An activist decapitated, a journalist killed, a lawyer beaten, a magazine closed and an embarrassing legal case mysteriously settled out of court. In the past few days China's netizens have dug their claws into a smorgasbord of crimes and controversies in which the only constant is a reluctance to believe the official version of events.

Such is the scale of the trust deficit and the power of online opinion that police took the remarkable step today of welcoming citizen investigators to help investiagte one of China's most high-profile cases.

Following a huge internet outcry, they will look into the grisly death of Qian Yunhui, a villager whose neck was severed by the wheels of a truck on a quiet rural road in Xinyi, Zhejiang province, on Saturday. Local officials initially declared the death a "traffic accident", but photographs of the crushed body spread rapidly online along with speculation that Qian, who had been arrested three times over land disputes, was killed to stop him running for re-election as village chief.

Online scepticism over the official version focused on three key questions: why a roadside surveillance camera was not recording at the time of Qian's death, why the truck was driving on the wrong side of the road, and why there was no clear sign of impact on its bonnet. The doubters' case gained credence when a woman told local media she saw Qian being pushed under the wheels of the truck by three masked men wearing white gloves. Officials say the testimony is unreliable because the witness is a drug addict.

The arm of Qian Yunhui is visible benath the truck that ran him over on a quiet rural road in Xinyi, Zhejiang province.

Qian's wife has subsequently reported he had been threatened for challenging the paltry compensation paid to villagers for the appropriation of their land for a power station. Believing his life was in danger, he frequently changed his whereabouts until he left home that rainy morning after receiving a mysterious phone call.

Local officials tried to quell suspicion with an unusual show of accountability. Police held a press conference on Monday, prompting protests by villagers, and opened a dedicated website, rapidly deluged by thousands of scornful messages. Faced with such scepticism, provincial leaders said the case was still being investigated as both a possible crime and an accident. State media reported the case under headlines on "suspicious death".

In an unusual concession to online demands, police held a second press conference and state broadcaster CCTV aired an interview with the driver, Fei Liangyu, who denied knowing the victim or being ordered to kill him. He said he had to drive on the wrong side of the road because the other lane was blocked. "I tried to brake, but it was raining and the road was slippery," he said. "I called 110 [emergency] but I think he died immediately."

Wenzhou police chief Ye Hanbing said there was no evidence to suggest a murder. He said skid marks on the road and dents in the vehicle were consistent with a traffic accident. Contrary to online rumour, he insisted no witness had reported anyone pushing Qian in front of the truck. "The witnesses were detained due to a misunderstanding," he said. "Police officers who went to the scene were attacked by villagers. One of our men was badly injured. The witness was among the assailants." He said the police were willing to work under the glare of the spotlight and would strive to present a cast-iron case. "We must improve. We were late to disclose information. We must respect the public right to know."

Despite the national attention, locals fear repercussions. "Everyone is discussing the case. Many say Qian was murdered, but they don't dare talk in public because many people have been detained by police. It is said some have been taken away for sending text messages," a villager told the Guardian by phone. "Qian was a noble man. His family is very poor, his house is very shabby, but he always thinks about others and does good things for the villager."

In another case, online activists are calling for an independent investigation into the death on Tuesday of a journalist in Xinjiang. Sun Hongjie had been in a coma for several days after being beaten by five men. Many suspect he was killed for writing about corruption and local development plans. This is denied by his newspaper and local police.

The display of mistrust over such incidents shows the scale of the credibility challenge facing the authorities. Conspiracy theories flourish online in all countries, but they have a particularly strong appeal in China, which has the world's biggest online population and a long history of censorship and official cover-ups.

Rights campaigners say recent cases highlight the need for reform. "It is hard to find the truth in such cases. China doesn't have an independent legal system so we need an independent investigation," said lawyer Teng Biao. "Without reform of the legal system, anger will accumulate and the result could be violence and chaos, which nobody wants." Teng has also been beaten and detained in the past week, which might have been worse were it not for text message and twitter microblog support. Police seized him on 23 December while he was visiting another activist's home in Beijing.

When he challenged the legality of the arrest, an officer told him: "You should think more clearly. Don't talk so much about the law with me. Do you know where we are? We are on Communist party territory!"

He told the Wall Street Journal another officer threatened to kill him. That became impossible when supporters – notified via blogs and tweets – gathered outside the police station. Teng was released and within days campaigning to liberate petitioners held illegally in "black jails".

But civil rights, law and the internet rarely triumph against power and influence. China's most popular blogger and outspoken social critic, Han Han, announced on Tuesday he has been forced to close his literary magazine after a long struggle with the authorities.

And last week an out-of-court settlement appeared to stifle one of last year's greatest internet outrages. The son of a senior police officer in Hebei had killed a college student in a drink-driving accident, then declared to a crowd of onlookers: "Sue me if you dare, my father is Li Gang!" This phrase instantly became a byword for nepotism and injustice, but has proved prophetic. According to a report by investigative journalist Wang Keqin, the case was quietly settled out of court, when – as predicted – political pressure forced the father of the victim to drop his suit.

• This article was amended on 4 January 2011. In the original, Qian Yunhui was referred to in one instance as Chen, instead of Qian. This has been corrected.