with the throng of people who were loudly voicing their support for Bo.

Bo’s fall has clearly given his critics the opportunity they’ve long desired to voice their criticisms of him.

However, despite the accusations that paint Bo’s Chongqing was something akin to a modern-day Tammany Hall, the populism and perhaps most importantly, the pride he instilled in this mega-city suggest his popular legacy may last far longer than Communist Party officials would like.

As one driver told us, “Yeah, Bo might have been corrupt, but at least he did something for us – which is more than those corrupt officials who do nothing at all.”   

NBC News’ Bo Gu contributed to this report.