Don't panic: there may be a coup taking in place in China.

Rumours of a supposed power struggle at the heart of the Chinese Communist party have been bouncing around the internet since Monday, after thousands of people on Chinese social media sites reported strange events taking place in Beijing.

At first bloggers reported unusual levels of security around the Zhongnanhai leadership compound.

Later, fuelled by reports on websites including the Falun Gong-linked Epoch Times and Taiwanese media which talked of a coup attempt by a left-wing faction at the very top of the Chinese Communist party structure, the rumours began to grow.

On communities including 'the Chinese Twitter', Sina Weibo, and forums on search engine Baidu, reports were posted of gunfire on the capital's Changan Street, military personnel building barricades and shots being fired. Some even posted pictures that appeared to show tanks on the streets.

The rumours were taken so seriously that the cost of credit default swaps on Chinese debt rose on Tuesday.

A reported crash of a red Ferrari in Beijing was also linked to the coup, on the theory that a man killed in the crash was rising left-wing party figure Bo Xilai.

But look behind the rumours and it appears there really is no substantiated evidence of a military coup, or anything of the kind, taking place in China at all.

The pictures of tanks were apparently bogus, and in a curious case of circular spin, the main basis for a conspiracy theory increasingly appeared to be the Chinese government's insistence on censoring search terms and images referring to one.

So who, or what, is behind the supposed coup?

According to most experts, the theory centres on two top officials: the aforementioned Bo Xilai, and Minister of Public Security Zhou Yongkang.

Until last week Bo Xilai was a powerful rising politician on the 'New Left' of the Communist Party. As Chongqing Committee Secretary he controlled a large municipality in central China, had led a popular crackdown against organised crime and he was seen a candidate for promotion to the powerful nine-member Politburo Standing Committee.

But when Bo was suddenly ousted from power and placed under house arrest last week - ostensibly after his former police chief tried to seek asylum in the US consulate - social media erupted with the rumour that his arrest was orchestrated by the reformist faction inside the elite nine-member council, led by outgoing Premier Wen Jiabao, ahead of a scheduled national leadership transition.

The reports theorised that current standing committee member Zhou Yongkang had already promised, in secret, to get Bo promoted and give him over control of the People's Armed Police - or more dubiously that Bo even attempted to create his own private army after ordering 50,000 rifles.

The key issue is that there are increasingly two competing ideologies (and not just factions) in China - the liberal reformists and the left-wing traditional socialists. That makes it more difficult to transition power from one faction to the other with the minimum of fuss.

But as the WSJ explains, increasing fuss in Chinese politics might be the order of the day.

"If the factions come to stand for policy platforms, they will naturally start to play for keeps," said the Journal. "Instead of rotating through positions as they currently do, politicians and their proteges will develop personal strongholds… From there it's a short hop to a real coup attempt like the one Mao's designated successor Lin Biao was supposedly plotting in 1971, before he died in a mysterious plane crash."

So as it stands, it doesn't seem like there is a coup taking place - but rather a slow-motion transition of power, which appears increasingly unstable.

Unless it isn't.

Confused? You're not alone.

Part of the problem, journalists based in China argue, is that almost nobody outside the nine-member Standing Committee can really claim to know what is going on inside government.

"The wall of secrecy that Communist Party leadership has built around itself… prevents the development of trust between the government, media and public. It leaves the media with no one to talk to and get real information from when there’s a wild rumour floating about," says the Canadian Globe and Mail's Mark Mackinnon.

For now it's probably easiest to assume the rumours of a coup attempt are false - at least until any real evidence emerges.

Then again you could do what people in the West do on Twitter when a serious new story breaks: make jokes.

As one wag on Weibo joked as the rumours spread: "Regarding last night’s internet rumors that loud noises in Beijing were caused by gunfire … actually the citizens of Beijing welcome the news that oil prices will rise and spontaneously gather in the streets to set off fireworks and celebrate. Don’t worry about a coup!"