The scandal surrounding the former Chinese Politburo high flyer Bo Xilai has turned from political intrigue to something much more sinister. If the rumours being floated by the Chinese authorities are to be believed, Bo's wife, Gu Kailai, plotted to have Neil Heywood, a British businessman, killed and may even have paid thugs to force him to drink poison. The mixture of high politics, elite lifestyle and murder, all in the setting of a rapidly changing China, has caught the attention of millions of newspaper readers around the world, who couldn't have found Bo's city of Chongqing on a map three months ago.

Another murder involving a Briton in China attracted popular attention three-quarters of a century ago. As with the death of Heywood, the circumstances were deeply suspicious. But the details were even more horrific. On the morning of 8 January 1937, the body of a 19-year-old girl was found at the foot of the Fox Tower in Beijing. All the blood had been drained from her body and in a particularly gruesome detail, her heart was missing, ripped out through her broken rib cage.

The victim was Pamela Werner, daughter of ETC Werner, well-known in the British community as a former consul and academic sinologist. Pamela had been an ordinary expatriate schoolgirl, something of a loner, but keen on ice-skating and listening to big bands on the radio. Unusually, though, she spoke fluent Mandarin. Was there a hidden side to her life, people asked, that had led to her terrible death?

An investigation was launched, but it quickly ran into trouble. The Legation Quarter of the city where expatriates under treaty protection tended to live was at the heart of the investigation, and an unusual joint Chinese-British police operation was instigated to get at the truth. Yet over and over again, the police were steered away from details that might throw the spotlight of blame on to the white community. Perhaps it was more convenient, and less embarrassing, to think that crazed Chinese ritual killers might be responsible.

Paul French's narrative of the investigation is spellbinding, drawing the reader from the very first pages into an unwholesome, macabre world where nothing seems to make sense. In a welcome turn away from orientalist cliché, the book makes the westerners in Peking seem like an assortment of oddballs, standing out amid a crowd of Chinese who are getting on with their lives as best they can.

A respectable American dentist turns out to be the leader of a nudist club (and his own consulate thinks him capable of more sinister and abusive activity). An upright schoolteacher is found to have sadistic tendencies and is shipped off to Britain. Even Werner, the scholar who turned detective, comes over as an obsessive (as well he might do with a murdered daughter), a man of violent temper who had broken a young Chinese man's nose for daring to talk to Pamela.

The British authorities in China did their best to try to preserve their mystique of superiority in the face of the murder, thwarting attempts by British and Chinese detectives alike to penetrate into the "badlands" of the city to search for clues in a steamy quarter of brothels and dope dens. As war with Japan loomed, Werner became ever more frantic to find out the truth. A plausible account of what might have happened did eventually emerge, but too late to bring the culprit to justice.

French calls the book a "reconstruction", and that is quite accurate in the sense that history and true-crime shows on TV use the same term to describe a way of putting together known facts in an accessible fashion. But the technique does mean that, although the book is based on archival materials, many never used before, it often verges on the speculative: we're frequently told what a policeman or a doctor was thinking or feeling in a way that sounds novelistic rather than purely historical.

The undeniably gripping plot also draws attention away from the wider context, perhaps inevitably. Titanic events, most notably the invasion of China by the Japanese, sit in the background, and the wider colonial history that brought these foreigners to China in the first place is sketched lightly.

Pamela Werner's murder was so shocking, and the cast of characters surrounding it so baroque, that it's hard to use it to make a wider point (not many foreigners were murderers or even nudists, after all), and the story tends toward evocation rather than explanation, like White Mischief with the Forbidden City rather than the Kenyan highlands as backdrop. Midnight in Peking could be usefully supplemented by a book such as Robert Bickers's Empire Made Me (2003), which tells the tale of a British policeman stationed in Shanghai between the wars, and combines a wonderfully atmospheric account of the city's "noisy stinking streets" with a thoughtful social history of the changes in the substantial British presence in China. And Qian Zhongshu's classic 1947 novel Fortress Besieged (available in English translation) is perhaps the best evocation in fiction of what the tumultuous politics of the 1930s meant for China's own citizens as they coped with the onset of war and the horrors that followed.

There's no doubt that the Werner case does have many of the features of the grimmest sort of fiction, and there was a danger that the story could have been written as a sort of Fu Manchu tale of murder in the mysterious east. Instead, French has created an affecting account of the death of a trusting, vulnerable and no doubt terrified young woman. Seventy-five years after the murder, it's not too much to suggest that the book is a final act of remembrance.

The Chinese themselves, of course, have something of a record of composing "true crime reconstructions" of murders and scandals in high places. Back in 1997, a book appeared entitled Wrath of Heaven (Tiannu)  a novelised version of the true story behind the recent downfall and suicide of Beijing's former mayor. It became a bestseller until it was hastily banned by the Communist party. One can only imagine that someone is currently composing a similar book on the mysterious death of Neil Heywood that has already brought down the high-flying Bo, and that such a book will also evoke a society with too many secrets.

 Rana Mitter's Modern China: A Very Short Introduction is published by OUP.