OK let's say the toxic debt built up by the Chinese suddenly catches up on them. The entire Chinese financial system begins to enter systematic collapse and the Chinese are forced to go to the IMF. They give them a record loan, but force the CCP to privatise and shutter companies, cut salaries, etc.
Very little of the debt is denominated in foreign currencies, so even if hypothetically the IMF *did* grant a loan (denominated in a basket of foreign currencies which incidentally now includes the Yuan), it's of exactly zero effect.
And in fact, it's not the first time China faced a systemic financial crisis. Back in the 1990s, there was a debt crisis caused by bad investments made by local government-linked trust companies. The central government intervened, chopped up the banks' books, and eventually floated the "good banks" on international capital markets. Thousands of state-owned companies were shut, privatized, or merged. And 20 million employees were jobless.
More realistically, what's likely to occur is a one-off devaluation of the Yuan. Lots of whining from Washington, but ultimately it passes. Something like TARP is implemented, except that the banks are already state-owned. Meanwhile, the Politburo exerts its authority to implement new reforms to open new sectors.
The middle class has now grown to hundreds of millions of people. These people have apartments, run businesses, own cars, take vacations in Thailand, and save in hopes of sending their child to university in the US. Will they even think about supporting something which threatens all of that? Even if they blame the CPC for the crisis, they will prefer the devil they know. They all know their history.
Make no mistake, these are Market Leninists. They accept the market economy, but they're Leninists to the core. This means the state ultimately controls all the commanding heights of the economy. They won't allow any significant organization to emerge which isn't influenced by them. And, most importantly, all Party members understand they must hang together or hang separately. Each and every Party member (all 80+ million of them) have watched one documentary explaining how Yeltsin was allowed to become a rival to Gorbachev, which is what eventually killed the Soviet Union.
Finally, did anyone else remember how two years ago, everyone was so confident that western sanctions and the oil crash would cause the Russian economy to crumble, and take Putin with it? We all forgot about Russians' ability to endure even the sh**ttiest environments. There have been no anti-Putin protests outside a few liberals in Moscow. I suspect the same would be true even if China suffered a similar shock.
